Sep 4, 2012

What the asset sales delay means for Maori

As the dust settles, the government’s decision to delay is looking less and less attractive. Only affected iwi will be consulted, meaning a pan-Maori solution has been rejected, the shares-plus idea has been rejected and the Cabinet have unilaterally imposed a tiny consultation period. So for iwi who are not Waikato-Tainui, this is a loss.

What the delay means for Maori

Well, we are no closer to establishing what rights and interests Maori have and how far those rights and interests extend. The Waitangi Tribunal have given us a guide, but the rejection of a pan-Maori solution means we will not receive a definitive statement.

A pan-Maori settlement would have clarified what rights and interests we have and how they should be compensated. However, an iwi by iwi approach is a buy-off process for the government. The government will, iwi by iwi, purchase their complicity.

Essentially, it’s divide and rule. The government will drive a wedge between iwi. On one end, the government will co-opt iwi who are affected by the sale of Mighty River Power, including the powerful Waikato-Tainui, while on the other end the government will marginalise iwi who are not affected. Those iwi that stand to drive a deal, think Waikato-Tainui, will then apply pressure on other iwi to drop their opposition. In effect, those iwi who are co-opted will be doing the government’s work for them.

It’s all very clever, pats on the back all round, but none of this will prevent the Maori Council filing Court action.

The legal position

The government’s decision to delay and consult is also a move to mitigate the legal risk. The Court will look more favourably on a government that appears to be acting in good faith. It’s no coincidence that the word “good faith” is repeated ad nauseam. However, the government is wrong in thinking that the appearance of good faith will insulate them against a negative Court judgment. The government’s solution, even if proven that it was conceived and implemented in good faith, is still a breach of the principles of the Treaty.

The central question, however, will be whether or not Maori have an ownership interest in water. The Waitangi Tribunal’s report answers in the positive, quite emphatically too. Even if the Court finds Maori have interests less than ownership, there are strong grounds to argue a breach of the Treaty.

After all, the Crown is under a duty to “actively protect” Maori property rights, management rights and our relationship with our taonga. To quote Cooke P, as he then was, this obligation is not “passive but extends to the active protection of the Maori people in the use of their lands and waters to the fullest extent practicable”. The government, it can be argued, has undermined Maori rights rather than actively protect.

Should the issue reach Court, and that seems likely with the government rejecting a pan-Maori solution, then Maori have a better than even chance at establishing ownership rights and solid case for establishing a breach.

The politics of the issue

The politics is chaotic. The referendum opposing the sales will gather enough signatures in the next few weeks. The signatures will be verified and that will trigger a referendum that must be held within the year. The government, however, will not be stupid enough to schedule the referendum before the sale of Mighty River Power.

However, what complicates opposition to asset sales is opposition to Maori rights. Arguably, opposition to the latter is stronger than opposition to the former. Therefore, any deal that Maori sees Maori gain a slice of MRP would increase opposition against the sales.

Most New Zealanders also see asset sales for the train wreck that it is. History, I think, will not look favourably on this government’s political management. There are further bumps to come. Court action, further tension with the Maori Party and so on. Whatever way you look at it, this isn’t going to be a clean.

What happens now?

The government will undertake a 5 week consultation period with iwi affected. Although the Prime Minister has stated that shares-plus is not favoured, Chris Finlayson has indicated if iwi can make a strong case for shares-plus then the government will listen. The shares-plus option could include golden shares, a board position(s), a place in the constitution of the company and so on. I can almost assure you that Waikato-Tainui will take the deal – they’ll do what’s in their commercial interests – while the smaller and in some cases pre-settlement iwi will bow to the pressure to do the same.

The Maori Council is the unknown quantity in this equation. The government and the Maori Party will meet with the Council. The next step, assuming the government and Maori Party cannot placate the Council, will be Court action. More iwi, I predict, would join the action too. Court action, even if the government wins, is the worst possible outcome. An injunction would operate while the issue is before the Courts, and it could be before the Courts until 2014, meaning that an injunction rather than an unfavourable judgment would derail asset sales. Whatever way you look at it, this isn't going to be clean. 

More to come as the issue progresses. 


  1. To start with I fail to see how the mixed ownership model breaches the treaty. All that is happening is that a minority of the shares in one company are being sold and have their ownership will change. Contact energy was sold in 1998 or 1999, with 100%, not just 49% of the shares being sold. I don't know too much details, as it owns the hydro dams on the Clutha River would raise the same water rights issues as Mighty River Power. I don't know the details of how the treaty issues around the sale of Contact Energy were resolved, but can't the same solution be used for Mighty River Power? And also it would show this isn't some new issue, the issue also presumably came up 13 years ago (asuming the treaty issue is based on genuine concerns, not as a weapon to hurt the government or get money).

