Date posted: 28/09/2018 8 min read

The Māori economy: patient capital meets new activism

As historic grievances are settled, Māori are becoming a new, powerfully committed element in New Zealand’s sustained economic growth.

In Brief

  • Traditionally passive and cautious, Māori investors are becoming active investors.
  • Treaty of Waitangi settlements are super-charging Māori economic capacity and ambition.
  • The rise in Māori business is creating a higher demand for Māori accountants.

Rachel Taulelei, 2018 Māori Woman Business Leader and chief executive of Kono, of one of New Zealand's fast-growing Māori exporters, describes her job as "working for the family business".

Kono is typical of a new breed of Māori enterprise. It's a thoroughly modern subsidiary of Nelson-based Wakatū Inc, a collectively owned Māori commercial entity whose roots stretch back to land losses and colonial betrayals in the 1840s.

Today, after more than 40 years of self-determination, Wakatū is one of the largest private land owners in the upper South Island and Kono is founded on a set of distinctly Māori values.

Its production of award-winning wines, seafood and horticulture is guided by a "500 year plan" that stresses not only inter-generational wealth creation but also kaitiakitanga, or guardianship.

Preservation of culturally significant land and communal responsibility sit alongside values more recognisable to most modern businesses, albeit expressed in richly metaphorical Māori terminology.

"As a shareholder in Wakatū through my own whakapapa [genealogical links], the role of CEO comes with immense responsibility to ensure the resources with which I am entrusted are cared for, valued and enhanced for future generations," says Taulelei.

Pictured here: Rachel Taulelei, CEO, KONO and Māori Woman Business Leader 2018

Pictured above: Kateriina Selwyn, CAANZ Māori Sector Manager

Māori business is different

Her description of Wakatū as "the family business" provides a route to understanding much of what makes Māori business different. Like family businesses, they tend to think long-term, inter-generationally, are conservative about debt and are driven by non-commercial as well as business imperatives - but with bells on.

"A lot of New Zealand family businesses might be one or two generations, so if Dad wants to retire and I don't really feel like doing it, then sale is a genuine option," says David Hamilton, the ANZ Bank's New Zealand head of Māori relationships. "If you're a Māori collective entity, there's not really an option to say 'let's sell up and do something else'." And most family businesses don't have "300 or 4000 or 70,000 owners."

Collective ownership is the most common structure in large-scale Māori enterprises, whether they're traditional trusts and incorporations or represent whole iwi (tribes), which have been the conduit for negotiating settlements with the Crown for historic grievances under the country's founding document, the Treaty of Waitangi.

There have been about 75 settlements worth NZ$2.3 billion since 1992. Legislation ratifying the most recent, and sixth-largest, settlement passed through parliament in early September. Another dozen or so are in the wings and the country's largest iwi, the 125,000 strong Ngāpuhi tribe, has yet even to agree how to negotiate, let alone settle.

NZ$50 billion in assets

However, that NZ$2.3 billion in initial settlement assets is now estimated to be worth close to NZ$8 billion of the estimated NZ$50 billion of assets in Māori ownership.

That ownership includes some 40% of New Zealand's forestry estate, one-third of the country's lamb production, 10% of the dairy industry, half the country's fishing quota, and 10% of its kiwifruit industry, with settlements accelerating the re-emergence of Māori as powerful influences in the New Zealand economy.

More recently, tourism, commercial and residential property and aged care and retirement have become common investment themes. "The capacity that's arisen from settlements is a big part of this," says Paul Majurey, who heads a ground-breaking new NZ$115 million direct investment fund, Te Puia Tapapa, involving capital contributions from 26 iwi.

"Leaving aside whether the amounts of the settlement funds and assets have been anywhere near the level of losses, there is a historical echo here of the halcyon period of the 1850s, when Māori-owned flour mills and schooners and were feeding Sydney and the like," he says.

Preferred partner status

Māori specialise in "patient capital, but this is patient to the power of two or three", says Majurey, and that patience has been crucial to the fund gaining "preferred partner" status with the New Zealand Superannuation Fund, which seeks co-investors in large-scale capital projects.

"Many iwi and Māori groups have historically had limited diversification across portfolios, no direct investment teams and minimal genuine deal flow," says Tama Potaka, the Super Fund executive who helped drive Te Puia Tapapa's creation. "We are a natural partner," says Majurey. We're not going anywhere. We're here forever."

Tama Potaka, senior adviser, NZ Superannuation Fund

The Super Fund's long-term investment horizon aligns with Māori investor focus and with a growing appetite for Māori investment beyond traditional primary industry on tribal land, and for putting at least some Treaty settlement cash to more active use than the trend to date of parking it in managed funds.

This fresh, more confident approach from many Māori capital-holders also comes with new demand for commercial skills, and a war for Māori talent. Chartered Accountants Australia and New Zealand's Māori Sector Manager, Kateriina Selwyn, works with the member body's 860-strong Māori members and liaises with Ngā Kaitatau Māori o Aotearoa, a national network of Māori accountants.

More demand for Māori accountants

"The boost in the Māori economy has created this opportunity for more Māori within the profession", along with much greater demand from Māori clients for a wider range of advisory skills than traditional chartered accountancy.

Every business deals with risk and reward, but it's far more heightened for iwi because of what's at stake.
David Harrison ANZ Bank

While Davidson says Māori businesses are becoming more comfortable with taking on debt, a 2017 analysis of large iwi balance sheets by consultants TDB found the highest debt to capital ratio is 17%, while smaller iwi often prefer to be debt-free. "Māori owners have always been risk-averse," says Selwyn. "With everything that's happened, from the land wars through to settlements, there's a sense that if anything goes wrong, they run the risk of losing the most important thing: our land."

ANZ's Harrison says "every business deals with risk and reward, but it's far more heightened for iwi because of what's at stake". However, the trend of the past 15 to 20 years has seen a marked shift from passive to active management by the owners of Māori assets.

And "unlike many businesses, many of them have cash, particularly the Treaty settlement entities. Often what they're looking for is partners who bring expertise to the table."

Other research found Māori business owners are markedly more optimistic, collaborative and innovative than New Zealand businesses as a whole. Says Selwyn: "I think Māori tend to do things, if not more slowly, then not to jump into things so fast. But they are starting to be more active investors." Or, as Majurey puts it: "We're not afraid of risk. But we're not going to be silly about it."

Pattrick Smellie is an owner of BusinessDesk, a New Zealand economic and business news service and a one-time NZ correspondent for The Australian.

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