The Auditor-General's office has found there was nothing inappropriate in the Government's decision to negotiate with SkyCity to build an international convention centre in Auckland.
But in report released on Tuesday, it said some of the advice given and steps taken in the lead-up to the decision were deficient.
Opposition parties Labour and the Greens are calling for the Government to ditch the deal, saying the process has been "shonky" and neither the Government nor the Prime Minister has been vindicated in the report.
The deal involves SkyCity paying for the $350 million for the convention centre, subject to negotiations allowing it to expand its Auckland casino.
The Auditor-General's office began investigating the matter in June 2012 after Green Party co-leader Metiria Turei complained about the process used to select SkyCity as the preferred bidder to build the centre.
The report said it was surprised that there was no documented analysis or advice on the process that should be followed to determine who the Government should negotiate with. However, it said it found no evidence to suggest that the final decision to negotiate with SkyCity was influenced by inappropriate considerations.
The report said there are several reasons why the proposal to build an international convention centre was always going to be difficult. it is potentially economically significant and will have a high public profile.
Those problems are compounded by the involvement of SkyCity, which requires changes to gambling regulations as part of any deal, making the convention centre more controversial and politically sensitive.
Officials criticised
The report said those involved in the process appeared to have more focus on the need to manage the difficult balance between commercial and political considerations than on the disciplines that should govern commercial decision-making in the public sector.
In analysing the process, the report said it did not consider that the evaluation of expressions of interest in building the convention centre was transparent or even-handed.
The Government spent more time talking to SkyCity, so it could fully understand the policy and political consequences of the SkyCity proposal. As a result, SkyCity was treated very differently to the other parties, the report said.
But the report is critical of officials, not ministers. It said it understands that officials worked in good faith to provide a careful and genuine evaluation of all the proposals but, in the end, one was treated differently from the others.
While that is the case, it said none of the other parties have said they did not understand why the Government might prefer the SkyCity proposal.
The report said the Government is entitled to decide to negotiate directly with SkyCity on the basis of offering it gambling concessions in return for building the convention centre.
"The Government will be accountable in the usual way to Parliament and the public for those policy choices," it said.
Govt working hard to conclude deal - Joyce
Economic Development Minister Steven Joyce told Radio New Zealand's Checkpoint programme on Tuesday the report isn't as damning as opponents say and dismissed the Green Party's claim that SkyCity was given an unfair advantage in the bidding process.
Steven Joyce. Photo: NATIONAL PARTY
"The Greens and Labour made all sorts of aggressive political insinuations about what this was all about. The Auditor-General came out today and said that there was nothing that would change the substantive outcome of the negotiations.
"It made some suggestions around procedural issues and process, but in no way did it suggest that anybody was acting improperly."
Mr Joyce said in the end, the SkyCity proposal is the most developed plan with the greatest benefit to taxpayers, compared with the other four bidders, and officials are working hard to conclude negotiations with SkyCity.
Prime Minister John Key said on Tuesday the report vindicates the Government's approach. "The allegations made by Labour and the Greens that this was a cosy deal between National and SkyCity have been utterly refuted."
Mr Key said the report now clears the way for the Government to continue negotiating with SkyCity over the proposed deal and believed the convention centre would be good for Auckland and New Zealand.
SkyCity chief executive Nigel Morrison said he looked forward to resuming negotiations with the Government. Mr Morrison is out of New Zealand and SkyCity declined further comment on Tuesday.
Auckland mayor Len Brown said he supports the Government's bid for the international convention centre - but who builds it and how is for the Government to determine.
Metiria Turei says the report doesn't vindicate the Prime Minister nor the Government. Photo: RNZ
Opposition says Govt not vindicated
Opposition parties on Tuesday called on the Government to ditch the proposed deal with SkyCity, saying the Auditor-General's report is damning.
The report said it found no evidence to suggest the final decision to negotiate with SkyCity was influenced by inappropriate considerations, but reveals that SkyCity was given preferential treatment and the other bidders were treated unfairly.
The Labour and Green parties say that is proof enough that the process was shonky - and neither Prime Minister John Key nor the Government are vindicated.
Greens' co-leader Metiria Turei said the report makes a number of criticisms of the process and it is unacceptable for the deal to remain on the table.
"It shows serious flaws in the process, it shows that SkyCity was always the preferred option and, in fact, they got the deal. So John Key can't say he's vindicated and neither is the Government in this."
Labour leader David Shearer said the report proves that the Auckland casino is getting a special deal.
"It was a shonky deal and John Key is donkey deep in it. This report shows that it was not transparent, the process was not accountable, it wasn't even-handed, and SkyCity had the worst tender of the five. This is ridiculous that he can claim that he was not losing any sleep on it - I would have been awake all night."
Mr Shearer also believed the Government should now stop negotiating with SkyCity.
"I object to the deal because, frankly, it's building a convention centre on the backs of problem gamblers. It's ultimately pulling money out of people's pockets because they're gambling and putting it into a convention centre - I think we could be above that in New Zealand."
Mr Shearer said he supports building an international convention centre, but it should be done another way.
