Editorial: Nats lose a water right fight

Maori Council 1, John Key 0. The prime minister would have us believe otherwise, but no amount of bravado on his part can disguise the fact that Cabinet's decision to delay the partial privatisation of Mighty River Power represents a victory for the Maori Council and a defeat for him.

The prime minister who assured the public that "no-one owns the water" has effectively been forced to concede that while no-one owns the water, Maori may be entitled to a say in how it is used and, possibly, financial compensation for lost development opportunities.

Mr Key doubts the "shares plus" package proposed by the Waitangi Tribunal will work. Under the package iwi that can demonstrate "residual proprietary rights" over the water used to turn Mighty River's turbines would receive shares in the floated company plus a say in the operation of the business. Mr Key says adopting the tribunal's recommendations would reduce the value of the shares sold to non-Maori and bring the company into conflict with established law.

However, the mere fact Cabinet has set aside five weeks for consultation over a proposal with which it so vehemently disagrees suggests it has received legal advice that the Government's position is not as clear-cut as the prime minister led the country to believe. If that is the case, Mr Key and his ministers are guilty of a grave error of judgment.

As everybody who has sold a vehicle or property knows, it is essential to be able to demonstrate ownership before offering it for sale. In this instance, the Government appears to have announced its intention to partially sell Mighty River Power and fellow state electricity generators Meridian and Genesis Energy without first considering the consequence of long-standing Maori water rights claims.

The postponement of the float from this month to next March gives the Government an opportunity to resolve the issue through direct negotiation with the eight iwi affected by the Mighty River sale. But if the negotiations fail, the country faces the prospect of a costly, protracted legal battle, rancorous protest and a reduced dividend from the sale of a valuable asset.

Shares in the company will not attract the same premium if the Government is forced to alert prospective investors to the possibility of Maori gaining the right to charge royalties for the use of the water the company at present gets for free. Nor will non-Maori investors take kindly to the idea of being second-class shareholders. Not for the first time, the prime minister has embarked upon a course of action without first assessing the potential pitfalls as well as the opportunities.

The cost of the abandoned preparations for this year's float has been put at $5 million to $10m. As the claim lodged yesterday by Hawke's Bay's Ngati Kahungunu to the country's second largest aquifer demonstrates, the long-term costs will be exponentially greater. The Government has shifted Maori water rights claims to the centre of the political stage. Dealing with them will prove difficult and time-consuming.

The Dominion Post