Mai Chen: Section 9: Why it matters for asset sales

A crowd gather on Taupiri Mountain to pay their respects to Te Arikinui Dame Te Atairangikaahu. Photo / NZPA

Whether the Government decides to remove section 9 of the State Owned Enterprises Act when establishing four new mixed-ownership companies matters because it directly taps into the much bigger debate around Maori constitutional aspirations for the Treaty of Waitangi and the status of Treaty principles.

Many Maori want the Treaty's constitutional status to be changed so it applies to everything the Crown does, whether the Treaty is directly incorporated into statute by Parliament or not.

At present, the Treaty is not directly enforceable in New Zealand courts unless incorporated into domestic law.

In the absence of a "Treaty clause" incorporating Treaty principles into legislation, Maori must rely on the presumption that judges will interpret statutes consistently with Treaty principles, where possible, or on customary rights (the existence of which is difficult to prove: think foreshore and seabed). So not including a section 9 clause in legislation establishing the four new mixed-ownership entities will be viewed by most Maori as a backwards step.

In many ways, the rise of the Treaty and of iwi in modern New Zealand can be traced back to section 9. There is an important history of Treaty-rights litigation brought under section 9 of the SOE Act, which has put the Treaty of Waitangi centre stage:

* In the seminal 1987 Lands case, the Court of Appeal held that section 9 amounted to a "constitutional guarantee" to Maori, which restricted the Crown from going through with the wholesale transfer of Crown lands and assets. The Lands case resulted in the Treaty of Waitangi (State Enterprises) Act 1988 which gave the Waitangi Tribunal binding powers to recommend that land that had been transferred to SOEs be transferred back to Maori (it is these "clawback" provisions the Government has said will apply to mixed ownership model companies).

* In the Coal case, the Court of Appeal held that mining rights were "an interest in land" for the purposes of section 9, requiring the Crown to devise a scheme for safeguarding Tainui against the sell-off of Crown land; and

* In the Broadcasting Assets case, the Privy Council held that section 9 imposes a continuing obligation on the Crown to take reasonable steps to assist in the preservation of the Maori language by the use of both radio and television broadcasting, and an obligation of active protection where the Crown's actions resulted in the vulnerable state of the language. This decision was central to the creation of Maori Television.

Section 9 also began an incremental but significant constitutional change in New Zealand because successive governments enacted legislation which requires public decision-makers to consider or give effect to the "principles" of the Treaty of Waitangi.

The problem for the Crown is that it wants to maximise the value of the sale of the minority stake in the SOEs earmarked for sale, and it must act in the best interest of the company to do so.

Its Treaty obligations may be contrary to that.

Certainly, the Air New Zealand model being applied, as set out in the Speech from the Throne, has no Treaty clause, and although the company has been subject to financial review by Parliament's select committees, the Government has been largely hands-off.

But Waitangi Day is coming, and the Constitutional Review, negotiated as part of the Maori Party's 2008 confidence and supply agreement with National, will embark this year on consulting with the public on constitutional issues including the role of the Treaty of Waitangi in New Zealand's constitutional arrangements.

Thus, the consultation the Government is now starting with iwi and hapu about the movement to mixed ownership could impact on the constitutional status of the Treaty.

The consultation could result in calls from Maori for a general Treaty clause applying to all branches of government (this could be written into the Bill of Rights Act or the Constitution Act 1986, for example).

This would require public decision-makers, and judges, to promote and protect the Treaty and give it meaning where possible, subject only to clear legislation to the contrary, irrespective of the existence of specific clauses like section 9.

Such a move would herald a new development in the Maori/Crown relationship, but we will know how far the Crown is prepared to go only when the mixed ownership model legislation is introduced.

Mai Chen, Chen Palmer Palmer, Adjunct Professor University of Auckland Business School, and author of the Public Law Toolbox, forthcoming in March 2012.