    I can understand the concept of maori having some water rights in some circumstances, such as if a river became so badly polluted that an iwi could no longer use their traditional fishing grounds in the river. Arguably building the dams in the first place may have been a breach or the treaty, but I can not imagine a future government demolishing the dams to rectify the breach. All that the asset sales will do is change the ownership of some shares of a company owning some dams (and geothermal interests). It will not a change a thing regarding the water in the waters, namely the dams will still exist, the same amount of water from the river will be used to produce power e.t.c., so in that aspect nothing changes

    1. Hi Nicholas,

      It's not the mixed ownership model that breaches the Treaty, it's the government's conduct. And yes, this isn't a new issue. The first water claim, if we can use that terminology, was lodged in the early part of last century. What separates this claim from previous claims is the commercial aspect. The government is looking to privatise the benefit from the commercial use of water. Many iwi and the Maori Council reason that if the government is going to cease using water resources solely for the public good, then Maori should be compensated for the breach and use of their rights to water.

  2. I think I'm right also in saying that Contact Energy is watching this all very carefully. One thing all the hydro generators fear is the impact of a "water tax" of any kind on their profitability, given their current relative inability to raise tariffs.

  3. Hi Morgan: Why do you say Waikato -Tainui is a powerful tribe & in what way? Why do you say it will take the commercial deal? What is the commercial deal - how is it in their commercial interests – while the smaller and in some cases pre-settlement iwi will bow to the pressure to do the same. But waikato tainui are now promoting themselvs as saviours to the other iwi. Tainui is broke it has less than $7m in the bank. Is that why you are saying they will take the deal? We have no been asked - Thx Margie & Tony - Kawhia

    1. Kia ora guys,

      Although in-debted, Waikato-Tainui have significant economic and political leverage. The tribe has assets worth over $700m, including many strategic assets, a stake in local and central government and professional structures including Te Arataura and Te Kauhanganui. Ngai Tahu are the only iwi who come close in terms of economic and political power.

      The deal that has been mooted is the shares-plus idea. This deal will include shares and an added bonus if I can use that term. The bonus could include golden shares, a board position or positions, a place in the constitution of the company and so on.

  4. There is an interesting dynamic here that parallels the waitangi tribunal's history - a movement from a broad-based, popular demand to narrower economic interests. The process is much faster though.
    Just as Labour's establishment of the Tribunal with its present powers in 1985 was the result of a broad-based pan-Maori movement that enjoyed support from Labour's Pakeha base, the ability of Maori to use the treaty to stop asset sales was initially welcomed by the liberal left.
    Just as the treaty settlements gradually pitted iwi against iwi and hapu against hapu, and were skilfully used by National in the 1990s to divide Maori from Pakeha, so too the water rights claim has devolved (much more rapidly, in a matter of days, not years) into an issue that divides iwi, and Maori and Pakeha.
    The reason for this is that private property rights are the cornerstone of the legal/economic model that has been sold to iwi. The only way, or at least the clearest way, to assert rights under this model is to assert private property rights, which simultaneously means to assert that the water (in this case) is a commodity.
    So the treaty process (in response to pressure from grassroots Maori, and to a lesser extent, Pakeha) has returned some assets to Maori, but it has simultaneously turned them into commodities.
    The development of iwi corporates to take care of these assets has reconfigured the relationships between iwi, pitting them against each other (and all other private companies) in the marketplace. So while the Key Govt may be playing divide and rule, there are structures within Maoridom now that make that the obvious game to play.
    By the way, I'm not opposed to treaty settlements. As I mentioned above they have been won by pressure from below, and even if they haven't done much for ordinary Maori whanau, I disagree with the way some leftists put Maori poverty and iwi wealth together and suggest a causal relationship. I can't see that. The Affco intervention was really interesting too.
    I'm a member of the international socialists organisation and the Mana Party.

  5. Hi Morgan, Why do you an other commentators keep saying that Waikato Tainui are the only tribe that has anything to do with the Waikato River? There are 4 other iwi invovled, including Te Arawa, Ngati Maniapoto, Ngati Raukawa, and Tuwharetoa.
    Already due to government maniplulation hapu and iwi bordering the Waikato and lake Taupo have had the paternalistic government policy that impedes their ability to use, or make a living on their resources. For example Ngati Maniapoto has had half their share Lake Taupo stolen by government policy through the development of the Lakes Trust, and a large part of Kinloch taken as well.

    1. Kia ora anon,

      I'm aware that there are other iwi and hapu affected, but for brevity I have left them out. Waikato-Tainui is, arguably, the biggest player so I thought I should cover them. I'm interested in the korero around the Lakes Trust? It always struck me as odd, a never knew Te Arawa had an interest in the Lake Taupo and parts of the Waikato.

  6. Bruce Bevin September 5, 2012 1:40PM I think a Hui hosted by Waikato Tainui as invited by the Maori king to all concerned is a good idea as it allows all Maori to have a say and to Pre-empt and Pre-judge before it even happens is very divisive, why not go and see how it turns out?



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