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Section 9 of the SOE Act – what Parliament thought it meant

  • February 14th, 2012

Brian McDonnell, an academic who must be brave given the consequences in his world for taking academic freedom at face value,  dares to question Tariana Turia's claim that Section 9 of State-Owned Enterprise Act 1986 created a "pathway to nationhood", that formed a "prescription for a relationship which is central to our constitution", which is an "exquisite blueprint for a nation in which kawanatanga and rangatiratanga sit alongside each other". Rather bold claims for a section that says nothing more portentous than "Nothing in this Act shall permit the Crown to act in a manner that is inconsistent with the principles of the Treaty of Waitangi."

I heard from the author of the section, her Majesty's loyal Prime Minister at the time, what he thought the section meant. It is remote from the meanings promptly invented by the court and  now forming the core creed of the Treatafarian religion ( Mr McDonnell's colourful description of his colleagues' faith).

The section was a simple expedient, a fleeting appeasement expected to get the government through an awkwardness. Not up there with Chamberlain-at-Munich standards of more recent abandonments of colour blind law treating all citizens alike, because the Labour Ministers who agreed to it did not know what the courts would do with it. They thought they were offering legally empty symbolic assurance to unsophisticated Maori. The Tainui leaders, they thought, just needed comfort that existing law would not be covertly avoided by transfer of ownership of assets to the SOEs.

My law firm drafted the SOE Act and the section. But I do not breach any professional confidences in explaining what her Majesty's loyal Ministers actually intended. I heard it from them in other capacities, first as a company director and later as an MP.

I was a member of  the Establishment Board of Coal Corporation of NZ (now Solid Energy). We had a breakdown in the negotiation of the transfer values for our books. It reached impasse because we were determined to have an asset cushion against insolvency in case the business took longer than expected to turn around. Treasury had told us what debt we would owe. So the book values would determine the level of shareholder funds and thus potentially our ability to uphold promises made to our employees that we would stick to the cost cutting rationalisation announced, and would not be forced into more redundancies. Recall that all this was not long after the Thatcher showdown with the miners in the UK that ended in the closing of most UK pits.

Our transfer value turned on whether Tainui claims to an interest in the mines should be provisioned in the financial statements. David Lange decided to break the impasse. Invited to his office he told us that the Tainui claims were baseless. He said their leaders were reneging on their deal with him. He denounced them for claiming that section 9 entitled them to rights in the coal mines. 

David Lange insisted that the section was just a reminder that the Crown would remain responsible for redress whether or not the subject assets were no longer in Crown hands. The meeting with Lange was late at night.. Immediately after he left us, his Head of Department (of Prime Minister and Cabinet) came into the room and asked us to help him note what Lange had told us. He said Lange had entertained the Tainui leaders and reached the agreement on section 9 without officials who could have recorded what was actually said.  This was not hard to accept. He met us too without officials. We took it that John Henderson had been excluded from the meeting with us deliberately.

Whatever the truth behind Lange’s fury, members of the Labour Cabinet at the time claim that Sir Geoffrey Palmer told them section 9 would not have legal importance. He said it was symbolic because it did no more than state what the law was anyway. That might have been true but for the unwise  reference in section 9 to the then non-existent ‘principles’.

On the application of Tainui,  ‘Judges who would be kings’  seized the invitation to invent some principles. The elastic ‘partnership’ that emerged put paid to the naïve hope that section 9 was just declaratory. This mythical partnership bore little resemblance to any kind of partnership previously familiar to lawyers, but the word served the court’s purpose. As a term of political rhetoric it justified a flood of subsequent invention, and has proved so attractive that we now see “partnerships” springing up everywhere. Even our recent free trade agreements with other countries are now called “partnership agreements”. If the BNZ is your banker they claim to be in partnership with you. As a lawyer I long to find a case for a client enforcing long established partnership duties on BNZ to trump boring old banking law.

David Lange's derisive comment about the partnership fiction has been reported elsewhere so he must have repeated it a number of times. he gave a version to a small group outside a Law Society Triennial conference when he was supposed to be chairing a  session at which Lord Cooke was the main speaker. He explained that he could not stand to stay and listen, because "I may not be an expert in Victorian history, but I do not believe for one minute that Victoria thought she was entering into partnership with 100 thumbprints"  

Jim Bolger later secured Lord Cooke’s appointment to the UK House of Lords to limit his scope for doing more constitutional damage in New Zealand.

 Thanks to Muriel Newman who prompted me to record this for a contributed piece in


  • Kiwiwit
  • February 15th, 2012
  • 7:34 am

If Victoria did not think she was entering into "a partnership with100 thumbprints", how on earth could the people of New Zealand today have entered into such a partnership?
The answer is, the people of New Zealand today only assume responsibility for Treaty grievances by their good grace, irrespective of what Justice Cooke might have determined.  Maori claimants should remember that. 


we have had enough 

  • atrout
  • February 24th, 2012
  • 1:33 pm

What astounds me is that as a nation we appear to have been lulled into accepting a train of events that are essentially at odds with any reasoning person's idea of what is a democracy. At the fundamental level a modern democracy has only one level of citizenship. All persons are equal in the eyes of the state. No privilege is granted on the basis of ethnicity, race or religion. Here, in NZ since the start of the Treaty settlement process, there has been a growing agenda of self determination among some Maori leaders, a following of Iwi Maori and a small but significant number of non-Maori Treaty apologists.

The theme of self determination has developed along with a nearly desperate premise of Treaty Partnership… Iwi Maori on one hand and the Crown on the other. This leaves non Maori in the odd position of having essentially less say in legislative and governance matters. In procedural matters, even at the local government levels there is a degree of veto which Iwi groups hold over resource consent processes and a growing amount of Council proceedings.

At present there is a Constitutional Review underway. The express objective of some of those who are involved is to have the Treaty in it's post 1975 form incorporated in a new Constitution enshrining the partnership concept AND a functional right of veto over legislation, policy and processes which Maori declare of interest to them. Again this is a concept which should be utterly abhorrent to anyone desiring to live in a modern egalitarian democracy.

I believe that anyone who is personally committed to maintaining an egalitarian, non-racist society should refuse to participate in any process based on racial or ethnic preference. Importantly one should withhold their vote from any political party which encourages any form of differentiation in citizenship. The Treaty can remain as our most important founding document but only in the form intended by those who drafted the original document.

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