The Government will drive iwi fishing operators out of business by banning them from using foreign boats with low-wage crews, Maori Affairs Minister Pita Sharples says.
A bill which had its second reading in Parliament on Tuesday night will mean fishing companies can use foreign charter vessels only if they are flying the New Zealand flag and obey New Zealand laws.
The aim is to ensure the crews of foreign charter vessels are covered by local employment law.
The rules would come in by 2016 and iwi fisheries were to have until 2020 to adopt them, but the Government has now scrapped that extension.
Mr Sharples said that would put some iwi companies out of business, as they needed time to change their situation.
New Zealand's largest iwi, Ngapuhi, uses foreign charter boats to catch its deep-water fishing quota and spokesperson Rihari Dargaville said the bill would be devastating to its business.
Having to have its own vessels would be "quite traumatic" and the iwi would not just lie down and accept the change, he said.
Mr Dargaville said Ngapuhi could take a contemporary Waitangi Tribunal claim over the law, as the tribe was given fishing rights under a Treaty of Waitangi settlement.
However, Associate Primary Industries Minister Jo Goodhew said the Government was serious about protecting the welfare of fishing crews and New Zealand's reputation, and an exemption for iwi would undermine the legislation.
The Government will officially remove the exemption when the bill comes back before the House for its committee stages.