Friday, February 10, 2012

Iwi, water, and privatisation

So, what's the reason for the iwi objections to the government's plans to part-privatise state-owned enterprises? It comes down to one thing: water. While John Key is technically correct in saying that no-one owns water, people do own rights to extract and use it, which is the same thing in practical terms. Those rights are crucial to various industries (hydro-electricity generation and dairy farming are two obvious examples), and therefore very valuable.

They are also stolen property. On this, Māori have a cast-iron case. They used the rivers in 1840, establishing at the minimum usufructory rights, if not outright ownership (depending on what Māori custom said at the time). Unless extinguished, those rights persist under the doctrine of aboriginal title, in the same way that your ownership of your house survives a change of government. If extinguished - which is almost certainly the case given the large amount of legislation dealing with water use over the years - then that is a breach of Article Two of the Treaty of Waitangi, which guaranteed Māori tino rangtiratanga over their lands, villages, and other treasures.

The Treaty having been breached, redress is due. The problem is that part-privatisation will remove the most effective means of that redress - the transfer of crown-owned water rights vested for the time being in energy companies - and therefore prevent any effective compensation.

(Arguably, the same happened in 1999 when some South Island hydro assets were sold as part of Contact Energy - but that affected a single river, not the entire country).

There's a clear parallel here to the New Zealand Māori Council v. Attorney-General (1987). In that case, the crown was going to transfer land which was potentially the subject of Treaty claims to the newly-created SOEs, which might then be sold. The courts rightly said that that wasn't on unless the crown took steps to preserve its ability to meet claims. I have no doubt that if a case is taken, the courts will follow that precedent and deliver the same ruling (backed, if the legislation takes the expected form, and is passed in time, by an order prohibiting any asset transfers). Which puts the Māori Council in a good position to negotiate a settlement. The only question is what that settlement will be.

One option is a part share in the SOEs. Which of course blows the government's case for sale out of the water. Another is the enactment of similar clauses to the existing sections 27 - 27D, which protect Māori interests in transferred land, and allow for the Waitangi Tribunal to order its return. That too would blow the government's case for sale out of the water; either it would have to accept lower prices to reflect its uncertain title, or it would have to indemnify purchasers against "Treaty risk" (or both). Either way, suddenly privatisation looks like an even worse deal...

I should add that this issue was bound to come up. The pressures over water use in some areas (particularly the South Island) have been pushing the government towards new legislation in that area, and the favoured mechanism, advocated by the natural resources ministries (DoC, MfE, MAF, TPK, MED and LINZ), the Land and Water Forum, and just about anybody else who has looked at the issue, is for a system of tradeable water rights. Which would raise exactly the same issues as are being raised now (which is why all of those agencies are clear on the need to sort matters with iwi first). National's enthusiasm for privatisation has meant that we're facing the issue earlier than expected - and without the easy settlement option such tradeable rights would provide.