Māori Enterprise and the New Zealand Capital ... - Te Puni Kokiri

MÄORI ENTERPRISE
AND THE NEW ZEALAND
CAPITAL MARKETS
Scoping Report
12 May 2010

Contents
2 Executive Summary
5 1. Background
13 2. Our findings
17 3. Specific proposals
21 4. Recommendations
23 Appendix A - Case studies
Purpose & status
The scoping study is the first phase of work by the Mäori Investment, Capital Market and
Enterprise Reference Group. The Reference Group, chaired by June McCabe, is an advisory
committee of the Mäori Economic Taskforce.
This report of the scoping study fulfils the requirement of Report 2a of the Mäori Enterprise &
the New Zealand Capital Market Project and has been prepared by Burleigh Evatt for the benefit
of the Mäori Economic Development Taskforce and its Mäori Investment, Capital and Enterprise
Reference Group.
This report is supplied on a confidential basis for the exclusive use of the Reference Group and
Taskforce.
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Executive Summary
Introduction
This scoping study investigates the issues affecting the demand and
supply of capital to Mäori enterprises based on previous studies and
current analysis
Mäori enterprises
Mäori enterprises are significant contributors to economic performance and important
players in export-orientated primary industries. Mäori enterprises also figure in tourism,
property development and energy production, as well as social services provisions.
The role of Mäori enterprises is changing away from the traditional reliance on landusing
commercial activities and into a broad range of commercial situations. They are
a vital conduit between the private sector and government. Mäori enterprises are an
important source of development capital for Mäori entrepreneurs and social enterprises.
With a few exceptions, however, Mäori enterprises do not have the financial flexibility to
make the most of the opportunities facing them.
Mäori enterprises exist in a complex and dynamic operating environment. There are
expectations on them to support social, cultural and community activities as a priority.
In mainstream commercial settings, such support activities are discretionary.
Mäori enterprises need to access capital markets
Mäori enterprises need access to capital markets to fulfil the potential represented by
their collective asset holdings and market position.
Traditionally the issues relating to pledging Mäori land as loan security have been seen
as the barrier to accessing capital for development. While there are issues relating to
land as security, this issue is not a complete problem definition for issues facing Mäori
enterprises access to capital.
Some Mäori enterprises are able to access capital and other capital market services
but this is not the case for all Mäori enterprises. The capital market perception is that
the largest Mäori enterprises have obtained the necessary management ability through
their ability to attract talent. In contrast, smaller Mäori enterprises are perceived by the
market to struggle in this area. There is reference to smaller Mäori enterprises being
over-dependent on advisers who may themselves lack relevant commercial skills.
Capital providers
Capital providers recognise the economic potential represented by Mäori enterprises
and they are seen as a strategically important focus area with significant business
development potential.
There is currently no understood commercial model for a “standard” Mäori enterprise
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that recognises the competing pressures and complex operating environment. Capital
providers have an understanding of other “non-standard” commercial models (e.g., cooperative
companies, family-controlled business and State-owned Enterprises) which
also face competing pressures resulting from the nature of their ownership structures
and operating environments.
Perceptions matter in capital markets
In capital markets perceptions matter. This is because it is costly and time consuming to
find out everything about an organisation needed to assess if it can be trusted.
Capital providers look at a few characteristics when making such assessments. If
gaps are evident, capital providers look more closely at other characteristics such as
governance arrangements, mandates and the quality of commercial proposals.
Three inter-related and overlapping matters emerge from the Scoping Study. Perceptions
held about these issues affect the ability of Mäori enterprises to access the capital
markets. The three issues are:
1. Governance arrangements.
2. Property rights and mandates.
3. Commercial value creation.
In part, market perceptions relating to these issues arise from structures, in part, they
arise from behaviours, and in part, the perceptions are influenced by the lack of an
understood commercial model for Mäori enterprises.
Previous studies
Previous studies have highlighted cultural, socio-economic, education and behavioural
influences as well as conflict between Mäori cultural values and commercial imperatives
as affecting access to capital markets.
Progress has occurred in the past decade especially by the largest Mäori enterprises.
Collective organisations such as in fisheries and the Central North Island Iwi Forestry
Collective are important developments that have imparted critical mass.
The availability of Limited Partnerships since 2009 is another noteworthy development.
This entity gives access to the internationally preferred structure for co-investment,
which is also compatible with the various asset-holding structures used Mäori
enterprises. However, knowledge of Limited Partnerships and other mechanisms available
to Mäori enterprises is not widely held.
Scoping Study findings
In summary, the Scoping Study finds that current market perceptions relating to
governance, property rights and commercial value creation are factor limiting capital
providers’ interest in Mäori enterprises. This is even though the development potential of
Mäori enterprises is recognised as seen as a strategic focus area for business development.
Larger Mäori enterprises are recognised as making faster progress in addressing these
issues. Understanding how to mobilise resources is an important engine for economic
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growth. Mobilising resources relies both on a conducive external environment for
business and internal factors. Factors internal to an enterprise that make for success are
not well enough understood. Attracting talent and capital play a part, but also important
are attitudes towards progress, prosperity, risk reward and opportunity. Gaining
acceptance that attitudes towards “competitive mindsets” within Mäori enterprises need
to change is critical. To change mindsets requires a better understanding about how
attitudes change and the role that culture plays in shaping attitudes.
Scoping Study recommended directions
This scoping study makes recommendations about directions for further work relating to
both behaviour and structure.
The scoping study gives greatest emphasis to investigating ways and means of changing
attitudes in relation to governance, property rights and value creation that are
compatible with Mäori cultural values.
Subsidiary issues emerged from the Scoping Study that are suitable for advancing
separately:
• A dialogue between capital providers and Mäori enterprises to develop a shared
understanding of the “standard” Mäori enterprise model.
• Develop a knowledge base of structures and case studies of how they have been
successfully employed by Mäori enterprises.
• Investigate the possibilities for alternatives to over-the-counter markets Mäori
incorporation shares.
• Investigate a collective treasury management facility for Mäori enterprises.
Conclusion
Mäori enterprises holding collective assets are important to the New Zealand economy.
