Govt should wait until Sept report before selling Mighty River shares, Waitangi Tribunal says; Means sale process shouldn't be delayed if water rights are found to be preserved

By Alex Tarrant

The government should hold off selling up to 49% of Mighty River Power until the Waitangi Tribunal has completed the first stage of a report on whether Maori water rights would be preserved following the sale of shares, the Tribunal says.

With the first stage of the report to be issued in September, that means the sale may not be delayed at all.

However, the position of claimants led by the Maori Council, that selling shares would impinge on Maori water rights and therefore should not proceed, was "not an implausible one," the Tribunal said.

The government is looking to start the sale process of Mighty River Power shares in September, and can wait until the first week of December to complete the initial public offering, the Tribunal noted in a memorandum released on Monday afternoon following submissions from the Crown, and Iwi opposed to the sale, at a hearing through July.

Minister for State Owned Enterprises Tony Ryall said the government was considering the interim direction and would seek advice on the government's position. Ministers would also meet with Maori Party leadership "as we develop our respective positions," he said.

'Not implausible'

"Regardless of whether the claimants' evidence, in our deliberations and stage one report, is found to establish a connection between any Treaty rights in water and the sale of shares in the companies in question - and, further, whether such a connection establishes a Treaty breach on the part of the Crown - the claimants' position as put to us at this stage is not an implausible one," the Tribunal said.

"Where the Crown alters the nature of the shareholding of a Crown owned body utilising freshwater resources, it is in our view arguable that this may alter its ability, either in a legal or practical sense, to recognise any proven Treaty rights in such resources, or to remedy their breach," it said.

Read the full memorandum here.

Could the Crown remedy Treaty breach if shares sold?

The claims before the Tribunal were premised on the argument that to sell shares in the power-generating Mixed Ownership Model companies - Mighty River, Meridian and Genesis Energy - would compromise the Crown's ability to recognise Maori Treaty rights in water and remedy this prior breach, the Tribunal said.

"Clearly, were shares in one or more Mixed Ownership Model companies sold prior to the Tribunal's [September] report, the Crown would have limited its ability to address the report if the Tribunal finds in favour of the claimants," it said.

"We are aware that were the Tribunal to make recommendations in favour of the claimants in its stage one report, the Crown has stated that it could repurchase any shares sold in the Mixed Ownership Model companies. This is, however, only a partial factor in weighing the balance of convenience, as the shares, once sold, can only be repurchased from a willing seller and may require a prohibitively expensive outlay," the Tribunal said.

"The only other option available to the Crown, were it to wish to return the Mixed Ownership Model companies to full Crown ownership, would be to pass legislation compulsorily reacquiring the shares sold in the companies,' it said.

The sale of shares in Mixed Ownership Model companies could therefore cause a significant disadvantage to the claimants, were their claims to be determined to be well-founded by the Tribunal, it said.

But think of the Crown too

"The delay of an initial public offering of Mixed Ownership Model company shares would, however, have significant implications for the Crown. Crown counsel have stressed to us the complicated and detailed work involved in preparing a share float of this nature," the Tribunal said.

"They have also submitted that the sale of shares in the power-generating Mixed Ownership Model companies is a major policy initiative of the current government. That point is well made and accepted by us.

"The Tribunal must always take care in considering whether to direct that the Crown ought to delay a policy initiative, particularly one of this scale (and upon which budgetary considerations and other policy initiatives are dependant), to enable an as-yet-unproven claim to be heard and recommendations made," it said.

"The inconvenience to the Crown of a prolonged delay to the proposed share sale would clearly exist.

'May not delay things'

The timing of the proposed share float was an important factor in assessing the balance of convenience, and with the Tribunal planning to release its stage one report in September, it may be that in reality the Crown's planned share float may not be delayed at all (or might only be subject to a minimal delay), the Tribunal said.

"The Crown's witness, Mr John Crawford, Deputy Secretary of the Treasury, advised that the latest possible time for selling shares this year in the September-December slot is the first week in December," it said.

Wait for this:

State one of the report, to be released in September, would cover:

a) What rights and interests (if any) in water and geothermal resources were guaranteed and protected by the Treaty of Waitangi?

b) Does the sale of up to 49 per cent of shares in power-generating SOE companies affect the Crown's ability to recognise these rights and remedy their breach, where such breach is proven?

i) Before its sale of shares, ought the Crown to disclose the possibility of Tribunal resumption orders for memorialised land owned by the mixed ownership model power companies?

ii) Ought the Crown to disclose the possibility that share values could drop if the Tribunal upheld Maori claims to property rights in the water used by the mixed ownership model power companies?

c) Is such a removal of recognition and/or remedy in breach of the Treaty?

d) If so, what recommendations should be made as to a Treaty-compliant approach?

See the Tribunal's concluding remarks from its report below:

Conclusion

58. As previously stated, this is an issue of national importance. It is also an issue which has been before Maori and the Crown for a considerable time, a fact which is reflected in the previous Waitangi Tribunal reports on freshwater and geothermal issues and in the acknowledgments made by Maori and the Crown during the hearing of this claim.

59. In the interests of the Maori-Crown relationship, and all New Zealanders, the issues raised in this stage of the inquiry are serious ones that warrant measured consideration.

60. We also consider that the balance of convenience favours maintenance of the status quo.

61. We therefore conclude that the Crown ought not to commence the sale of shares in any of the Mixed Ownership Model companies until we have had the opportunity to complete our report on stage one of this inquiry and the Crown has had the opportunity to give this report, and any recommendations it contains, in-depth and considered examination.

62. Finally we consider the words of Cooke P in the Radio Frequency (No.1) case are apposite to this situation:

"In short I am driven to hold that no reasonable Minister, if he accepted that the Crown is bound to have regard to Waitangi Tribunal recommendations on Maori broadcasting, could do other than allow the Tribunal a reasonable time for carrying out its inquiry. To allocate frequencies without waiting would be to abort its inquiry and probably contrary also to the purpose of the Treaty of Waitangi Act 1975. It would deprive the Government of the day of the opportunity of taking into account in an effective way highly relevant considerations, namely the findings to be made by the Tribunal."