Settle doubts over water rights, PM told

John Key. Photo / David White.

Experts on the economy and free trade have warned that Prime Minister John Key's comments about Maori water rights will come back to bite him if he does not resolve those rights before embarking on asset sales.

The Waitangi Tribunal is meeting in Lower Hutt this week to hear urgent claims by the Maori Council and some iwi that seek to put partial asset sales on hold until Maori claims over fresh water rights and geothermal resources are determined.

At the hearing yesterday, Berl economist Ganesh Nana said water was significant for the energy companies and was free - but if redress, such as compensation or charges for its use, were required later to recognise Maori rights it could significantly add to the companies' costs.

"The Crown needs to ensure the uncertainty around water rights or remedies is minimised if the share sale is to be a success because uncertainty is the last thing investors need and this is a significant uncertainty."

Free trade expert Professor Jane Kelsey, of Auckland University, said if subsequent decisions on water rights drove down the share price or dividends of the energy companies, they could claim the Government had undermined their investment and breached obligations to them under international investment agreements.

She also warned that Mr Key's statements about water rights and Treaty issues could be used against him in such a situation because investors could claim they had relied on such assurances.

Ms Kelsey said if it went ahead with the sales now, it might later have to weigh up whose interests it put first: either iwi or the investors - and the threat of investor action could deter the Government from siding with iwi.

"So it's absolutely essential it deals with the matter now."

Mr Key said a change in the ownership of companies which used water would alter nothing because the Government's view was that nobody owned water - and he expected that view to be upheld.

"And if that view was changed by the courts and upheld then that would have a big impact on every business, irrelevant of what their ownership is."

"There are some Maori that believe they own water ... [and] there are also Maori that believe they own the air and there's Maori that believe they own the geothermal assets. I would dispute those and the Government's view is that no one owns water."

His comments have been interpreted as dismissive of the tribunal and have sparked anger from the Maori Party co-leaders, Dr Pita Sharples and Tariana Turia.

Mr Key said he expected to meet them next week and said he was confident the Maori Party would not walk away from National because he was simply stating the law.

However, anger about Mr Key's comments continued at the tribunal hearings yesterday. Ngati Ruapani lawyer Kathy Ertel said she had represented Maori in front of the tribunal for nearly 20 years.

"In that time I have never known the Crown to be so disrespectful, so misleading and so lacking in good faith as they have in this inquiry."

She said it was "an extraordinary situation" where the Prime Minister was making such comments while a judicial body was in the middle of a hearing.

"We are here talking as a Treaty partner. Never before have I been so embarrassed and disgraced by my Crown, by our Crown, as in the way they have conducted themselves in the matter."

AUSTRALIAN LISTING PLAYED DOWN

Prime Minister John Key has confirmed the Government is considering listing Mighty River Power on the Australian Stock Exchange, but denies it will result in more overseas shareholders.

Mr Key said no decision had yet been made on whether to list Mighty River Power on the Australian Stock Exchange as well as the New Zealand Stock Exchange when the Government puts up to 49 per cent of the company up for sale this year.

However, he said eight of the 10 biggest New Zealand companies were also on the Australian stock exchange and Treasury was providing advice on whether the same should apply for the state-owned enterprises.

He said it did not mean more overseas buyers were likely to buy into the SOEs. "It's irrelevant really where a stock is listed. Ultimately the liquidity is almost certainly going to be on the New Zealand exchange."

The Government is considering loyalty schemes to ensure New Zealand shareholders retain their shares.

Mr Key said he could not comment on whether listing on the Australian exchange would give a better return to taxpayers.