Asset sales prospectus will consider water rights, court told
Allowing for some contigency tweaking, the government still expects to make between $5 and $7 billion from its asset sale process to spend on schools, hospitals, roads and rail.
The sale would also "strengthen the stock exchange and improve public scrutiny of the companies through the constant reporting process", Crown lawyer David Goddard QC told the Supreme Court in Wellington today.
"Presumably, any investor prospectus would have to point out all possible outcomes," Justice Robert Chambers asked Mr Goddard at today's water rights hearing.
The Maori Council is attempting to halt the government's planned partial asset sales.
Subject to the court case, the government plans to sell up to 49% of Mighty River Power in the first half of the year.
It has signed an order-in-council to transfer the state-owned enterprises into a mixed ownership model (MOM) act.
"Any investor prospectus will need to disclose all information. One of the disclosures will be the time period of water-use consent and the risk associated with reapplying for another consent at the end of the 35-year period," Mr Goddard said.
Chief Justice Dame Sian Elias asked whether the new MOM company would be valued subject to the company's 35-year water rights.
"One would expect the value of the company to take into consideration the current entitlements," Mr Goddard said.
"There are downside contingencies and there are upside contingencies. The potential for regulation changes is one of those downsides."
He said there is a potential for a change to entitlements and admitted cost structures are on the table. "There is the prospect of renewal but for a different period and on different criteria."
Justice Chambers asked exactly when the Crown expected to transfer the assets from the state-owned enterprise (SOE) act to the MOM act.
Mr Goddard said he expected the transfer to take place right at the start of the sale process, which would also leave time for the reversal of the transfer to take place in extraordinary circumstances, such as a lack of public interest in the offering.
Chief Justice Elias repeated her concern over the Crown's ability to recognise Maori rights under the Treaty of Waitangi.
"The appellants point out that introducing a third-party ownership will be a further impediment to their rights."
"There will be no material impediments," Mr Goddard says.
His arguments will continue until later this afternoon.