Mäori enterprises, large and small, need access to capital for their development
requirements. The larger organisations are already on a well-established pathway, but
smaller organisations, which nevertheless collectively represent large asset holdings, are
not so well served. Mäori enterprises are themselves important capital providers to Mäori
entrepreneurs and social services providers.
Capital markets providers are aware of the development potential of Mäori enterprises
and regard the sector as a strategic opportunity for increased provision of financial
services.
The scoping study gives emphasis to investigating ways and means of influencing
attitudes governance, property rights and value creation that are compatible with Mäori
cultural values
The scoping study also recommends promoting a dialogue on developing a shared
understanding about a standard Mäori enterprise commercial model, a knowledge
resource on commercial matter built from Mäori enterprise experiences, investigation
of alternatives to over-the counter markets for shares and investigation of a collective
treasury management facility.
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1. Background
Introduction
The purpose of this scoping study is to provide a framework for
understanding and analysing the demand and supply of capital for
Mäori enterprises as consumers and suppliers of capital.
The scoping study has firstly, defined the market within which Mäori capital users and
Mäori capital providers operate and secondly, identified the potential range of issues
affecting the demand and supply of capital to Mäori enterprises, with a focus on Mäori
enterprises that hold and control collectively owned assets.
Ngata’s whakatauki
E tipu e rea mo nga ra o tou ao.
Ko to ringa ki nga rakau o te Päkehä hei ara mo to tinana.
Ko to ngakau ki nga taonga a o tipuna Mäori hei tikitiki mo to mahuna.
Ko to wairua ki to Atua, nana nei nga mea katoa.
Grow up and thrive for the days destined to you.
Your hands to the tools of the Päkehä to provide physical sustenance.
Your heart to the treasures of your ancestors as a diadem for your brow.
Your soul to God to whom all things belong.
When Sir Apirana Ngata wrote his whakatauki for Rangi Bennett around 1949, he was
describing his vision of a well-rounded Mäori individual. Various interpretations are
made of this proverb. It is generally represented that a person should take advantage of
everything that is available from the Mäori and non-Mäori worlds that are relevant and
significant to their development into a well-rounded individual.
The proverb is a clear indication that although Ngata was raised to be staunchly Ngäti
Porou, he was not ethnocentric. His words mean Mäori should embrace and adopt the best
of what is available from all cultures in order to promote their human development, while
maintaining pride in, respect for and full participation in the culture of their ancestors.
The exhortation to employ the tools of the Päkehä forms the backdrop for this study of
the characteristics of Mäori enterprises.
There is a sense that because of Mäori enterprises’ unique position in the marketplace,
Mäori are not able to achieve their full potential contribution to economic development.
Mäori enterprises appear to be not aligned with capital markets’ requirement and are
unable articulate clearly their future requirements. There is not a consensus view yet
emerging about purpose and role of Mäori enterprises. For example, should they be
purely passive investors, or actively promoting start-ups and early stage enterprises
Should the geographical scope be limited to their rohe, New Zealand or the world
Should the focus be purely in investment capital or does human capability investment,
innovation and entrepreneurship also enter the frame
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Importance of perceptions
A key question for Mäori enterprises is how they are able “put their hands to the tools
of the Päkehä”. In the present case, the tools are the capital markets: the “markets” for
financial 1 and reputational 2 capital.
Because capital markets operate on perceptions, a key focus of the scoping study has
been on the perceptions held by capital providers and individuals who are involved with
Mäori enterprises in management, governance and advisory roles.
Perceptions of both capital users and providers are important to market functioning. In
part, this is because relevant information about commercial organisations is difficult and
expensive to obtain. Reputation embodies the generally held views about an organisation
and the trust that can be placed in it. This is why market perceptions are important.
This scoping study is in large part a distillation of the perceptions held by numerous
individuals who have had close and personal experience of dealing with Mäori
enterprises 3 .
• They include individuals who have worked for and inside such enterprises, and have
been involved in their governance, management and administration.
• They include individuals who have been involved in providing loans, partnering or
joint venturing with Mäori enterprises in commercial settings.
• They include professional advisers such as legal, accounting, financial and consulting.
• They cover the spectrum of Mäori enterprises. The spectrum ranges from collectively
owned land, marae committees, trusts and incorporations, through to statutory
entities, iwi authorities, collectives, post-settlement governance entities, social
services providers and education institutions.
• They include the experiences and observations of both Mäori and non-Mäori
individuals.
The scoping study also builds on previous related studies which, by and larges,
highlighted mixes of behavioural and structural issues, and conflicts between commercial
imperatives and cultural values.
1 Financial markets are used to match
those who want capital to those who
have it, and they facilitate:
• Raising debt and equity capital (in
the capital markets).
• Transfer of risk (in the derivatives
markets).
• International trade (in the currency
markets).
2 Reputational capital is represented
by the value of intangible assets
including business processes, patents,
trademarks; reputation for ethics and
integrity; quality, safety, sustainability,
security, and resilience.
3 See “Mäori Enterprise & the New
Zealand Capital Market: Report 2b
on feedback & interviews” for more
elaboration on the interviews with
participants in the study.
Mäori enterprises role in capital markets
Mäori enterprises are represented on both the supply side and the demand side of the
New Zealand capital market:
• On the demand side Mäori enterprises of all sizes have needs for :
– Transactional services and working capital.
– Capital for development and organic business expansion.
– Project finance and asset-based financing.
– Deal-making services.
• On the supply side:
– As investors in bank deposits and a range of passive funds (wealth management
arrangements).
– As co-investors in a range of joint ventures in a wide range of mainly resourcebased
situations (e.g., forestry, geothermal, horticulture, energy).
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– As promoters of property developments in New Zealand and overseas in
commercial, residential and tourism properties.
– As corporate investors providing equity to unlisted companies and holding
material stakes in listed companies.
– As development bankers providing seed and development capital to start-up and
early stage business enterprises.
– As holders of co-operative shares (e.g., in relation to shares in Fonterra and
fertiliser co-operatives).
The future needs of Mäori enterprises in relation to capital markets will increase:
• In the post-settlement environment, the prominence of financially endowed iwi is an
important change in the Mäori enterprise landscape.
