- Wellington.scoop.co.nz - http://wellington.scoop.co.nz -

Covid and the convention centre

by PCGM
We must have touched a nerve. First Cr Jenny Condie wrote [1] about how fantastic Wellington is, and then Mayor Andy Foster explained [2] why he thinks the convention centre will be a fabulous thing. Good on both of them for joining the public debate, in stark contrast to too many councillors who have gone silent during lockdown (and at most other times, come to think of it).

But do the claims about the convention centre stack up? Let’s find out.

Claim 1: Stopping the convention centre would cause reputational damage

There are times when irony is no match for reality, and the idea that the council’s reputation would somehow be endangered by responding appropriately to a global pandemic is one of them. Perhaps the idea came up in one of those brainstorming sessions amongst the council’s communications people, but it should never have seen the light of day.

For starters, organisations of all shapes and sizes across the entire planet are having to re-shape their plans for the future, and none of them think that re-planning for a very different world is somehow irresponsible. They are merely displaying flexibility in the face of uncertainty – and this is an entirely prudent thing to do when economists are suggesting we may be facing a full-blown depression. No-one is going to be saying to the council “I can’t believe you changed your plans in the face of the pandemic!”

In fact, not changing plans is likely to cause greater reputational damage. Taking a “damn the torpedoes!” attitude and refusing to re-think the city’s major capital projects seems perverse, and may well result in the council gaining a reputation for rigid thinking and blind intransigence. This is unlikely to help the council win friends and influence people, and it’s unlikely to help the election prospects of mayors and councillors who seem to think a lack of mental agility is somehow a skill to be celebrated.

Claim 2: We’ve already spent $60 million

This is interesting but alarming. As wellington.scoop commenter Lance so eloquently put it, “Wow, upwards of $60 million has already been spent on the Convention Centre. Why didn’t that come out at the last election?” It’s an exceptionally good question.

In reality, the fact that we’ve spent money in the past is no justification for spending money in the future. For every $1 that’s been thrown down the convention centre rat-hole, another $2 is scheduled to head in the same direction over the next couple of years – and there’s no getting away from the fact that it’s a lousy investment right now. Continuing with pointless expenditure is just tossing good money after bad, and as anyone in business knows, there are times when you need to cut your losses and just walk away. This is one of those times.

While this is obvious to business people, perhaps it’s less apparent to our councillors because of the dearth of practical business experience around the table – maybe that’s part of the problem. Just a thought.

Claim 3: It’s a contract!

It will be true that the council has signed contracts for the development of the convention centre. But in the commercial world, parties can – and do! – renegotiate contracts all the time. And it’s a pretty good bet that the lawyers are busy all around the planet, re-negotiating contracts of every size and stripe, in an effort to stem losses, change direction and pivot businesses. Billions to trillions of dollars of contracts will be up in the air as we speak.

Councils do need to honour their commitments, but by the same token, the contract for the construction of the convention centre was not brought down from the mountain engraved on tablets of stone by Moses. It is the result of a bunch of people sitting around in meeting rooms trying to find a viable and equitable way forward, and there is nothing so special about the convention centre contract that it can’t be renegotiated in the same way.

Claim 4: It will create jobs

This is true. But so is the counter-factual: if we spend $180 million fixing the Central Library and Civic Square instead, then we will create the same number of jobs. There’s no special magical quality in the employment growth that comes from building convention centres rather than anything else; any project uses the same engineers and digger operators and electricians and plumbers as any other. So spending the money on something the city does want instead of something it doesn’t want will result in the same people doing the same things, merely on a different site.

Claim 5: It is part of our shovel-ready bid to central government

Well, yes it is – and the implication is that if the government stumps up, ratepayers won’t have to find the money needed to build this particular white elephant. The problem is the messaging from the Mayor and Cr Condie – that the convention centre can’t be stopped and will be going ahead anyway.

The astute will have noticed that one of the conditions of the Crown Infrastructure Partners funding was that the projects would either be stopped due to COVID-19, or would not proceed at all. Based on the pronouncements of the council, the convention centre doesn’t qualify – it’s going to happen irrespective of pandemics, climate change, (presumably) asteroid strikes or the end of all intelligent life on the planet. So if the project is going to happen anyway, why would the government need to fund it?

Claims, claims and more claims

In their respective articles, both the Mayor and Cr Condie made plenty of other claims about investing in the vibrancy of the city, the inability of the council to trim its budget, and how rates rises are not only necessary but practically enjoyable. So we’ll be taking a closer look at the business case for the convention centre, and we”ll also see if the council’s accounts might be hiding the very savings that they seem intent on not making. Stay tuned!