7 Nov 2016

PM defends Saudi deal as good use of taxpayer money

12:57 pm on 7 November 2016

Mr Key said the deal with a Saudi businessman smoothed relations between New Zealand and the Gulf States which are discussing a trade deal.

Under the deal the government gave more than $11 million in cash, livestock and agricultural equipment to Saudi livestock importer Hamood Al-Khalaf, to appease him over New Zealand's ban on live sheep exports.

A report by the Auditor-General found no evidence of corruption, but heavily criticised government processes. It found no evidence of the government seeking legal advice on a claimed legal threat by the Saudi businessman.

Mr Key told Morning Report the issue was very serious and had led to a breakdown in the relationship.

"Without doing something there I don't think we would have advanced the Gulf States FTA. "

Saudi Arabia - one of the seven parties to the Gulf States free trade negotiations - had been opposed and were now moving towards the 'yes' camp.

"The relationship is back on a firmer footing," said Mr Key and a trade deal with the Gulf States was "getting pretty close".

"It's going to happen. That's the sign we see out of Riyadh."

New Zealand will get access to a very large market and would benefit from the agri-business hub developed in Saudi Arabia as part of the deal.

Asked whether he thought deal was a good use of money, he said he did.

"We did do something that was novel, I agree with that, something that was a bit unusual, but equally we do get an opportunity to promote New Zealand."

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