John Armstrong: Water rights remain political hot potato

5:30 AM Saturday Mar 2, 2013

Although it takes some swallowing, the Prime Minister's insistence that there was no plan B had the Supreme Court blocked the part-sale of Mighty River Power has to be taken at face value.

The reason? Had the court ruled against the Government, it is hard to envisage how National could have saved its flagship partial asset sales policy without creating a great deal of strife for itself.

As things stand, National has emerged seemingly triumphant from the Maori Council's last-gasp resort to the legal process to try to halt the Government's privatisation plans.

Last Wednesday's unanimous rejection by the Supreme Court of the Maori Council's arguments has if anything reinforced National's mandate to float up to 49 per cent of the Government's 100 per cent shareholding in Mighty River Power and the two other state-owned power generators, Meridian and Genesis.

For once, National had something to truly rejoice about. The Government can now get on with finalising the details of the first float impeded only by the talk of an Opposition-instigated referendum whose real purpose is to destroy National's argument that the last election gave it a mandate for privatisation rather than stopping the sell-offs themselves. The plebiscite will be held too late for the latter to happen. National will anyway ignore what is almost certain to be an adverse outcome.

Another matter lingers, however. Crown assurances to the court that Maori rights and interests in water have been acknowledged by the Government plus the court's view that those assurances suggest the Government has indeed accepted that there is a need for action may yet cause National severe political grief.

National's absolute priority, however, was victory in the Supreme Court. That was not just because defeat would have been a massive blow to National's morale. It is also the case that there was not a lot National could have done to remedy a reversal in the Supreme Court.

Smart politicians always have a fall-back position in case of defeat on some issue. And John Key, his advisers and the senior ministers in his kitchen Cabinet are smart operators. No doubt they mulled over some sort of contingency plan to cope with the highest court in the land siding with the Maori Council - and then just as quickly rejected having one. The options would have been too unpalatable.

One of those would have been to legislate to overturn the court's decision. That might have gone down well in some quarters of the National Party. But National is very much on the wrong side of public opinion when it comes to privatisation.

Emergency legislation overturning a Supreme Court decision would not only have raised constitutional questions. Such a measure would have been viewed by the wider public as going right over-the-top, utterly selfish and self-serving, and tantamount to bullying.

It would thus have considerably weakened National's strong argument that it has an electoral mandate to sell shares in the three state-owned power generators.

It would have put probably fatal strain on the Maori Party's relationship with National - which is why National assured the Maori Party some time ago that it would not so legislate. Emergency legislation would have placed United Future's Peter Dunne, who has been lukewarm about asset sales, in an invidious position, and more so if National then made the bill's passage through Parliament a confidence matter.

The governing party might have even failed to secure the necessary numbers to rush a measure through the House.

That would have raised serious questions about whether National had the confidence of Parliament to continue as a minority Government.

By that stage the rumour mill would have been overheating with ugly talk of an early election.

Less risky, but equally unsatisfactory and more humiliating would have been National haggling with the Maori Council and affected iwi over how much the latter should make from the proceeds of the sell-offs of shares in exchange for no longer blocking those floats.

That would not have gone down well within the National Party along with a wider audience which would resent being captive to Maori.

The remaining option would have been simply to do nothing. That would have had Opposition parties claiming a substantial victory in their long-running fight against asset sales.

Little wonder then that Key's usual sunny disposition was even merrier following the Supreme Court's ruling. A lot more had been at stake than might have appeared to be the case.

But a lot more remains at stake on what could become a vexed issue for National - Maori control, management and ownership of water rights.

There had not been much doubt the Supreme Court would rule in National's favour. But nearly three decades of judicial activism on Treaty of Waitangi matters was enough to keep alive in Government minds the albeit slim possibility that they might lose the case.

To lessen the chances even further of that happening, the Cabinet adopted a belt-and-braces defence of the Crown's position that transferring the power generating companies from the state-owned enterprises model to the part-privatised mixed ownership model would not impair Maori when it came to rights and interests in water and geothermal resources.

Bill English, who as Deputy Prime Minister took charge of the Government's handling of the case, told the court that recognition of those rights might encompass Maori making the decisions on the care of those resources and charges or rentals for their use. He did not spell out whether iwi alone would make those decisions, but that is the interpretation Maori will take from the affidavits he and other ministers filed with the court.

Maori might have been disappointed the court case has not settled questions about access, management, ownership and control of water to their advantage.

But there is no question that the court has made it pretty clear such rights not only exist, they will be formalised in Cabinet decisions once the various ongoing reviews of water rights have been completed.

That may well come as a shock to many people. As water is a fundamental of life, it would not take much to turn questions of access and ownership into a red-hot issue. National has accordingly deliberately kept the question of water rights as far below the political radar as possible.

Labour's desire to win back the Maori seats makes it impossible for that party to exploit the issue. Likewise the Greens will not want to play in that kind of territory.

No surprises then that NZ First is not displaying similar reticence. Winston Peters last year claimed the Government's consultation with Maori over water rights had left Key "with his hands in a wasps' nest of his own making". No doubt Peters will do his best to make sure in coming months that the Prime Minister gets badly stung.