Cross-Examination: Water Pricing and Treaty Settlements

BY CHRIS RYAN

Water become a major issue in this year’s election campaign following public concern about the extraction and sale of water resources and the Labour party’s policy of introducing a charge on commercial water users.[1] However, the status of Māori claims over freshwater means that such a policy has raised some concern.

Māori and Water

Article Two of the Treaty of Waitangi promised Māori ‘te tino rangatiratanga’ over their ‘taonga.’ The Waitangi Tribunal has recognized that rivers are a “taonga essential to the identity, culture, and spiritual well-being of Māori”.[2] While iwi may differ in their expression of spiritual relationships with water, the Waitangi Tribunal was of the view that, “there is among all tribes a continuing and all-embracing theme of acknowledging traditional holistic concepts of water in both physical and spiritual, tangible and intangible senses.”[3] The Waitangi Tribunal, in its 2012 report on freshwater resources, went so far as to argue that tino rangatiratanga over the taonga of water was similar to a promise of ownership.[4]

However, for some Māori the concept of ownership is problematic. Many Māori conceive of freshwater, in the context of rivers,  “… as an indivisible whole, not something to be divided up and analysed by the constituent parts…”.

However, for some Māori the concept of ownership is problematic. Many Māori conceive of freshwater, in the context of rivers,  “… as an indivisible whole, not something to be divided up and analysed by the constituent parts…”.[5] Rivers, and the freshwater they contain, are “seen as a living entity with its own personality and life-force…”, a point of view reflected in the decision to give personhood to the Whanganui River.[6] Furthermore, some have argued that tino rangatiratanga is more complex than just a granting of a right akin to ownership, rather it includes the power to control and manage resources in accordance with Maori customary practices.[7] This would mean that it included notions of both ownership and the right to manage as a kaitiaki, or guardian, of the environment.

The Labour Party’s water policy

Should the Labour Party become the Government, the party plans to implement what it calls a royalty on water for large commercial users. The policy has several elements:

  • A charge on commercial water users. The royalty for bottled water will be based on per litre and the royalty for irrigation water will be based on per 1000 litres. It will be approximately 1-2 cents, although the precise level will be set following consultation.
  • The royalty will be flexible to reflect the scarcity or abundance of water in different regions, the different quality of water, and its use.
  • The revenue will largely be returned to regional councils, but Māori would receive a share.[8]
  • Labour announced that it planned to work with iwi to resolve Treaty water claims in a manner that respects iwi’s mana, and restores the mauri of our rivers and lakes.

Both the Greens and The Opportunities Party have also proposed developing a charge on water, with policies that would likely resemble something like Labour’s policy.[9]

Reconciling Labour’s water policy with Māori interests in freshwater

Ownership of water

In English common law, freshwater cannot be owned until it is extracted or captured. One of the primary concerns that has been raised is that placing a price on water would challenge that regime. National’s Treaty Negotiations spokesperson and former Attorney-General Chris Finlayson warned that Labour’s policy overturned accepted policy of successive Governments over the past 25 years that no one owned water.[10] The basis of Chris Finlayson’s argument is that it is inherent in the nature of royalty, the connotation of ownership.[11] In particular, if the Crown is levying a royalty the implication is that the Crown owns water. If the Crown can own water then it is unclear as to why Māori should not be able to seek a proprietary right in water.[12]

A water royalty was one of Jacinda Ardern’s flagship proposals during the election campaign.

Labour’s environment spokesperson and former attorney general David Parker, rejected Finlayson’s attacks on the policy, primarily on the basis that there is a distinction between a charging a royalty and claiming an ownership right[13] This approach is reflected in other aspects of resource management in New Zealand. For example, the Crown charges royalties on minerals under the Crown Minerals Act which it does not purport to own.[14]

At the heart of this debate however, is the contention that nobody owns water. The first point to note is that currently the Crown behaves as if it is the owner of water by, for example, issuing resource consents to allow others to use water. This is not too different a process from a landowner renting their land to another. This might suggest that there is very little difference between the Crown’s current policy and a policy context in which the Crown was the owner of freshwater.

