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 Prof 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.
She said if the Government went ahead with the sales now, it might later have to weigh up whose interests it would 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," Mr Key said.
"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." Counsel for Ngati Ruapani, Kathy Ertel, 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," she said.
