Editorial: Mighty River court ruling strikes right balance

5:29 AM Thursday Feb 28, 2013

The Government will be mightily relieved at the Supreme Court's ruling yesterday. It can proceed with the sale of shares in Mighty River Power in good faith that the rights and role of Maori in the administration of New Zealand's fresh and geothermal water will be settled in other forums.

The decision is an admirable balance of principle and realism. Without diminishing the underlying claims to the water, the court has concluded those claims would not be damaged by a change in the ownership of assets that generate electricity. The court has noted there are already two substantial power-generating companies in private ownership, Contact Energy and Trust Power.

"Any proposal to impose royalties (for water use) would be likely to attract opposition from [their] shareholders as well as the Crown and the public at large," it says. "The introduction of private shareholders in mixed-ownership companies would thus not have a material effect on the level of opposition."

While the court agrees that the transfer of water permits to Maori could not be contemplated after privatisation, since it would expropriate value in the company from private shareholders, the court finds it "implausible" that water would be withheld from an electricity generating plant in any event.

The judges have taken particular note of Treaty settlements that give Maori a voice in the management and care of water flowing through their tribal territory, and of the Government's undertaking to recognise Maori interests in a more general reform of the ways that water rights might be awarded and traded in future.

The Maori Council's urgent challenge to the float of Mighty River Power has forced the Crown to accept for the purposes of argument that Maori have rights equivalent to ownership of water, and that partial privatisation of power companies would not affect the Government's ability to recognise those rights.

Now that the case has been decided, it is time to put the horse back in front of the cart. The primary claim has yet to be heard by the Waitangi Tribunal.

The tribunal separated the council's challenge into the immediate issue of the Mighty River Power sale and the general question of Treaty rights. It will now consider the second part of the case. There is not much doubt what it will decide. The Supreme Court notes that the tribunal has already accepted claims such as Tainui's to the Waikato as being "in the nature of ownership" and rejected the idea that those rights were satisfied by a guardianship role.

While the Government has won the day on its asset sales programme, there will be many more days of dispute over water claims.

But this was a comprehensive defeat for the Maori Council on all points of its challenge to the share float. The Supreme Court has largely endorsed the Government's reasons for rejecting the "shares plus" proposal and finds nothing wrong with the way it went about consulting iwi last year.

Perhaps the most important element of the Supreme Court's decision is its acceptance of the Crown argument that the courts should ensure there is not "an unwarrantable intrusion into the function of Parliament".

The Treaty did not only recognise Maori property rights, it invested power of government in the Crown.

Lord Cooke, in his "landmark" ruling on the implications of state-owned enterprise, said both parties to the Treaty must acknowledge the sphere of the other. This decision endorses the Government's right to constitute electricity assets as it thinks best. This one could be a landmark too.