A decade of disappointment: The grim, costly saga of the NZ International Convention Centre

Saturday, 7 June 2025

The saga surrounding the development of Auckland’s New Zealand International Convention Centre stretches back to 2013, and involves accusations of dodgy dealings, fears about spurring more gambling, a massive fire, cost overruns, and general discontent from all the sundry about the time it was taking to finish.

Its beautiful stained glass façade now adorns central Auckland and it will be open for business in February, but not before another chapter in its turbulent history passes - with news yesterday SkyCity is to sue Fletcher Building for $330 million over a near decade delay to its opening

The saga of controversy and escalating cost dates back to 2013 when the then National Government signed a “heads of agreement” with Sky City, which would spend its shareholder funds building a $402 million international convention centre.

Construction was expected to begin in 2014, said Economic Development Minister Steven Joyce, now the chairman of the NZME media group, and it would open in 2017.

The country would get an international-standard convention centre essentially for free as a result of the deal, with no taxpayer funding needed, but the deal left opposition MPs and anti-gambling bodies furious.

That was because SkyCity would build the convention centre in return for an extension its Auckland casino licence, due to expire in 2021, out to 30 June 2048, an additional 230 “pokie machines” on the casino floor, and an additional 40 gaming tables.

But there was nothing free about it, said Graeme Ramsey, then-chief executive of the Problem Gambling Foundation.

“There is a very clear correlation between availability of machines and the number of machines and the number of problems,” he said at the time. “Research shows for every gaming machine you put in you get 0.8 of a problem gambler, so it's almost one for one.”

Labour’s Chris Hipkins said the deal traded “off the misery of people who suffer from problem gambling. It trades off the misery of all of the people who are associated with them, and it transfers money to the people at the top of the economic heap”.

Prime Minister John Key said he was ''not convinced'' more pokies at SkyCity would have an impact on problem gambling.

He was focused on providing an estimated $90m annual boost to the economy, and the hundreds of construction jobs it would create.

Opposition MPs cried foul. Other companies had tendered for the project but were blown out of the water when SkyCity said it would do it for free.

'SkyCity had an unfair advantage over other bidders for the convention centre in that Prime Minister John Key offered the casino significant legislative change that would enable it to bid without seeking public contribution from the Government,' Green Party co-leader Metiria Turei said.

It was a 'dodgy' deal and there was no evidence the Government had considered the impact of increased harm from pokie machines that would follow from it, she insisted.

The Auditor-general investigated, finding no evidence that ''inappropriate considerations'' such as political connections played a part in the decision to choose to negotiate with SkyCity.

However, it criticised meetings between Beehive staff and SkyCity which took place when senior ministers had already agreed to seek expressions of interest from the market.

Construction did not begin in 2014 as Joyce had hoped. Instead, it was December 2015 that Fletcher Construction started work.

It wasn’t quite the convention centre as originally envisaged. In 2014 SkyCity had attempted to get the Government to contribute $70m to the project as the expected costs had blown out to between $470m and $530m.

For a while it appeared the Government would agree as Key seemed to suggest that would prevent an “eyesore” being built, but after an intense media focus, SkyCity withdrew its request for a top-up, and the size of the convention centre was scaled back.

SkyCity chief executive Nigel Morrison and Fletchers’ chief executive Mark Adamson went to the site to witness the beginning of demolition works on 16 buildings that had to go to make room for the convention centre.

The convention centre did not open in 2017, as Joyce had expected, and is still months from throwing open its doors.

SkyCity’s legal claim against Fletchers indicates it thinks it has lost out to the tune of $330m as a result of the delays.

But, if it succeeds in getting Fletchers’ shareholders to shoulder that cost, it will compound what has already been a financial nightmare for the NZX-listed Fletcher Building.

Massive budget overruns on 16 huge construction projects saw Fletcher Building suspend its dividends to shareholders in 2018.

It was forecasting a $410m loss from the convention centre alone.

Fletchers’ mounting losses cost chairman Ralph Norris his job, and resulted in Fletchers cancelling its first half dividend and breaching its banking covenants. The company also stopped bidding for more of these giant construction projects, with its then chief executive Ross Taylor telling media: “The risk reward profile makes little sense.”

Costs continued to blow out. In February 2019, the aluminium panels that were cladding the convention centre were replaced at a cost of $25m.

Then SkyCity chief executive Graeme Stephens said similar aluminium panel cladding had been partly responsible for the devastating Grenfell Tower fire in London in 2017 which killed 72 people.

But worse was to follow shortly after.

In October 2019, just before the convention centre was due to be completed a massive fire broke out. More than 100 firefighters battled the blaze, but the building was gutted.

The fire was accidentally started when a waterproof membrane being fitted to the roof was 'momentarily exposed' to a worker's gas torch, a investigation has found.

Stephens said the fire was “absolutely devastating”.

Fletcher Building expected its insurance to cover the costs.

In 2020, a year after the fire, Fletcher Building said it had decontaminated the convention centre, and expected it to be completed by 2023.

But by 2022, the completion date had been pushed out to 2025, and the rebuild would cost it $150m more than it was due from its insurer.

Fletcher Building’s then chief executive Ross Taylor said in December 2022: “The unfortunate combination of the unique complexity to rebuild, the Covid delays, and higher than normal cost escalations have meant that as we have progressively got our arms around the rebuild it has now become clear it cannot be completed within the insurance levels that are in place.”

But now, as the convention centre nears completion, with only some building “defects” to be fixed, and some council sign-offs, Fletcher Building shareholders could face having to cough up even more on the troubled project, though it says it will defend SkyCity’s claim vigorously.

Shareholders of both companies have little to be cheerful about. At the end of 2013, everything looked rosy. SkyCity shares were worth around $3.70, and Fletcher Building shares were worth nearly $7.80.

On Friday, SkyCity shares were worth just over $1. Fletcher Building shares were worth just over $3.

And the convention centre is now due to open for business in February, nearly a decade after Joyce had anticipated it would be attracting international conferences to New Zealand.