– The role of iwi relation to local and regional resource management is
being supplemented by an expectation of iwi involvement in infrastructure
development. This has the potential to expand their role in the commercial
sphere in the provision of such assets, but currently they lack the resources to
fund meaningful participation in large-scale capital-intensive investment.
– Iwi are becoming an important conduit between government (at both central
and territorial levels) and the private sector. Modern re-interpretation of the
meaning of Treaty partner relationship is portraying iwi as valuable partners to
private firms seeking to supply services to government.
– Some Treaty settlements have given deferred purchase rights and first rights
of refusal in relation to Crown-owned assets. Settlements have also reserved
the position of claimants with respect to important resources such as water,
geothermal and certain minerals. Claimants will need access to capital to
exercise such rights and/or exploit such resources as they become available.
• Land-owning trusts and Mäori incorporations 4 :
– In sheep and beef farming, structural changes in the industry are occurring in
response to structural cost pressures, exacerbated by drought conditions and
attempts to control the supply chain, reduce costs and improve quality.
– In forestry, face the requirements of financing the replanting of previously
harvested forest lands.
– Have opportunities to develop more intensive land-based activities that would
increase the overall productivity of their land. This includes changing land use,
alternative production, energy supply, adventure tourism, and the like.
• Owners of pre-1990 forest land face a special challenge because of the liability
imposed on them by the Emissions Trading Scheme.
The face of Mäori enterprises is changing. Mäori enterprises are not so tied to land as
a primary economic asset as they once may have been. They engage in an increasingly
wide range of business activities, and the trend is ever widening. The range of economic
activities includes traditional agribusiness, horticulture and forestry (as well as landlords
to others undertaking such activities), commercial fishing, aquaculture, tourism, property
development, and electricity generation. Iwi hold land on which is situated government
buildings such as Police stations, Courts, schools and universities. Iwi may yet become
involved in provision of core national infrastructure in Public Private Partnerships (PPP).
4. The two key commercial structures
that manage Mäori interests in land
are ahu whenua trusts and Mäori
incorporations. In 2008 there were
129 Mäori incorporations and 5,201
ahu whenua trusts which administered
207,157 hectares (or
14 percent of Mäori land) and 750,187
hectares (or 50 percent of Mäori land)
respectively Roughly 15,000 whanau
trusts hold interests in about 15 percent
of Mäori land. Around 2½ percent of
Mäori land is held under other trusts
established under Te Ture Whenua
Mäori Act 1993.
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Mäori enterprises are also an important source of capital for business investment.
There is not an organised market as such to link capital providers with entrepreneurs.
Nevertheless, some Mäori enterprises have been an important source of seed capital for
individual Mäori entrepreneurs in a development banking role.
Iwi have become increasingly prominent in the provision of social services to their
communities and an important source of capital for the development of such enterprises
and local infrastructure. The appearance and growth of Mäori tertiary education
institutions and pan-tribal organisations in fishing and forestry should not be overlooked.
Traditional definition of the capital market access problem
The problem presented by Mäori enterprise gaining satisfactory capital markets access is
characterised as stemming from Mäori freehold land being unsuitable security for loans.
Mäori enterprises are reluctant to offer land as security for historical and cultural
reasons and out of legitimate fear of potential alienation. Lenders are reluctant to
accept the full market value of such land reflecting the alienation barriers and potential
reputational consequences of exercising their rights as mortgagor in possession.
This traditional problem definition is an incomplete characterisation because some landowning
Mäori enterprises have been able to access debt funding on satisfactory terms
(see Appendix A, Case study 1).
Moreover, as noted above, land-based activities are not the exclusive focus for Mäori
enterprises, which are increasingly active across the range of industry sectors. Mäori
enterprises are active on the supply side of the capital market as lenders, investors, coinvesters
and equity investors, in addition to the role depicted in the traditional problem
definition as borrowers on mortgage.
Capital market participants perceptions
The great majority of the comments made to us at meetings, were offered in the spirit of
constructive change. People welcomed the opportunity to put their views forward.
In contrast to the traditional depiction of a reluctance to do business with Mäori
enterprises, banks and other capital providers are actively engaged and looking to
develop the range of services they offer to the Mäori enterprise market.
Mäori enterprises are seen as a strategically important focus area, but as we highlight in
the following discussion, a focus area with some challenges ahead.
Mäori enterprise characteristics
There is a striking similarity to the observations made by the individuals interviewed
about what characterises Mäori enterprises in their interaction with the capital markets.
No practical distinction is apparent between iwi enterprises and other Mäori enterprises
managing collective assets.
What emerges is three inter-related and overlapping characteristics perceived of
Mäori enterprises. The three characteristics affect Mäori enterprises’ ability to operate
effectively on both the demand side and the supply side of the capital markets.
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These characteristics are:
• Governance arrangements.
• Definition of enforceable property rights.
• Understanding of commercial value creation.
We will return and describe in more detail below what is meant by these characteristics
and how they affect Mäori enterprise development.
These characteristics are not all present in every Mäori enterprise; some are present in
many, and a few Mäori enterprises are free of any. Capital markets providers point to
larger Mäori enterprises as having developed their commercial management expertise
and financial knowledge over the past decade or more. This has occurred because their
size has enable tome to recruit and retain individuals with such skills. Nevertheless, they
are the exception, and experience contagion by association with those that do exhibit
the characteristics.
Why do the current perceptions exist
This is so in part because of the environment in which Mäori enterprises operate.
The external operating environment is complex and dynamic. Expectations are high of
benefits delivered to individual members of the stakeholder groups.
Iwi, and to a degree all other Mäori enterprises, face expectations of support for marae,
cultural activities, tangi, scholarships and other community-related activities which are
a priority. The mainstream commercial model is such that activities are discretionary and
funded out of shareholder returns, but for Mäori enterprises, the obligation is in reverse.
Mäori enterprises have to juggle the kinds of conflicting and competing priorities
in market and non-market settings that governments usually grapple with. Mäori
enterprises are generally not so well equipped with advisers, analytical tools and financial
resources to undertake these complex decisions.
The legal requirements for members of Mäori incorporation committees of management
and auwhenua trustees are different from the requirements of company directors, (see
Appendix A, Case study 2). Shareholders, landowners and beneficiaries may be changing
their views about what constitutes appropriate behaviour and their performance
expectations of individuals who fulfil governance roles.