The second point to consider is that even if it is the case that there is no owner of freshwater, a royalty wouldn’t represent a significant change from the existing resource consent regime. Although the RMA specifically states that a resource consent is not a property right, it is certainly akin to a limited property right.[15] Reflecting this, the value of a consent for water extraction is included in the value of the land that the consent is associated with.[16] While resource consents cannot technically be a full property right because they have an expiration date, the presumption that resource consents will ‘roll over’, means that the expiration date is illusory.[17] Consequently, it is the norm that value of a consent into the value of the land.[18] Therefore, even if consents to use and extract are not a property right over water, in practice they have characteristics that mean that they are functionally similar to a property right. The effect of both points is, it would be misleading to describe the Labour policy as being substantially different from the status quo.

Finally, it is worthwhile to note that ownership in other contexts has not been a barrier to pricing resources to facilitate their management.

If a water royalty would promote more sustainable use, then a water royalty would be consistent with the Crown’s duty to manage water resources. For example, it would not be compelling for the Government to argue that it should not introduce a price of carbon, either via an emissions trading scheme or a tax on carbon, because it would disrupt the presumption that nobody owns the atmosphere. This would suggest that even if the issue of ownership was not settled, introducing a royalty, or even a tax, on water consumption would not be mutually exclusive to a view that nobody owned water. Moreover, it is unsustainable for the Crown to ignore Māori claims over freshwater by refusing to engage with questions around the ownership of water.

Treaty Settlements

The other concerned raised in response to the Labour party’s policy is that placing a royalty on water might require the Crown to renegotiate Treaty settlements. Chris Finlayson warned that Labour’s policy could force existing full-and-final Treaty of Waitangi settlements to be opened for renegotiation with iwi which he described as “dicing with death” and akin to opening “a complete Pandora’s Box”.[19] In response, Labour’s David Parker said that “Mr Finlayson knows the settlements with iwi include an express clause stating that freshwater claims are unresolved”.[20] For example, the current Ngati Tuwharetoa settlement before the Parliament Deed of Settlement expressly states that it does not affect any rights of iwi and hapu in relation to water in clauses 4.17 to 4.20. Mr Finlayson also knows the settlements with other iwi – including Ngai Tahu and Tainui – are the same. Each includes a similar clause.[21] However, it seems likely that iwi would be more dissatisfied with the unsettled status of their freshwater claims if the Crown was charging a royalty on water.

Dealing with water in New Zealand

The context for this discussion about a royalty on water is the degraded state of New Zealand’s freshwater ecosystems. Report have identified that:

  • Nearly three quarters of native freshwater fish species are threatened by or at risk of extinction, as well as a third of native freshwater invertebrates and a third of native freshwater plants.[22]
  • Nitrogen levels were worsening at more than half of the sites the Ministry for the Environment monitors and nitrogen leaching from agriculture has increased by 29 per cent since 1990.[23]
  • Based on consented water takes (not actual water taken), the Ministry for the Environment has reported that irrigation had “the highest potential to cause widespread reductions in downstream river flows, compared with other water uses”.[24]
  • Of the 41 sites the Ministry for the Environment monitors, only 11 had a good or very good overall cultural health index rating.[25]
  • In the future climate change will exacerbate New Zealand’s freshwater management challenge because the changing climate will reduce annual average rainfall in eastern and northern regions of both islands and increase the incidence and intensity of droughts.[26]

This would suggest that the current system of freshwater management is not tenable. For all New Zealanders, but particularly Māori who view freshwater as a part of their culture, coming up with a freshwater management regime that can improve the management of a resource that has both an economic and socio-cultural value. In other contexts, such as carbon emissions management, it has been accepted that pricing a resource is a way to incentivize more sustainable management, or at least a way to raise revenue to mitigate the effects of environmental degradation. Some experts in the area have recognized that there is a need to consider how freshwater resources in New Zealand are managed. For example, the Parliamentary Commissioner for the Environment has advised policy­makers that “sooner or later New Zealanders must have a serious discussion about water pricing”.[27] Thus far the debate about the Labour parties water royalty policy has not focused on whether it would encourage more sustainable water use.

Irrespective of whether a water royalty is introduced, addressing the state of New Zealand’s freshwater resources is also likely to require addressing Māori interests in freshwater.

