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Asset sales must halt for deal with Maori on water, Waitangi Tribunal says

Friday 24th August 2012

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The government should halt its privatisation policy while it changes the constitutions of its electricity companies to allow Maori input into how they are run, says the Waitangi Tribunal in its interim report on Maori claims to proprietary rights and interests in fresh water.

The tribunal says Maori do not "own water" but can claim "residual property rights", which must be properly acknowledged for the government to meet its obligations under the Treaty of Waitangi.

The finding was released in a 275-page "pre-publication, interim" report to meet a government request for advice on urgent claims made to the tribunal by the New Zealand Maori Council on fresh water rights earlier this year.

While the tribunal does not expect the government to reach a total solution to Maori water claims immediately, "it should be possible to agree an appropriate scheme for the three power generating companies up for partial privatisation" - MightyRiverPower, Meridian, and Genesis Energy.

The issue of shares to Maori interests should be part of the remedy for the loss of those rights but "shares on their own are not a remedy", the tribunal says.

"Shares in conjunction with shareholder agreements and revamped company constitutions could give Maori enhanced power in in the companies that control and use their taonga.

Government lawyers argued the opposite at the tribunal hearing, raising the prospect of the government choosing to ignore that part of the recommendations once it has "carefully considered" the report, which State-Owned Enterprises Minister Tony Ryall said would now occur.

No further comment is likely until that consideration is complete, although the timetable for the sale of up to 49 percent of MRP before Christmas will demand decisions on the proposed share float within the next three or four weeks, at the latest.

MRP announces its annual profit on Tuesday, in the process paving the way for the government to issue a prospectus for the sale of a minority share of the state-owned electricity generator and retailer. However, the tribunal says that once shares in the state-owned enterprises are sold, "the Crown will not be able to provide a meaningful form of rights recognition for Maori in respect of its water bodies after it sells the shares to private investors."

While other forms of commercial compensation might exist, "it cannot be stated with certainty that any other commercial rights recognition will actually come to pass." "Since the opportunity exists here and now, the tribunal concludes that the sale should be delayed while an accommodation is reached with Maori."

The tribunal's findings rest on its rejection of a key element of the Crown's argument on the water rights issue. That was that there was no established "nexus" between the share float and the potential to remedy the loss of an established right under the Treaty of Waitangi.

While there are other commercial remedies available to recognise Maori interests in water, the privatisation process removes the shares themselves as a source of such compensation. "There is a nexus between the asset (shares enhanced by shareholders' agreements and revamped constitutions) and Maori rights in the water bodies used by the power-generating companies," the tribunal says in a letter to Prime Minister John Key at the start of its report.

"As a result, the very asset being transferred by the Crown, and which is sought by Maori in partial remedy for this claim, will in practical terms be put beyond the Crown's ability to recover or provide after the sale," the tribunal says "We consider that the sale must be delayed while an accommodation is reached with Maori."

Key indicated a month ago that the government may hold back a proportion of the MRP shares to be offered for sale as part of a loyalty bonus scheme for small-scale kiwi shareholders. While there has been no public discussion of the proposal, it is possible shares could be held back in similar fashion to make a deal with Maori which could allow the MRP sale to go ahead.

BusinessDesk.co.nz

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