The Office of the Auditor-General has stepped into deep political water with its decision to investigate the Government's handling of bids for an international convention centre in Auckland.

It is calling into question the conduct of a Prime Minister whose standing remains very high in the country despite some unpopular steps this year. It cannot be easy, even for an office with statutory independence, to ignore the political climate and take a step such as this. The office can be congratulated without that comment prejudging the issues in any way.

Opinion has been sharply divided on the propriety of John Key's personal intervention which appears to have led directly to an offer from SkyCity casino and the decision last year to accept it over several other proposals. Many see it as a very good deal, the only one that would not require a direct subsidy, and see nothing wrong with Mr Key's role in it. Others find the deal disturbing mainly because the casino wants additional gambling facilities in return, but not only that.

Tenders for public projects ought to be kept at arm's length from those with the ultimate power of decision. The procedure must be fair and transparent and no bid should appear to have the inside running. That is essentially the focus of the Audit Office inquiry announced yesterday.


The Deputy Auditor-General will examine the overall process for seeking and assessing proposals, the adequacy of the assessment of likely costs and benefits of each, and any other matters it finds it desirable to report on. The second term of reference could allow the office to pass judgment on the implications of the bid for problem gambling but a ruling on the possible public costs seems unlikely until government officials negotiate the finer details of the deal with SkyCity.

It is now a year since the Cabinet announced it preferred the SkyCity proposal for the 3500-seat centre that would cost the casino $350 million. This time last year Mr Key did not see much difficulty in SkyCity's terms - additional gaming tables and poker machines and an early renewal of its licence. "We're constantly changing regulations and laws in relation to economic activity," he told a press conference a year to the day yesterday.

The fact that a finished deal has yet to be announced probably reflects the success of the Problem Gambling Foundation in highlighting the potential social costs. That campaign ought to have strengthened the arm of the Government's negotiators since it will be clear to the casino that the deal must present a credible response to its potential harm.

The Audit Office might be more concerned about the renegotiation of the casino's licence in the context of a negotiation for a convention centre. The licence renewal, not due until 2021, would have invited a proper, full and open public review of this country's experience with casino gambling. The terms of the first licences might render their renewal routine, as Mr Key suggested a year ago, but the public interest suggests it should not be decided in private negotiation.

The Prime Minister is also a keen Minister of Tourism when he has the time. It is a portfolio which can involve a minister intimately in the industry's development. There is no question that Mr Key was acting in the public interest when he directed his officials to stop work on a tortuous exercise with the Auckland Council and wait for a proposal from SkyCity.

He had put the idea to the SkyCity board at a dinner and the board had wanted gambling concessions. He has answered questions about it quite candidly. It is a good deal for the country, he believes. Only when the details are seen and this inquiry is done, can the country start to agree.