Local political pressures also make it hard to reconcile the competing demands, and
these pressures can be intensely pressing on individuals.
This is a complex issue. For reasons that spring from the unique melding of institutional
structures and behaviours (reflecting specific cultural and capability issues) operating
at the level of owner/beneficiary, governance, management, and community, Mäori
enterprises do not conform to an idealised model of the nearest mainstream equivalent.
In the following paragraphs, we elaborate on what is meant by each of the three Mäori
enterprise characteristics.
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What do they mean by governance
We interpret the exercise of governance to mean the following four things:
• Keeping the promise. This begs the question of what promise is made (about
organisational purpose and performance) and to whom (which relates to property
rights).
• Effectively representing the organisation externally. This means projecting trust
to key stakeholders, investors, regulators, the community, and potential business
partners.
• Being an effective internal control mechanism. This means ensuring the organisation
is well run day-to-day and intervening appropriately when deviations occur. An
understood goal is needed to fulfil this element.
• Avoiding the unacceptable. This relates to the management of risk of all kinds,
including loss of reputation.
Mäori enterprises are largely corporatised such that there is separation of control
over the use of assets from the ownership of assets. Control is vested in the hands of
management or trustees who are agents for the owners and beneficiaries.
Not every Mäori enterprise has problems in any or all of the above-mentioned aspects
of the governance role. Nevertheless, there is sufficient perception amongst Mäori
and non-Mäori alike that governance of Mäori enterprises is required strengthening.
This is sometimes described by reference to slow decision making requiring extensive
consultation, which even then remains subject to veto. The intensity of politics puts
members of governing groups under intense personal pressure if they go one-way or
another on key decisions. The prospect of Mäori Land Court review is another factor
contributing to a perception of brittleness about governance in Mäori enterprises.
Attendance at courses, such as those run by the Institute of Directors, is pointed to, as
a partial recognition of need for improvement, but are criticised as elementary learning
and not a well-rounded education in the governance role.
The position is further complicated by the unfamiliarity of the structures predominately
employed for collective land holding. Mäori incorporations and ahu whenua trusts
are unfamiliar structures for capital markets providers in comparison with standard
companies and Limited Partnerships.
What do they mean by property rights
Property rights only have meaning and value if they are recognised, valued and capable
of being enforced at reasonable cost.
Private property rights in the European context are generally understood to be static,
exclusive and perpetual, although, as we will comment later, this is not the only way that
property rights may be viewed.
For the present purpose it is evident that in connection with Mäori enterprises, property
rights are either not sufficiently defined, or have become so diluted as to provide very
little incentive for enforcement. For example:
• For “property rights” in relation to assets held in trusts there are no ownership rights
in the normal sense of the entitlement to receive a share in distributions, information
and to alienate the entitlement.
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• For shareholding interests, which may be variations on a body corporate, such as a
Mäori incorporation. The distinguishing characteristic of the modern corporation is
the separation of ownership of the assets of the corporation from control of those
assets. While ownership of the assets is vested in the shareholders, control over these
assets is in the hands of professional managers of the corporation. Hence, managers
take actions whose consequences are largely carried by the shareholders of the
corporation.
The difficulty with the property rights entailed in these arrangements is that under trusts
there is no entitlement for the beneficiaries to receive distributions and it is largely a
discretionary matter for trustees as to how distributions are made.
In the case of Mäori incorporations the splitting of shareholdings when one generation
inherits from the previous, combined with low returns from land-based activities and
high administrative overheads, mean that shareholdings represent very little of material
significance in many cases. In other words, the shares add little value for their owners,
although owners may attach immense cultural and historical value to their continued
connection with ancestral lands.
Treaty settlements too are highlighted as transferring collective assets where property
rights are not well defined. Perceptions are that small elites control the resources gained
and held in post-settlement governance entities (PSGE) and these assets do not mean
much to Mäori unless they are directly involved in the business of the iwi.
The other sense in which property rights need development, concerns the mandates
given to individuals in governance and management positions.
The property rights system based on static, exclusive and perpetual rights in relation to
land stands in contrast to the understanding of land ownership that Mäori employed
before European contact. Property rights were not static, exclusive nor perpetual in this
setting. Nor were property rights in land this way in pre-feudal Europe. Ownership in
these systems was a use right. Use rights could change in favour of the owner’s wider
kin if the owner did not use, or fully use the land. It was a case of use it, and share the
benefits with kin, or lose it to kin.
Static and perpetual property rights are also at odds with economic efficiency. These
ideas are at odds with Mäori cultural values in relation to land.
What do they mean by understanding of value creation
Value creation describes the processes by which businesses increase the wealth of their
owners.
It is a difficult concept to master because there is no market in which shareholder
value may be observed and generally accepted accounting policies do not calculate it.
Commercial value creation is a relative concept. A business creates value for its owners
in a year in which the return to capital providers (owners and capital providers) exceeds
the required return on equity and debt provided. In other words, commercial value is
created when returns exceed the expectations of the capital providers.
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Conclusion
Many Mäori enterprises have a mission to create or preserve value and enact strategies
to achieve their mission.
There is a perception from the capital markets perspective that process and means by
which commercial value is created is not always well understood. This is reflected in
investment ideas and credit proposals, which are not suitable for the capital market
providers to whom they are presented. Another manifestation is the perception that
Mäori enterprises undervalue executive management and over-rely on “investment”
strategies without a sufficient recognition that shifting from one asset class to another;
more risk class does not of itself add value unless the investment out-performs the
market for assets of its class.
Capital markets view commercial value creation as the result of a management process.
The most consistently successful businesses understand that their purpose is to create
value for customers, employees, and investors, and that the interests of these three
groups are inextricably linked. The first focus should be on creating value for the
customer. This cannot be achieved unless the right employees are selected, developed,
and well rewarded. Nor can it be achieved unless investors receive consistently attractive
returns such that they will provide the capital necessary to achieve the first two. The
expectations of all three need to be exceeded, regularly and consistently.
The perception is that there is room for improving the knowledge of Mäori enterprises
about the means of creating commercial value.
Mäori enterprises holding collective assets are significant contributors to economic
performance and major players in export-orientated primary industries. Mäori
enterprises also figure in tourism, property development and energy production.
