Tuesday, October 16, 2012

The sale of shares in MRP and the Crown's ability to recognise Māori rights

Yesterday, the Prime Minister announced the next steps to for the partial privatization of Mighty River Power. This decision appears to be based on the Government’s position that in common law no one owns water, that Māori rights and interests are being addressed through other fora, and that the Crown’s ability to provide redress is not affected by the sale of shares in Mighty River Power.  Let’s consider each of these points.

In common law no one owns water.
It is arguable that this oversimplifies the common law position as well as misrepresenting the nature of the claim, but in any case, this is somewhat beside the point.  From a Treaty of Waitangi perspective, the key question is what rights were guaranteed by the Treaty, not what rights were recognized by the common law.  As the Tribunal pointed out:
“…Māori citizens were guaranteed the property they possessed in 1840.  That right of property was not constrained by what could be legally owned in England.  Rather it depended on what Māori possessed at the time in custom and in fact.”

Maori do have rights and interests in water, and these will continue to be addressed through a range of processes such as Treaty settlements, the Government’s Fresh Start for Fresh Water programme and dialogue with iwi leaders.
The Waitangi Tribunal explained in its 2011 report on the Wai 262 inquiry – Ko Aotearoa Tēnei – that delivering exclusive or shared decision-making powers to Māori in relation to water bodies does not depend on historical breaches of Treaty principles and Māori ought not to be made to expend the potential of their Treaty settlement packages on having these rights and interests recognized.
And when the Tribunal granted an urgent hearing of this claim it found that dialogue with iwi leaders was not an alternative remedy for the claimants because the claimant, the Māori Council was not a party to that dialogue.  In any case, that dialogue appeared to be proceeding on the basis that Māori rights would not be affected by the outcomes of freshwater management reforms, whereas the claimants argued that Māori rights in water needed to be defined before any effects on them could be considered.

The partial sale of Mighty River Power does not impact on the Crown’s ability to recognise Maori rights and interests in water
Underlying this statement is the Government’s rejection of the ‘shares plus’ concept outlined in the Waitangi Tribunal’s interim report.  The Prime Minister’s statement says:
Financial redress and input into resource management decisions can be provided in other – and in some cases better – ways. 
Appointing directors and exercising shareholder voting rights can also be achieved in other ways with the Crown, which will remain the controlling shareholder. 
The Crown does not believe that providing iwi with special rights in making management decisions will work well and most submitters who considered the idea agreed. 
‘Shares plus’ would create a potential conflict of interest within and between different iwi groups. And it would potentially weaken existing relationships between iwi groups and the SOEs.
Whereas, the Tribunal found that:
“…a commercial option for rights recognition or redress (where recognition is not possible) is essential.  That commercial option or options should, as far as possible, provide for the Māori development right.” 
“In our view, the Crown is correct that it will still be able to provide many such options after the sale of shares in the MOM companies.  We think that the claimants’ evidence has shown that it will be significantly more difficult for the Crown to do so once it has introduced thousands of ‘mum and dad’ investors into the political mix.  We suspect that the Crown’s evidence underestimated the political obstacle that these new interests will put in the way of a tax, levy, royalty, or resource rental for the use of water to generate electricity.” 
“But there is one area in which the Crown will not be able to provide appropriate rights recognition or redress after the partial privatization, and that is in the area that we have termed ‘shares plus’: the provision of shares or special classes of shares which, in conjunction with amended company constitutions and shareholders’ agreements, could provide Māori with a meaningful form of commercial rights recognition.  As we have found, ‘shares plus’ are not ‘fungible’ and company law would in practical terms prevent the Crown from providing this form of rights recognition after the introduction of private shareholdings, certainly after the sale of more than 25 per cent of shares and arguably before that too.”
Well, I expect we will soon see what the courts think about this issue.  In the meantime, we know that the Waitangi Tribunal, having heard evidence from expert witnesses presented by the Crown and claimants, came to the considered view that the sale of Mighty River Power will have an impact on the Crown’s ability to recognise Māori rights and interests in water bodies.