The point about revitalising city centre hospitality is a complete red herring.
6500 public servants were sacked earlier this year. Most of them were in Wellington, a city of 200k souls. Even you add in the Hutt Valley and Kapiti Coast, that's maybe 400k people. So a working population of maybe 200k. Not all the sacked public servants were in Wellington, but that still means around 3% of those who were working are now not. That automatically translates to a 3% cut in spending.
Given that many more public servants are now concerned about joining the dole queue and have cut discretionary spending to the bone, you can see that a 10% fall in spending is a direct consequence of the government's job cuts. That won't be spread evenly, so we can expect to see fewer shops, cafes and bars in town - and that means even more unemployment which in turn means less spending.
That's what's killing the Wellington hospitality trade.
Not entirely sure what POS is supposed to mean in that comment. It could go one of two ways. ;)