Their role is changing away from the traditional focus on land-using activities and into a
broad range of commercial situations and they are an important source of development
capital for Mäori entrepreneurs.
With a few exceptions, however, Mäori enterprises do not have the financial flexibility
required to make the most of the all opportunities facing them. Mäori enterprises need
access to capital markets to fulfil the potential represented by their collective asset
holdings and market position. Some Mäori enterprises are able to access capital to meet
their needs on acceptable terms, as well as the other services offered by capital market
participants (risk management, wealth management, and advisory).
Capital providers, largely, recognise the economic potential represented by Mäori
enterprises and see the sector as a strategically important focus area for business
development. However, currently there is no understood commercial model for a
“standard” Mäori enterprise that recognises the competing pressures and complex
operating environment they face. Capital providers look at a few characteristics
when making assessments about whether they will invest. If there are gaps, such as
an unwillingness to offer and as security, capital providers look more closely at other
characteristics when undertaking their due diligence examination.
The perception is that over more than a decade the largest Mäori enterprises have
improved their management ability and financial knowledge through their ability to
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attract and retain people with such skills. In contrast, smaller Mäori enterprises, which
are the great majority and control significant assets, are perceived to struggle in this
area. Three inter-related and overlapping matters surface in discussions relating to
transactions between capital market providers and Mäori enterprises. Perceptions held
about these issues affect the ability of Mäori enterprises to access the capital markets.
2. Findings
Introduction
In this section, we present the key findings of the scoping study.
In the previous sections what has emerged from our discussion with capital market
participants is that there are three inter-related and overlapping characteristics
perceived of Mäori enterprises. The three characteristics affect Mäori enterprises’
ability to operate effectively on both the demand side and the supply side of the capital
markets.
These characteristics are:
1. Governance arrangements.
2. Definition of enforceable property rights.
3. Understanding of commercial value creation.
Current perceptions are limiting capital providers interest in Mäori enterprises
For capital providers there are three logical responses to these three characteristics
involving Mäori enterprises:
• Passive investors, whether equity providers or banks, will limit their exposures. When
governance is weak, trust is low, and it flows logically that contact and exposure
to risk will be minimised. If business proposals are founded on poor understanding
of markets and business process they are unlikely to be backed. If organisational
boundaries are fuzzy then capital providers will be concerned about value leakage.
• Active investors will limit their involvement to situations where they exercise day-today
control over resources and over key strategic decisions. They will also limit their
involvement to situations were the return justifies the risk of slow or attenuated
decision-making.
• Reputable parties will not be attracted to co-investing in situations where there is
risk of failure because the participants fail to understand the nature of the risk they
face in a business venture.
These are rational responses to the perceptions held about Mäori enterprises. Our
interpretation is that the governance, property rights and commercial value creation issues
stem knowledge and experience and to a lesser degree from issues related to structure.
There has been in recent years development of commercial structures by Mäori
enterprises and the introduction of new legislation for Limited Partnerships Capital
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providers can point to transactions and structures which have worked for them and
Mäori enterprises, but there is recognition that awareness may be low among those who
have not been directly involved.
The central issue identified in this scoping report relates to ways and means of
managing mindsets in relation to governance, property rights and value creation that are
compatible with Mäori cultural values.
Larger Mäori enterprises are recognised as making faster progress
One perspective is that the Mäori enterprise sector is developing maturity more rapidly
through experience of doing business and interacting with capital markets.
The perception is that iwi organisations have significantly developed their management
ability and financial savvy. This is attributed to their size, giving them the ability to
attract and retain talented individuals with the right skills and experience.
At the same time, the scarcity of management talent has affected the smaller less well
resourced Mäori enterprises, and here the perception is that these organisations have at
best stood still in relation to management ability and financial savvy. Concerns are also
voiced that smaller Mäori enterprises may over-rely on advisers who themselves do not
possess the right commercial skills.
It is universally acknowledged that strong governance, well-defined enforceable property
rights and commercial value creation are the core components of sound business. These
three elements are the commercial tikanga, the right way of doing things.
Understanding how to mobilise resources is an important engine for growth
The key issue is for Mäori enterprises to understand the likely engines of future growth in
the economy, how they work, and how best to encourage the productive use of resources
available to them.
Mobilising the resources already under the control of Mäori enterprises is an important
engine for growth.
Employing the available tools of the capital market is an important mechanism for
achieving commercial success and growth. Mäori enterprises control significant
economic resources with considerable development potential, but with a few exceptions
they lack the liquidity necessary for development. To access successfully the necessary
liquidity from the capital markets to make this happen there need to be changes
in attitude to governance, property rights and commercial value creation that are
nevertheless compatible with Mäori culture.
Harking back to Ngata’s whakatauki, two important things emerge:
• Culture, the diadem in Ngata’s words, is a significant determinant of any economy’s
ability to prosper. This is because culture shapes the way individuals think about
progress, prosperity, risk, reward, and opportunity. Cultural values form the principles
around which economic activity is organised, and without sufficient economic
activity, progress is not possible.
14

• Successful business enterprises are the primary engines of growth, the tools of the
Päkehä in Ngata’s words. Successful businesses may take many forms and have
many ownership structures. What is most important to recognise is that it is at the
business level that commercial value creation occurs. Without enough successful
businesses, there will be insufficient economic progress.
Given these connections between human progress, culture and prosperity key questions
for attention in the next stage of the capital markets project focus on what makes for
successful businesses and how these can be fostered as Mäori enterprises.
Internal factors that could foster success not well enough understood
Many external factors influence the ability of any enterprise to be successful. Such
external factors include a stable macroeconomic environment, transparent and efficient
government institutions, adequate physical infrastructure, an educated workforce and
access to markets for products and capital. Although there has been extensive analysis,
research and debate external factors, the internal factors are not so well understood.
Research and analysis on what is necessary to achieve success inside an enterprise is
relatively sparse. Access to talented individuals and to capital on satisfactory terms are
success factors. So too are enterprise-level operating practices and strategies.
