SkyCity deal to go ahead now ministers cleared of cronyism

Talks between the government and SkyCity are to be accelerated now the proposed national convention centre deal has had a clean ethical bill of health delivered by the auditor-general’s office.

Prime Minister John Key and Economic Development Minister Steven Joyce said this afternoon talks could now be sped up.

The deputy auditor-general’s report into the deal, tabled in Parliament his afternoon, cleared the government of any accusations of cronyism – accusations which were implicit in the complaint which led to the investigation, made by Green Party co-leader Metiria Turei.

The report concluded there major differences between the SkyCity proposal and that of the other bidders for the contract and this meant much more work to determine whether it was commercially – or politically – viable.

“The other proposals were more straightforward to assess,” the report says. “Officials therefore engaged in extensive and detailed discussion with SkyCity. The practical effect was that officials worked closely with SkyCity as it put together a detailed proposal.”

In doing so officials told the other bidders what was going on, and it appears those bidders made no objections to the process.

Even so, the report suggests this could have caused problems and it should not be repeated.

“The result was that SkyCity was treated very differently from the other parties that responded and the evaluation process effectively moved into a different phase with one party. In our view, the steps that were taken were not consistent with good practice principles of transparency and fairness.

“Although decisions were made on the merits of the different proposals, we do not consider that the evaluation process was transparent or even-handed.”

The report places great stress on the economic opportunity a national convention represents.

“New Zealand is not currently competitive in international conferences of over 1000 delegates, which was the area of strongest growth in this market over
the last 10 years.

“So, while organisers are eager to bring their conference to Australasia and the Asia-Pacific region, New Zealand is often passed by because it lacks an international standard facility of an appropriate scale.”

Mr Key this afternoon said the government had been vindicated by the report and he wants negotiations with SkyCity, which are still under way, to be sped up.

“New Zealand is getting a new convention centre at no cost at all with the risks taken by the operators and in return we would have a slightly lower reduction in the number of pokie machines,” he told an impromptu press conference at Parliament this afternoon.

The number of pokie machines – which has attracted a lot of criticism from opposition parties – is still coming down, he says, just at a slower rate.

“That’s subject to negotiation by officials but the nubmer is coming down – it peaked at I think about 24,000 a number of years ago and it is now about 15,000, 16,000.”

Mr Joyce told the same press conference the negotiations between officials and SkyCity executives “will continue, with perhaps renewed enthusiasm”.

The report was critical of procedural matters, he says, “and not in any way in terms of the substance of what occurred”.

The report expressed concern the complexity and unusual nature of the discussions did lead to any documented analysis or advice on the process needed to be followed from a procurement perspective.

This was less to do, however, with the boundary between commercial and political decision making – which was the focus of Ms Turei’s complaint.

“In our view, those involved had a strong focus on the need to manage the difficult relationship between the commercial issues and the policy and political decisions that were needed, but too little focus on the disciplines that should govern commercial decision-making in the public sector,” Mr Joyce says.

The government is now re-evaluating its procurement procedures and will include the report’s conclusions in its work.