Woolly claims about Saudi deals

Power Play - When a government is in trouble it follows a predictable strategy: first up, deny everything, and blame the former government.

Ignore or reject requests for information. Delay as long as possible and then dump the information, with much of it deleted of course, during a recess week so you do not have to answer questions in Parliament when the release of information is still fresh in the public's mind.

As well, no matter what the official papers say, do not deviate from your spin.

Say it often enough and perhaps enough people will believe you.

Finally make sure the minister under scrutiny - in this case Foreign Minister Murray McCully - is overseas and not available to answer questions.

No surprises, then, in how National dealt with the full release of official documents after months of controversy over its decision to spend $11 million setting up a farm in the Saudi Arabian desert.

Mr McCully had faced persistent criticism about the deal.

For months, the Government blamed Labour for the deal, saying the money had been spent to prevent the Saudi businessman, Hamood Al-Ali Al-Khalaf, taking legal action over the ban on live sheep exports.

The Government argued Mr Al-Khalaf had been misled by the previous Labour-led Government into believing the ban would be lifted so he could export live sheep from New Zealand to Saudi Arabia.

The papers, however, do not support the Government's argument, even though Prime Minister John Key continues to make such claims.

Mr Key's political approach will be based on an assessment that most people will not look closely at the documents or the reporting of them.

If he says it often enough, despite the evidence, he presumably believes a majority of the public will believe the story.

What the papers do confirm is that the ban on live sheep exports, which was upheld by National, did cause a diplomatic rift with Saudi Arabia. It was this rift National sought to heal, by spending a few million dollars on Mr Al-Khalaf's farm.

When Labour was considering extending the ban on live sheep imports in 2007, officials warned it would create diplomatic and trade difficulties with Saudi Arabia. And since then, it has been cited as the significant impediment to New Zealand finalising a free trade deal with the Gulf States, including Saudi Arabia.

But the very same officials also warned that removing the ban and allowing live sheep exports to resume would carry an even greater economic risk, because it would harm New Zealand's reputation, particularly in European markets.

Later documents, which cover the actual development of the proposal to resolve Mr Al Khalaf's grievance, reveal the Treasury and Office of the Auditor-General raised serious concerns about the deal.

There were questions about whether the payment was legal. What is clear from the papers is the extraordinary lengths officials went to find just what appropriation they could make the payment from.

The Treasury and Auditor-General also questioned the business case for the deal, describing it as weak.

Despite those warnings, National ministers approved the payment.

It was seen very much as a proposal to appease the Saudi government and remove its objections to the free trade deal with the Gulf States.

There should be little surprise the Government proceeded with what it probably believed was as an innovative way to deal with the problem.

It has, after all, previously handed plenty of money to businesses and large corporates.

It spent millions, as well as changing industrial law overnight, to keep the Hollywood studios happy; it did the deal with SkyCity over the Auckland international convention centre, and paid money to the Tiwai Point aluminium smelter to keep it open.

Dealmaking was portrayed as one of Mr Key's strengths when he first became National Party leader, and he has not shied away from doing deals he argues are in New Zealand's best interests.

But it does raise questions about government process, and, in the Saudi case, those doubts were clearly shared by the Treasury and Auditor-General.

And when those government agencies are asking questions about the legality of a deal and describing the business case as weak, government ministers should take heed.

Dealmaking might be the Government's strength, but is at the expense of good governance?