Not only is freshwater management in New Zealand facing an immense ecological challenge, Māori interests in water are still unresolved, with or without the introduction of a royalty. Some have suggested that the Courts might recognise customary property rights in freshwater, where proven under the common-law doctrine of native title.[28] For instance, Māori ownership of water bodies could be realised through a ‘qualified exclusivity’ approach, which would provide important recognition of Māori ownership of water, while still allowing for public use rights. Finally, others have suggested that placing a royalty on water might be a good way of giving effect to Māori interests in water.[29] Irrespective of whether a water royalty is introduced, addressing the state of New Zealand’s freshwater resources is also likely to require addressing Māori interests in freshwater.

Labour’s policy of placing a royalty on freshwater is one potential approach to dealing with the challenge facing the management of New Zealand’s freshwater resources. Given the unsettled status of Māori interest in water, the policy might exacerbate existing tensions in the area. However, it is important to note that a water royalty and Māori interests in freshwater are not mutually exclusive.

The views expressed in the posts and comments of this blog do not necessarily reflect those of the Equal Justice Project. They should be understood as the personal opinions of the author. No information on this blog will be understood as official. The Equal Justice Project makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The Equal Justice Project will not be liable for any errors or omissions in this information nor for the availability of this information.

[1] Patrick Gower “Newshub poll: 87pct say charge royalties on water”  (14 June, 2017) Newshub  <http://www.newshub.co.nz/home/politics/2017/06/newshub-poll-87-say-charge-royalties-on-water.html>.

[2] Jacinta Ruru, “Māori rights in water – the Waitangi Tribunal’s interim report. Māori Law Review, September 2012” (September, 2012) Maori Law Review <http://maorilawreview.co.nz/2012/09/maori-rights-in-water-the-waitangi-tribunals-interim-report/>.

[3] Waitangi Tribunal, (2002) The Pouakani Report 1993 (Wai 33), Legislation Direct, Wellington.

[4] Above n2.

[5] Waitangi Tribunal, (1999), Whanganui River Report (Wai 167), GP Publications, Wellington.

[6] Waitangi Tribunal, (1999), Whanganui River Report (Wai 167), GP Publications, Wellington.

[7] Rachel Kennard “The Potential for Maori Customary Claims to Freshwater” (2017) Otago <http://www.otago.ac.nz/law/research/journals/otago036259.pdf>.

[8] Audrey Young “Treaty warning over Labour’s water tax” (14th August, 2017) New Zealand Herald <http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11903486>.

[9] Jenna Lynch “Greens to charge 10c a litre for water” (09 July, 2017) Newshub <http://www.newshub.co.nz/home/politics/2017/07/greens-to-charge-10c-a-litre-for-water.html>.

[10] Above n8.

[11] Above n8.

[12] Jo Moir “Labour’s plan for a water tax has politicians wading in on Maori claims” (15th August, 2017) Stuff <http://www.stuff.co.nz/dominion-post/news/national/95790744/Labours-plan-for-a-water-tax-has-politicians-wading-in-on-Maori-claims>.

[13] Nicholas Jones “Charging royalties does not assume ownership’: Ardern defends water tax” (15th August 2017) New Zealand Herald <http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11904582> .

[14] Crown Minerals Act 1991, ss 13-14.

[15] Resource Management Act 1991, s 122.

[16] Above n16.

[17] Above n16.

[18] Above n16.

[19] Above n8.

[20] Bernard Hickey “Labour’s water tax plan dragged into a Treaty fight.” (2017) Newsroom <https://www.newsroom.co.nz/2017/08/14/42616/water-fight>.

[21] Deed of Settlement and Historical Claims Ngati Tuwharetoa – TheCrown (opened for signature 21 September, 1992) art 4.17-4.20.

[22] Ministry for the Environment & Stats NZ “New Zealand’s Environmental Reporting Series: Our fresh water 2017.” Ministry for the Environment (2017) <http://www.mfe.govt.nz/sites/default/files/media/Environmental%20reporting/our-fresh-water-2017_1.pdf >.

[23] Above n22.

[24] Above n22.

[25] Above n22.

[26] Paul McBeth “Does NZ need to put a price on water?” (25th September, 2016) Noted <http://www.noted.co.nz/money/investment/does-nz-need-to-put-a-price-on-water/>.

[27] Above n26.

[28] Above n7.

[29] Above n7.