26 August 2012

John Key's Waterloo?

Having enjoyed a dream-run in its first term, based largely on the popularity of their leader, the National-led government is now forced to do battle on grounds not of its own choosing, and the outcome of which can only be either bad or very bad, if not fatal.
The Waitangi Tribunal has obligingly hurried up its process and released an interim report, the findings of which lob a well-placed mortar into the very middle of National's defenses, potentially rendering them defenseless in any court. Perhaps Key should have told the Tribunal to take as long as it likes over its deliberations. In any case, an awful lot of water has flowed under the bridge since Key declared that no-ones owns the water and the Waitangi Tribunal could be ignored! (And add to that the problems posed by Rio Tinto threatening to close down the Tiwai Point smelter, which would free up 15% of our national power supply, drive down prices, and affect the profitability of the generators!)
Let's face it: the asset-sales programme was the only 'big idea' that the government had left over from its election manifesto. A bland personality may have won the last election, but asset-sales were crucial to National's credibility as a government that can get some serious points on the board. Furthermore, the Minister of Finance has already booked in the proceeds of the sales to his fiscal projections, and hence they are vital to his promise to balance the books by 2015.
Key and co. will no doubt try to brazen their way through this by saying that they will consider the Tribunal's findings 'in good faith', but they would prefer to carry on down their pathway to sales undeterred, if they can. Anything less would be a sign of weakness, and a 'giving in to Maori interests' which would look bad to many white middle-class voters, including the vital centrist voters whom National cannot afford to alienate.
If National do try (recklessly) to 'stay the course' on the sale of Mighty River Power shares, a now probable result will be a High Court injunction to delay the asset-sales. A while ago, one might not have rated the Maori Council's chances of getting an injunction all that highly. After all, the government had a strong case to allow it to complete its legitimate plans. But the strength and cogency of the Tribunal's findings now give the Maori Council plenty of ammunition to take to the courtroom. The Tribunal makes a direct recommendation to delay the sales, and it finds that Maori have 'residual proprietary rights' in water, and that to proceed without negotiations with Maori would amount to a breach of the Treaty. If the sales go ahead and the state-owned enterprises are restructured to include private shareholders, the Tribunal finds that the Crown's options for providing remedies or compensation to Maori, after the fact, would then be too limited. The best route (according to the Tribunal) is the very one that National will not want to follow: that is, stop the sales process, enter into negotiations with Maori, reach a settlement, and then proceed with the asset-sales from that basis. One can see that process lasting till well after the next election, and National having to kiss goodbye to the one and only big policy idea of its second (and hence possibly last) term in office.
Key has the choice between a long losing battle or a quick retreat followed by a losing battle later – unless the Crown's lawyers can somehow recover the ground they've lost at the Tribunal and prevent a High Court injunction. Looks like this fight's heading to the courtroom.
Unless the government is prepared to back down!


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