Such practises and strategies are heavily influenced by individuals’ attitudes towards
progress, prosperity, risk, reward, and opportunity. These attitudes are called
“competitive mind-sets”. Fundamentally, commercial success requires that the economic
foundations are in place and that a “competitive mind-set” exists which fosters
innovation and productivity inside the enterprise.
Increasingly it is understood that economic decisions are made in a social context. The
cultural norms of the society in which economic and commercial decisions are made
are at the core of attitudes towards economic decision making. If a more widespread
commercial culture is required then the society in which Mäori enterprises exist need
to become more supportive of competitive mindsets. A challenge is to break through
the attitudes that may be holding back development of a broader base of competitive,
successful Mäori enterprises.
Previous studies have pointed to structural and behavioural issues that lie behind
capital market access issues for Mäori enterprises. The NZIER in 2002, for example
point to a revised corporate entity that more closely resembled a shareholding
company as a possible way forward. Our scoping study has also revealed that there
are structures available that could be used to overcome many of the issues that stem
from structural causes. The reasons why these solutions are not adopted more widely
though are of interest.
In the following section of the scoping study we highlight four areas for improvement
which specific proposals, which are more or less independent and suitable for advancing
separately.
15

Gaining acceptance of the need to change attitudes within Mäori enterprises will be
critical
The challenge however, that will be faced by leaders in Mäori enterprises is that they will
be promoting solutions to problems that their constituents do not fully comprehend.
This, after all, was the blueprint that Ngata wrote in his whakatauki. Cultural change
may inevitably follow, but the task at hand is not to destroy culture. The task is to create
the conditions that give birth to competitive Mäori enterprises because these will be the
engines of growth that support human progress that can in turn promote culture.
However, these and other structural solutions will only be adopted by Mäori enterprises
if there is a change in attitudes towards governance arrangements, property rights and
commercial value creation.
Individuals’ attitudes towards progress, prosperity, risk, reward, and opportunity shape
what is called their “competitive mind-sets”. Fundamentally, commercial success requires
that a “competitive mind-set” exists which fosters innovation and productivity. Such
attitudes are necessary inside enterprises and also in the societies in which they exist.
Individuals’ attitudes towards such matters are shaped by culture. During the interviews
and in discussion with Reference Group members we heard how Mäori culture and
commercial mindsets could run in opposition to one another. Different individuals used
different words and stories to describe this issue. Fundamentally the view that emerged
is that when Mäori enterprises embrace different attitudes towards progress, prosperity,
risk, reward, and opportunity, this reflects in their governance arrangement, property
rights and approach to commercial value creation. When such attitudes are to the fore in
Mäori enterprises there is compatibility with capital markets requirements.
We need to understand how attitudes change
While the purpose of a scoping study is to highlight issues rather than to present
solutions recent academic research on human ability and social interaction and their
implications for economic behaviour highlights how attitudes might be changed.
Twenty years ago, behavioural economics did not exist as a field and many economists
were deeply sceptical-toward the idea of importing insights from psychology into their
field, being content with the 18th century invention of the rational, self-interested, workshy
individual as an explanation for market behaviour. A key insight from behavioural
economics is that most economic decisions are made in a social (or cultural) context.
Social dynamics, many economists now believe, are at the core of economic decisionmaking.
“What I decide affects you, what you decide affects me, and, even more to the
point, I care how I fare economically compared with how you fare”. Reference to social
dynamics is made in the area of workplace safety were there is clear evidence that
mindsets influenced by culture do change once the cultural dimensions are unpacked and
there is widespread shared understanding of the needs to do things differently.
Our focus for the next stage
It follows that the main recommendation of the scoping study is to focus the next stage
of work on understanding the influence of culture on attitudes that affect competitive
mindsets.
16

The tools of behaviour economics – which is a multi-disciplinary field – are available
and clearly some Mäori enterprises have succeeded in finding workable solutions. The
objective of the work will be to capture their insights and find practical ways and means
of influencing widely-held attitudes.
This, after all, was the blueprint that Ngata wrote in his whakatauki. Cultural change
may inevitably follow, but the task at hand is not to destroy culture. The task is to create
the conditions that give birth to competitive Mäori enterprises because these will be the
engines of growth that support human progress that can in turn promote culture.
Conclusion
Capital providers, by and large, recognise the economic potential represented by Mäori
but current perceptions are limiting capital providers’ interest in Mäori enterprises.
Capital market providers do however recognise that iwi organisations have significantly
developed their management ability and financial savvy during the last decade. Key
issues for Mäori enterprises are to better understand the:
• likely engines of future growth in the economy, how they work, and how best to
encourage the productive use of resources available to them; and
• lnternal factors such as enterprise-level operating practices that will foster success.
Gaining acceptance of the need to change attitudes within Mäori enterprises will also be
critical and understanding how best to change attitudes within change Mäori enterprises
is a key recommendation of the Scoping Study.
In the next section, four subsidiary issues that emerged from the Scoping Study are
discussed. These are or less independent and suitable for advancing separately from the
central issue.
3. Specific proposals
Introduction
Emerging from the scoping study were a number of specific
proposals which are more or less independent and suitable for
advancing separately
• Developing a shared understanding between capital providers and Mäori enterprises
of a “standard” Mäori enterprise model.
• Develop a knowledge resource on:
– Structures, precedents and marketing information for dissemination amongst
Mäori enterprises, advisers and the capital markets that are aimed at improving
the marketability of Mäori assets and the ease of joint venturing.
– Operational management, risk management, investment, treasury management,
business valuation and preferred legal structures.
• Structures that exist and case studies of how they have been successfully employed
by Mäori enterprises.
17

• Investigating alternatives to over-the-counter markets Mäori incorporation shares.
• Investigating a collective treasury management facility that would be available to
Mäori enterprises.
These proposals are discussed further in turn below.
There is no understood Mäori commercial model
There is not an understood model for a “standard” Mäori enterprise in the same way that
there are understood models for public companies, co-operative companies, familydirected
business, and State-owned enterprises. These understood models take account
of features of the ownership arrangements and operating environment that are specific
to the type of firm.
Participants in the study variously tried to relate Mäori enterprises by analogy to
mainstream entities such as shareholder corporations, co-operative companies and
family businesses:
• Like financial mutuals and cooperatives, Mäori enterprises may lack the ability
readily to raise equity capital from their shareholders. Thus, their main source of
equity is retained earnings or joint ventures. This limits the potential rate of growth
of such enterprises.
