The Government appears to be inching towards a trading system to allocate water rights.

The first hints of this came from Economic Development Minister Steven Joyce speaking to National Party members in Auckland a week ago.

He told Northland contractor, Ken Rintoul, that what was needed was some sort of economic ability to shift water consents around.

“I think there are some reasonably straight forward solutions in terms of allowing significant movement towards the highest value use and that involves some sort of potential tradability at some point,” he said.

POLITIK understands that what Ministers may be talking about is a system under which local authorities would negotiate with holders of under-utilised consents with the intention that consents be surrendered and the holders compensated by the authority.

But there any a lot of unanswered questions which Ministers freely admit they don’t have answers to yet.

What is clear is that they are not talking about a pure water market largely because that would require the concept of ownership to enter the debate and that would then raise questions about how to accommodate iwi.

But at the same time, it is felt that the current “first come first served” system of water rights freezes allocations and prevents substantial change in farming – or other water use patterns in a district.

Speaking over the weekend to the National Party South Island regional conference, Finance Minister Bill English described the water issue as “pretty tricky”.

He said regardless of what the Government did it would be a source of political tension in the lead up to the 2017 election.

“We have spent five or six years working through the complexities of working out how to get a more sensible way of how to allocate our water where it is scarce,” he said.

“That is not everywhere; it’s only scarce in a few places largely in the South Island – Canterbury and Southland and in some parts of the North Island.

“It’s a tricky issue because there are all sorts of existing interests of how the system works.”

But though the South Island may be pre-occupied with allocating scarce water, the North is also concerned about iwi claiming rights over water.

The issue has been in the background of the two regional conferences held by the National Party but has not been as divisive as some party officials feared at the start of the conference season.

Mr English argues that iwi interests are the same as other people’s interests.

“Iwi interests are the same as the dryland farmer who wants to change his land use and can’t get access to water,” he said.

“So the solutions for iwi are actually the same as the solutions for the dryland farmer or the person who wants to put in a horticultural venture in the Marlborough – Tasman area and can’t get water because it was all allocated 50 years ago.

“What we are trying to do is get a better economic way of allocating that water; that is, the person who has got the best idea which generates the most gain for them and their community gets the water not just the person who got it 50 years ago.”

Environment Minister Nick Smith told the conference that people like Don Brash and former ACT MP Muriel Newman were promoting extremist views of iwi involvement in water and had already been proved wrong with their doomsday predictions for the Foreshore and Seabed agreement,

But even so, he said the iwi issue was the biggest challenge facing the Government over its freshwater reforms.

“Iwi do have a right and an interest to be involved and to be consulted about the way in which freshwater is used and managed,” he said.

“But equally, the Government is saying no-one owns the water.

“No-one is going to get preferential rights around the access to that resource and the final decisions on how freshwater is managed are going to be made by elected Councils or the Government.”

Mr Smith also conceded that cleaning up freshwater was going to involve a cost and that cost would have to be shared.

Not only would landowners have to pay but also ratepayers and taxpayers.

Mr Smith believes the questions of water quality and water allocation are linked and believes that from November this year when water users are required to disclose how much water they have been using and that is compared with their consents it will be possible to determine how much water is available within a catchment for allocation.

But those disclosures will also point out the inefficient users and then, from what Ministers have been saying over the past week, it will be the local authority who step in and re-allocate that water.

It won’t be easy.