The Supreme Court has warned the Maori Council it needs to prove the government's ability to recognise Maori interests would be restricted if Crown assets were partially sold.
Chief Justice Dame Sian Elias told council lawyer Colin Carruthers QC this morning he needed to prove the "mechanisms" available to provide recognition for Maori are no longer sufficient if a third party is introduced.
Mr Carruthers says there is an acknowledged claim by Maori to water resources and he argues the sale will deprive the Crown of the ability to provide Maori with an opportunity for a measure of control over their own water resources.
"The assets being disposed of are the shares. But effectively it is the control of those assets," he says.
He wants the Supreme Court to rule the government's partial asset sales programme unlawful until the Crown puts in place protective measures for Maori.
The two-day hearing is before Chief Justice Elias and Justices John McGrath, William Young, Susan Glazebrook and Robert Chambers.
Mr Carruthers says nothing in the appeal "challenges the supremancy of parliament".
However, he says in this case parliament has expressly stated all relevant powers and discretions must be "exercised in a manner consistent with the principles of the treaty".
The Crown denies privatisation will impair its ability to recognise Maori rights and interests in water resources, he says.
"The claims, they say, are to ownership of the water resources. Meanwhile, what is being sold are merely shares in companies that own power stations which happen to use those water resources.
"Shares are financial instruments and therefore fungible. So, in selling shares, the Crown, it says, loses nothing that cannot be replaced in the future."
Justice Glazebrook asked Mr Carruthers whether selling just 49% – a minority – of the assets would make a difference. "Selling 49%, the asset doesn't really go to private interests, does it?"
Mr Carruthers says the transfer of shares will result in the impairment of the Crown's abilities. It would be unable to deal with river consent issues easily and would instead need to consult with the private shareholders.
The Crown, he says, relies on three mechanisms, including Maori traditional rights to rivers and geothermal energy and its engagement with iwi to protect future treaty claims.
At present the Crown can exert considerable control over the state-owned enterprise but this control will "signifcantly diminish" once each SOE is turned into a MOM (mixed ownership model) company.
"Giving Maori direct and meaningful involvement in the power-generrating SOEs after privatisation will not be possible.
"Power companies presently pay nothing for the use of the water resource. The privatisation is taking place in the context of this 'zero cost for water'. The privatisation is, as a matter of policy, targeted at selling shares to mum and dad investors.
"The Crown will be creating a large body of ordinary New Zealand citizens with a financial interest in preserving the status quo of zero-rated water resource use."
He says any change to the zero rating to recognise Maori proprietary rights may financially prejudice the power-generating SOEs and therefore the return to private shareholders.
It would inolve doing something the Crown has always been unwilling to do – implement a settlement which interferes with private property rights.
QC David Goddard's Crown case may begin later today.