• Like family businesses, complex interrelationships are the ties that bind the family
business in the business family in the Mäori enterprise context. While the business
assets unite the family in a shared economic destiny, overlapping roles can create
stressful relationships.
Banks and other financial institutions have developed ways of accommodating firms with
ownership restrictions. However, the application of the corresponding principles to Mäori
enterprises has yet to develop. This is not to say that there has been no recognition of
these principles in no situations, but the capital market lacks maturity to viewing Mäori
enterprises through such a lens. Partly this is because the common analogies fail to
provide a sufficient description of a standard Mäori enterprise.
The development of models, which promote understanding of Mäori enterprise and
how it might be structured to improve performance in business, is an area for fruitful
research in the future.
Developing knowledge of structures to improve marketability
While enforceable property rights are essential to the modern economy, it is not
necessary that all property rights are always static, exclusive and perpetual. Property
rights can be separated into ownership rights (the right to sell or otherwise alienate) and
the right to make use of an asset.
The familiar example is a landlord who holds the ownership rights in a piece of
property but exchanges with the tenant the right to occupy and use the property in
exchange for rent.
The development of this line of thinking leads into investigation of commercial structures
that provide flexibility so that assets can be attracted to their highest and best use,
without necessarily alienating asset ownership.
18

Such arrangements under which user rights and ownership are detached are widespread
and common.
A good example is forestry rights and Crown Forest Licences. Both of these arrangements
separate ownership of land from the right to use the land for defined forestry purposes
without creating a legal interest in the land. Such licences are exchangeable and able to
be used as security for loans.
Such separation of ownership and use preserves asset ownership but allows (relatively)
free exchange of the value-creating elements of the asset, which are the right to use the
asset for commercial purpose.
Mäori enterprises may benefit from the development of legal precedents (templates) for
the application of these principles to land in uses other than forestry.
Similar ideas emerge in relation to joint venture arrangements. There are few precedents
for such arrangements that can inform Mäori enterprises about what to look for, what
is reasonable to ask for, and what to avoid. The development of precedents could be
helpful.
Now that the Limited Partnership arrangement, which is favoured internationally for
venture capital is available in New Zealand, there is a need to promote understanding of
its benefits and the mechanics of using it as a deal structure.
Developing commercial knowledge
One of the influences at work on the interaction of Mäori enterprises and the capital
markets concerns the availability and application of specific relevant knowledge.
Currently there is a lack of a readily accessible mechanism to capture the knowledge
gained through experience of dealing in capital markets and share it more widely
amongst Mäori enterprises.
Good information, especially about markets and commercial ventures, is difficult, time
consuming and expensive to obtain. The highest quality information is first hand, and
is always the most expensive to obtain. The lowest quality is public information and
rumours. Public information is promptly reflected in market prices and so is rarely of
value in identifying value-creating opportunities.
A mechanism to share the previous commercial experiences of others would reduce costs
when Mäori enterprises contemplate transactions and investment. Specific benefits
would result from:
• Lowering the cost of obtaining relevant information about the commercial
attractiveness of an opportunity and about gauging the risk exposure.
• Lowering the costs of implementing transactions arising from improved awareness of
commercial mechanisms, and how and when they are deployed.
Developing a mechanism for Mäori enterprises to contribute from their experiences
would be one mechanism to help address the commercial knowledge issue. Such an
arrangement might be a moderated website organised on the Wikipedia model. This could
accumulate case studies, records of experiences as well as guidance notes on a range
of topics including operational management, risk management, investment, treasury
management, business valuation and preferred legal structures.
19

Alternatives to over-the-counter markets
The question of the benefits of tradeability of shares in Mäori enterprises is controversial.
The benefits of more accurate pricing, performance monitoring and facilitation of
ownership change are advocated by some and opposed by others who see this as
contrary to Mäori values.
Shares in Mäori incorporations may be traded subject to limitations on who may hold
shares. Typically, a share value is struck annually and the trading is on an over-the
counter basis with the incorporation matching willing buyers to willing sellers. Some
incorporations may deal in their own shares as a principal.
Such arrangements lack transparency especially with respect to price discovery. They are
also unresponsive to market-relevant news. They may also lack transparency in respect of
trading trends such as the amassing of stakes.
Technology has made the possibility of creating private trading posts as an alternative
to over-the-counter markets at low costs. A member-only area in the incorporation’s
website would be the interface to generally available market software to post prices,
display news and match bids and offers.
An issue to examine is mechanisms for dealing in unmarketable parcels such as fractions
of shares.
Trading posts may be a step in the direction towards a Mäori capital market that
specialises in transactions in claims on Mäori enterprises and may in the future permit
capital raising and other capital market transactions.
A Mäori enterprise treasury management facility
A proposed treasury management facility concept is to establish a collective treasury
management vehicle for Mäori enterprises. A similar concept has been advanced in
relation to a bond bank 5 for local authorities, and for similar reasons.
Treasury management is concerned with raising finance, managing liquidity, management
of currency and interest rate risks and management of relationships with banks (and
other capital providers).
The development of treasury management functions within corporate businesses can
be traced back to the 1960s. Developments in technology and the breakdown of fixed
exchange rates combined with the trend to globalisation of the business operating
environment exposed businesses to many more risks and opportunities that required
specialist management. This led to markets opening up for hybrid capital instruments
that offered lower borrowing costs than traditional methods, and financial instruments
(forwards markets and derivatives) that permitted management of interest and exchange
rate risks.
5 For an overview of bond banks
internationally see “Municipal Bond
Banks Around the World,” Moody’s
Investor Service, May 2001.
Even the largest Mäori enterprises, are only just big enough to justify a dedicated
treasury management function. The vast majority of Mäori enterprises are individually
too small, but collectively would have the critical mass to support a collective treasury
management function.
20

There are a number of possible ways in which such a facility might be organised,
if sufficient support for the concept could be mustered. Options would need to be
developed and tested with potential participating Mäori enterprises. Experience shows
that a key issue is whether the facility should be run as a profit centre or as a cost
centre. The main argument for a profit centre is the motivation to do what is best for
the group. The downside is that some treasurers may interpret a profit motivation as
an invitation to speculate. Consequently, there are many who advocate a cost centre
approach. The downside of the cost centre approach is the potential for arguments about
the allocation of costs (and losses).
