Future changes to water regulation are "well heralded", could be significant, but would not be affected by partial sale of assets, Crown lawyers have told the Supreme Court.
New Zealand's highest court is hearing a bid by the Maori Council to delay the partial-sale of a series of state-owned enterprises, at least until the issue of proprietary rights to water and geothermal resources are settled.
The Government is planning to kick off the so-called "mixed-ownership model" programme by selling up to 49 per cent of Mighty River Power before the end of June.
Crown lawyer David Goddard QC told the court in Wellington today the Crown remained committed to resolving the open question of Maori rights to water and geothermal resources.
The fact that regulation could change in the use of, and charges for, water, had been well-signalled and the market would be aware of it when considering buying shares in the companies.
"It is absolutely up in lights, it is well-heralded, that the terms on which entitlements to use water are conferred under the Resource Management Act are the subject of a current review, and it is possible that, therefore, there will be significant changes to the management regime and to the costs associated with the use of water," Goddard told the court.
Chief Justice Dame Sian Elias asked whether this meant the mixed-ownership companies would be valued on the basis of 35-year resource consents, if they came to be partially privatised.
Goddard said valuations would have to be based on existing consents and would include "downside scenarios" which could include changes to regulation within the time period of the existing consent.
The challenge was akin to valuing forestry assets under changes to the emissions trading scheme.
A disclosure would likely have to appear in the company prospectus laying out the risks associated with water-use rights, noting "terms up for grabs, renewals up for grabs".
Yesterday Colin Carruthers QC, for the Maori Council, told the court that the ability of the Crown to address Maori claims to water and geothermal resources would be limited once third-party interests were introduced to the companies.
He said that while the Crown said it acknowledged Maori had some proprietary rights to water and geothermal resources, the reality was the policy was to not recognise claims to water ownership on the basis of the incompatibility with New Zealand law.
In December the High Court rejected a bid by the council and other Maori groups to halt the sales process.
Judge Ronald Young found that decisions made by Cabinet which would allow the Government to sell up to 49 per cent of a series of state-owned enterprises was carrying out the will of Parliament, and therefore could not be reviewed by the courts.
The appeal bypassed the Court of Appeal to the Supreme Court so as to fit within the Crown's timetable for the sales.
The hearings are due to conclude this afternoon.