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BUSINESSDESK: The Maori Council is expecting a tough fight through the courts with the government after Prime Minister John Key ended talks with Maori over how the Mighty River Power sale could help address claims to rights in freshwater resources.
Felix Geiringer, a barrister representing the Maori Council, says the issue is "very likely to go to court" after the government announced it will push on with the sell-down of Mighty River, striking the company from the State-owned Enterprises Act and setting a target of a sale of up to 49% in the first half of 2013.
"Whether it starts in the High Court or the Court of Appeal is neither here nor there," Mr Geiringer says. "I imagine the government will go all the way."
Council members are attending meetings tomorrow and through this week, with the council "hoping to have a decision in principle in a day or two and a firm decision by the end of the week" on whether to mount a legal challenge.
Speaking at the prime minister's post-Cabinet press conference, Finance Minister Bill English made it clear the timing of the Crown statement today was intended to flush out likely Maori Council and any other legal action "in the next week".
The Cabinet meeting scheduled for Tuesday next week will agree to remove MRP from the State-Owned Enterprises Act in preparation for sale, an action requiring an order-in-council signed by the governor-general, also scheduled for next Tuesday afternoon.
"Someone wanting to prevent the sale should take a step when they see the Crown takes a step towards sale," Mr English says. "The order-in-council is a pretty clear signal that the Crown is taking this first, substantive step. If there's going to be court action, it's better to get on with it and get it sorted out."
He declined to speculate on whether the government would legislate to allow the partial privatisations to proceed, should the expected court action succeed in establishing Maori ownership of water. However, that was judged unlikely.
Investors say leaving Maori grievances outstanding could see the share price in an initial public offering marked down because it would be harder to quantify Treaty of Waitangi risks.
Mr Key says his Cabinet today shelved the contentious "shares-plus" proposal that could contribute to the settlement of claims to waterways through shares in state-owned power companies, and will not entertain any further talks on the issue as such a scheme could create conflicts of interest between iwi.
All three power companies slated for partial sale have extensive hydro-electric power generation assets.
The government argues it can address Maori claims by other means but won't cede public ownership of the waterways. Tainui tribal authority official Parekawhia McLean resigned from Mighty River's board last week.
"If the water rights issue isn't sorted out prior to the offer, the market will probably put a large discount on that or require lower pricing on those assets," says Douglas Lau, portfolio manager at AMP Capital Investors (NZ), which has $16 billion under management in local funds.
Mr Key urges New Zealanders to register to buy shares in the SOE and suggested there would be strong international interest because of the worldwide appetite for better returns than are available through historically low global interest rates.