Luxury limos: what the PM should have known

BMW 7 Series. Photo / Supplied

Prime Minister John Key should have been aware of officials' plans for the multimillion dollar purchase of 34 German limousines in time for the Rugby World Cup, months before the deal was inked, documents show.

The Department of Internal Affairs' Ministerial Services division decided late last year to replace its three-year-old fleet of BMW 730Ld limousines with the latest model. But with the Government's focus on cost-cutting in the public sector and ordinary New Zealanders facing hard times, the deal has been widely criticised.

Mr Key this week said the decision had "political" aspects and as such should have been run past him given his responsibility for Ministerial Services. But he says he only learned of it when chatting with his chauffeur last week.

"I can't take responsibility for a contract that was entered into by the previous Labour Government, that wasn't brought to my attention or to my ministers' attention," Mr Key said this week.

However, the department has now confirmed it was not obliged to purchase the new cars and yesterday Labour's Trevor Mallard unearthed a July 2010 report on Ministerial Services' budget which outlined the plan to buy the new vehicles and would have been provided to Mr Key months before the deal was struck.

The brief report details the $12 million estimated cost of hosting foreign diplomats during the Rugby World Cup and covers VIP transport requirements.

"[Ministerial Services] is planning to obtain replacement vehicles before the event, but not decommissioning the existing stock until afterwards, thus increasing the number available during the tournament," it reads.

The report was prepared by Government and Opposition MPs and tabled in July last year, four months before the department signed the contract for the new vehicles.

"John Key is clearly not on top of his portfolio if he's unaware that millions of dollars are being spent right under his nose on new cars," Mr Mallard said.

A spokesman for Mr Key last night said the Prime Minister had not seen the committee's report.

"We would note that there are potentially hundreds of select committee reports tabled each year."

The spokesman also said that while Mr Key was responsible for Ministerial Services, he did not sign off on the department's capital expenditure budget under which the purchase of the vehicles fell.

Although replacement of the vehicles - which have a retail price of about $200,000 - after just three years of use has been criticised as unnecessary, the spokesman said a three-year replacement cycle was actually more cost effective.

Under the deal struck by Labour three years ago, the Government gets a discount on the vehicles and the total cost of owning them for five years had been calculated at $4.7 million. However, the cost of owning them for three years then replacing them with new vehicles would be $2.6 million over five years.

"So the savings over five years would be $2.08 million," the spokesman said.

One News last night reported two of the vehicles arrived in New Zealand for testing by Ministerial Services in April last year.

Further indications the Government was aware of the purchase came yesterday as Gerry Brownlee told Parliament that Minister of Internal Affairs Nathan Guy wrote to Finance Minister Bill English a month after the contract was signed to discuss where the money from the older vehicles would go.