The Government feared that the taxpayer bill for the Incis commission of inquiry, scrapped yesterday in favour of a one-man investigation, would skyrocket to $7 million.

More than $500,000 was spent on the inquiry in its preliminary stages as against the one-man probe that is expected to cost $200,000.

Tranz Rail chief Dr Francis Small will report by June on what went wrong with the $107 million police computer project that was halted last year before key functions were implemented.

While the commission of inquiry would have taken evidence in public hearings, Dr Small's work will be private until his report is released by the Government.

Justice Minister Phil Goff said the "swarm of QCs" engaged to defend agencies before the commission could be swatted away.

Although Dr Small will work with more limited terms of reference, there are indications that he will probe the actions of particular individuals, including the outgoing Commissioner of Police, Peter Doone.

"It was never intended to be a witch-hunt. It was intended to ensure we learn those lessons which were incredibly expensive lessons for the New Zealand taxpayer," Mr Goff said.

"[But] if the inquiry finds that anyone who was related to this project has behaved incompetently then there would presumably be disciplinary consequences for that finding."

Asked if that meant Mr Doone's new contract with the Department of Prime Minister and Cabinet could be affected if fault was found to lie with him, Mr Goff said: "Conceivably it could, though the position he is now fulfilling is inherently different from his previous position of responsibility."

He then backed away, saying he could not pre-empt what Dr Small would find.

A parliamentary select committee spent months hearing evidence over the Incis debacle, but Mr Goff believed the ministerial inquiry could go further.

Police said yesterday that they would cooperate with the new inquiry but Assistant Commissioner Neville Trendle warned: "There may be aspects of the inquiry that require legal advice and if the need arises we will seek whatever advice is appropriate."

Opposition police spokesman Brian Neeson defended National's setting up of the commission and accused Labour of putting the matter behind closed doors.

"We are concerned this new inquiry will not be in public. Labour and the Alliance demanded answers and accountability over Incis - the current commission was going to deliver just that," he said.

One of two staff members with the commission, David Smyth, said some analysis that had been completed would be available to Dr Small.