Prime Minister John Key yesterday raised for the first time the prospect of not repealing the Foreshore and Seabed Act at all if there is no agreement on what should replace it.
He voiced what he called a note of caution - "it is going to take realism on both sides" - that is thought to have been aimed at iwi leaders.
It suggests negotiations are about to get difficult.
Maori Affairs Minister Pita Sharples said he believed the policy was headed towards "a form of co-management".
But his Maori Party colleague Hone Harawira said Mr Key's words were "code" for not wanting to do anything meaningful.
Mr Key made his comment at Te Tii Marae just before meeting the Iwi Leadership Group (ILG), which the Government consults on major Maori issues.
The group is assuming greater importance because the Maori Party is seeking its agreement on some big issues, such as the emissions trading scheme and the foreshore and seabed, before it will consent to a compromise with National.
A formal review of the Foreshore and Seabed Act has been completed as promised in the confidence and supply agreement between National and the Maori Party. Mr Key said in November that a repeal of the act was "likely".
Yesterday, he said a solution was "potentially close".
"But we are at the point of all negotiations where we need to see if we can make progress.
"In the end there's always the options I outlined [on the marae], which is the legislation stays on the books as it is, or there is a repeal and full access to the courts. But I think there is a better way through for the majority of circumstances."
Dr Sharples said Maori did not have a concept of ownership but wanted guardianship or kaitiakitanga.
Mr Key met the ILG at Haruru Falls near Waitangi but iwi leaders would not comment afterwards.
Meanwhile, the PM has been made aware of a poll suggesting restoring access to the courts for iwi seeking customary title to the foreshore and seabed is the only option that would satisfy both Maori and Pakeha.
The poll, commissioned by the Exceltium lobbying company run by National-linked commentator Matthew Hooton, was conducted by Curia, which does polling for National.
An Exceltium paper criticises the secrecy with which negotiations are being conducted.
Foreshore act could be kept, says Key
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