Opposition parties say it is unacceptable SkyCity could receive taxpayer money to meet the increased cost of building its international convention centre in Auckland.
Photo: AFP
SkyCity made a deal with the Government last year to build a $402 million centre in exchange for permission to expand its gambling business.
It has now said the centre could cost as much as $530 million due to significant recent and expected construction cost inflation.
Minister of Economic Development Steven Joyce said reducing the project's cost was the top priority but he would not rule out using public money to pay for the $128 million gap.
"The original agreement specified that either party can walk away from the deal prior to the convention centre construction contract being signed," he said.
"We're trying to build the best possible convention centre at the most reasonable price, around the $400 million mark, and we're mid-way through the process."
Listen to Steven Joyce
The Labour Party's economic development spokesperson, David Clark, said the Government had backed itself into a corner with a deal that was heavily stacked in SkyCity's favour.
He said the Government's options were limited to spending more taxpayer money or walking away from the project embarrassed.
"It has set up a contract that heavily favours SkyCity. SkyCity can walk away and only bear minor consequences," he said.
"If the Government walks away, it's a huge political embarrassment. It's already invested a huge amount of taxpayer money."
The Green Party's Auckland spokesperson, Denise Roche, said the initial deal was pitched as being free for the Government because SkyCity would shoulder the cost of the build.
She said it was not fair for the company to ask for public money because its costs had increased.
"We've changed the law around the gambling concessions for SkyCity in order to get this convention centre," she said.
"For SkyCity to come back, and the Government to say, well, we're discussing about the potential of the taxpayer paying the cost overruns, is just unacceptable."
SkyCity declined to comment.
A preliminary design and the construction cost for the convention centre will be decided in February 2015.