Scott Watson's bid for freedom rests with Justice Minister Simon Power, who is considering a taxpayer-funded report into the case of the convicted double murderer.

The inquiry was sparked when Watson wrote to Governor-General Anand Satyanand in 2008 to ask for a pardon or retrial for his conviction of murdering Ben Smart and Olivia Hope.

The pair were last seen boarding a yacht in the Marlborough Sounds in the early hours of New Year's Day, 1998. Their bodies have never been found. Senior lawyer Kristy McDonald QC was hired to investigate Watson's plea.

A spokesman for Power said her report was "under active consideration".

He said Power was aware of high public interest in the case and planned to consult officials before releasing the results.

Papers released to the Herald on Sunday under the Official Information Act show McDonald's inquiry took two years and she interviewed two witnesses.

She charged between $350 and $450 for each of the 340 hours she worked on the case. The total cost - including expenses - was $143,000.

The witnesses she interviewed were Rozlyn McNeilly and Guy Wallace.

Both were key to the prosecution case, identifying Watson as the man sought by police from the night Hope and Smart went missing.

Wallace was a water taxi driver who said he delivered Hope and Smart and a man resembling Watson to a yacht moored in Furneaux Sound. McNeilly worked in a bar at the lodge in the bay.

Both have retracted their evidence, saying police "tricked" them into identifying Watson. The papers do not reveal the outcome of the interviews.

Wallace's evidence was particularly important because it allowed the prosecution to present a witness who had delivered their suspect and two victims to the presumed murder scene.

A difficulty in the case was that a second water taxi operator, Donald Anderson, also testified to taking Watson to his yacht Blade that morning.

It allowed the prosecution to claim Watson made two trips to Blade that morning, matching a sighting on shore.

But inquiries by the Herald on Sunday have found there is uncertainty around Anderson's evidence. Along with doubts over Wallace's evidence, it removes a key connection between Hope, Smart and Watson.

One Justice Ministry briefing suggests it might have filled that gap. It said McDonald would clarify "new evidence" from water taxi operator John Mullen. That suggests Mullen may hold the key to the puzzle of how Watson returned to Blade. He previously said he carried Watson as a passenger on New Year's Day morning.

The papers also said McDonald tried to interview one of two secret witnesses who testified against Watson. Secret Witness A has since recanted his testimony.

McDonald sought police help to trace the man but he failed to keep two appointments.

Watson's father, Chris, said he was trying to access the report. He said so many aspects of the case against his son had collapsed that it at least deserved fresh examination in the Court of Appeal.