You can see the changes for yourself by reading the draft document from Treasury attached to this story.

An embarrassing blunder has revealed the Government's original intention to keep a crucial Treaty of Waitangi clause out of legislation required for state asset sales.

The information appeared in the draft of a key document that appeared on the Treasury's website yesterday for a few minutes before it was taken down.

The Government later released the final version of the document - a consultation paper on the law changes needed for the partial sale of four state-owned energy companies in preparation for consultation with iwi next week.

It sets out three options: using section 9 of the State-Owned Enterprises Act, which requires the Crown to act in accordance with the Treaty of Waitangi; use a more-specific clause; or have no clause at all.


But the draft that appeared on the Treasury's website included a list of the changes made since Tuesday morning - the day after the Maori Party first questioned whether the Government intended to include a clause protecting Treaty rights.

It showed the Government's original intention was not to include any Treaty clause at all in the new legislation covering the mixed-ownership model.

On Tuesday morning, a sentence was deleted which said the Government was yet to form a final view "but, on balance, favours no Treaty clause".

The reason for that preference - also deleted on Tuesday - was that applying either section 9 or a "new" Treaty clause to mixed-ownership companies "is not appropriate when its policy intent is for the companies to be treated like other private-sector companies: i.e. in a commercial framework".

The draft also revealed that the main "harm" the Government considered would come from using section 9 was that it would put off institutional investors. It said those investors would not understand it, which would "create uncertainty and have a negative effect on investment in the companies".

The last-minute changes illustrate the sensitivity around the issue, which came to a head on Tuesday after the Maori Party warned it would walk out on the Government if section 9 was not used for the companies tagged for asset sales.

In contrast to the draft document, that afternoon Prime Minister John Key said he was certain an "elegant solution" could be found and, although he did not favour section 9, a more specific Treaty clause was likely.

Yesterday, Finance Minister Bill English was asked what the Government's preference was. He would not say. He said the Government had to meet the standards the courts had set for consultation.

He indicated that a more-specific clause - specifying that only the Crown was bound by the Treaty - was most likely, although using section 9 remained a possibility.

Asked whether the document had undergone last-minute editing to please the Maori Party, Mr English said it was prepared over "a week or two" to ensure the arguments in it were clear.

He said the Maori Party was given it an hour before its public release but he had discussed the matter with Pita Sharples last week and on Tuesday.

The draft document shows other politically sensitive paragraphs were also deleted at the last minute - including references to the limited powers ministers would have over mixed-ownership-model companies, despite the Government's majority shareholding, and the aim of the policy being to run them as private firms.

On a smaller scale, a comment about "iwi leaders" was changed to "iwi". The reason given for the change was that it was "to avoid implication that Crown is consulting iwi elite".

The revelations in the draft document will do little to reassure the Maori Party. Co-leader Tariana Turia has questioned whether the consultation will be genuine, saying it would not be in good faith if the Government had already made up its mind.

The draft paper was removed from the Treasury's website within minutes and a spokesman for Mr English said he had not known it had gone on to the website until the Herald told him. Given the sensitivity of the material it uses, the Treasury is usually very careful about handling information.

Yesterday, Mr Key said he expected the issue of the Treaty clause to come up at Waitangi on Sunday.

He would raise it at Te Tii Marae himself to help address any "confusion and bamboozlement" caused by misinformation.

Meetings with iwi will begin next week and submissions close on February 22. The Government hopes to introduce legislation for the mixed-ownership model next month.

Taken out
* "The Government ... on balance, tends to favour no Treaty clause."
* "On balance, the Government tends to the view that continued application of section 9, or ... a new Treaty clause ... is not appropriate when its policy intent is for the companies to be treated like other private sector companies."
* "Ministers' powers ... will not be as great as the powers they have under the SOE Act ... This is part of the intent of the policy - to move the companies into a legislative and governance framework that will create a greater commercial focus to their operations."
* "In respect of institutional investors, section 9 will not be well understood ... and have a negative effect on investment ...

Put in
* "The Government is committed to meeting its Treaty of Waitangi obligations."
* "Certainty in expressing the Crown's Treaty obligations will help ensure the value of the taxpayers' investment and assist the sales process."