David Farrar: The double-edged audit sword

An artists impression of the proposed Convention centre for Auckland. Photo / Supplied

The decision by the Deputy Auditor-General to inquire into international convention centre tender, more popularly known as the Sky City deal, is a double-edged sword for the Government and the Opposition.

If the Deputy Auditor-General finds that the tender process was not run in a fair way, then it will damage the credibility of the Minister of Tourism. The Minister also, of course, happens to be the Prime Minister. This means adverse findings could strike at the heart of the Government.

However if the Deputy Auditor-General does not conclude there were any significant issues in the awarding of the tender, then it could blunt the opposition attacks on the awarding in principle of the tender to Sky City.

The Office of the Auditor-General is a vital one in our constitutional arrangements. It is the public watchdog, and has very wide powers. It has not always endeared itself to the Government of the day. When the Auditor-General found that most parliamentary parties had illegally spent taxpayer money on electioneering, then Prime Minister Helen Clark attacked the finding, saying she does not accept the reasoning in his opinion and judgement, and that he was wrong. She refused to express confidence in his competence, and said he "has a serious credibility problem".

This response is in stark contrast to the current Prime Minister who said he welcome the inquiry by the Deputy Auditor-General, and was "delighted" with it. Hopefully that view will not change, even if there is an adverse finding.

It is important to understand that the inquiry is not into whether or not it is a good thing to agree to more pokie machines at Sky City in return for them building a $350 million convention centre. That will remain a political issue.

The inquiry is into the overall process for seeking and assessing proposals for an international convention centre, and the adequacy of the assessment of the likely costs and benefits of each proposal.

It will be interesting to see how the competing proposals were assessed. As far as I know, three of them were asking for direct government investment (ie money) into either the capital costs or operating costs or both. The Sky City bid asked for no money, but an extension of their casino licence and various regulatory changes. Comparing the different bids could well be like comparing apples and oranges.

It would be a brave person to predict the outcome of the inquiry. Labour Leader David Shearer proclaimed that the mere fact the Deputy Auditor-General has agreed to look at the issue means it was "obviously something dodgy". One can only imagine how this made his caucus colleague Shane Jones feel, considering his actions are also being investigated by the Auditor-General - and at the request of David Shearer.

The worst case scenario for the Government would be if the Auditor-General found the tender was not adequately or fairly run, and should be done again. This would wound the Prime Minister, and probably mean no convention centre in the near future.

The best case scenario is a clean bill of health, allowing the negotiations with Sky City to conclude and construction on the convention centre to start before the election providing 1,000 more construction industry jobs and the other associated benefits of a $350 million construction project.