Having a treasury management facility available to Mäori enterprises would strengthen
their businesses and improve their presence in the capital markets. However there
are a number of practical issues relating to business purpose and scope, ownership
and governance arrangements, and operational management that would need to be
investigated. The concept needs development before testing its feasibility, suitability and
acceptability to the Mäori enterprise sector.
Conclusion
The scoping study recommends promoting a dialogue on developing a shared
understanding about a standard Mäori enterprise commercial model, a knowledge
resource on commercial matter built from Mäori enterprise experiences, investigation
of alternatives to over-the counter markets for shares and investigation of a collective
treasury management facility.
In the next section, we set out the recommendations of the scoping study.
4. Recommendations
Introduction
The scoping study has identified three characteristics of Mäori
enterprises that require development if they are to play a full role in
Mäori economic development.
The central issue emerging from this scoping study is the need to develop effective
means of improving Mäori enterprises’:
1. Governance arrangements.
2. Property rights.
3. Commercial value creation.
This central issue is the basis for our first recommendation. The priority for future work
is to develop better understandings of the attitudes towards progress, prosperity, risk,
reward, and opportunity within Mäori enterprises. Better understanding will contribute
to adoption of competitive mindsets that are compatible with Mäori culture.
21

Recommendation:
1. The priority for the Reference Group should be:
a. Achieving a better understanding of attitudes that inhibit adoption of
competitive mindsets in relation to governance, property rights and value
creation by Mäori enterprises.
b. Identifying ways, means and mechanisms to change mindsets in relation
to governance, property rights and value creation that are compatible with
Mäori culture.
Four subsidiary issues emerged from the scoping study, which are more or less
independent and suitable for attention. The subsidiary issues are:
• Develop a shared understanding between Mäori enterprises and capital markets of
the Mäori commercial model.
• Develop a learning post containing a knowledge resource:
– Structures to improve the marketability of Mäori enterprise assets. These
included:
– Widely understood mechanisms akin to forestry licences, for detaching
fungible use rights from the freehold of Mäori land.
– Promotion of the Limited Partnership as a model arrangement for joint
ventures.
– Templates that are accessible by Mäori enterprises. Such templates would
comprise guidance notes covering a range of topics including operational
management, risk management, investment, treasury management, business
valuation and preferred legal structures.
• Investigate alternatives to over-the-counter markets for Mäori incorporation shares.
• Investigate a collective treasury management facility available to Mäori enterprises.
The investigation needs to address practical issues relating to business purpose and
scope, ownership and governance arrangements, and operational management.
22

Recommendation:
2. Commission research into developing an understanding of the unique Mäori
enterprise commercial model that is capable of being endorsed by Mäori
enterprises and capital markets
3. Develop a knowledge resource:
a. Structures, precedents and marketing information for dissemination
amongst Mäori enterprises, advisers and the capital markets that are
aimed at improving the marketability of Mäori assets and the ease of joint
venturing.
b. Templates accessible by Mäori enterprises providing guidance notes
on operational management, risk management, investment, treasury
management, business valuation and preferred legal structures.
4. Investigate the possibility of creating listed alternatives such as trading posts to
over-the-counter markets for shares in Mäori incorporations.
23

Appendix A Case studies
Introduction
The following case studies illustrate and amplify aspects of the
scoping study.
The first case study illustrates how a Mäori incorporation was able to harness the capital
markets to pursue its long-term strategic direction of resuming direct control over lands
from lessees. It is an example of where good governance practice, a clearly articulated
value proposition, and careful relationship management paid off.
The second case study illustrates the important differences between the minimum
requirements for the governance arrangements of Mäori incorporations and companies.
The case study argues that if committee of management members were under the same
obligations as directors they would pay more attention to the obligation of acting in
good faith, exercising powers for proper purpose, employing a greater degree of skill and
diligence in the decision-making process.
Tuaropaki Trust is an ahu whenua trust formed in 1952 as an amalgamation of land
holding interests of seven hapü.
1. Atihau-Whanganui Incorporation
In 1998 the Atihau-Whanganui Incorporation (AWHI) made two important strategic
choices:
• To resume the remaining leased land that it owned as the leases matured.
• To pursue a claim against the crown for costs and losses incurred since its formation
in 1970 arising from the administration of its lands under the Vested Land regime.
AWHI’s 42,000 hectares and a further 5,000 hectares administered by the Mäori Trustee
are the residue of up to one million acres of land that was vested on trust in lands board,
subdivided and leased for farming on 21 + 21 year terms.
The terms of resumption, since the 1950s, were to pay the retiring lessee two-thirds of
the value of improvements assessed by two registered valuers. In addition, on resumption
AWHI faced, the cost of purchasing livestock (usually from the retiring lessee) and of
deferred maintenance expenditure. Common practice for retiring lessees is to run down
the property as maturity. Reduced fertiliser application and regrassing in the terminal
years have a long-lived knock-on effect on productivity.
AWHI has had a long-standing banking relationship with BNZ since its formation in 1970.
Its accountants, Balance Chartered Accountants provided a regular flow of information
and management meetings kept the bank aware of AWHI’s current situation and outlook.
Prior to the 2005 maturities, AWHI had an existing debt facility of around $10 million.
Security for the facility was provided by a mortgage over the Incorporations lands. The
lands have a rateable value of $100 million.
24

AWHI began discussions with BNZ on its strategic direction from the time of its adoption
by the board, even though the impact would not be felt until 2005 when the next
tranche of leases matured.
A facility was negotiated that would provide for AWHI’s working capital facilities and
the estimated costs of resumption, stocking and deferred maintenance. In 2004 the
estimated cost was $20 million. The actual cost turned out to be much higher at $33
million.
The situation was complicated by the drought and poor sheep and beef returns.
At its peak, AWHI drew down more than $50 million on its facilities with the BNZ
including interest costs.
In 2008, AWHI settled its commercial claim with the Crown for a total package of $26.5
million to apply to debt reduction and early lease resumptions.
The case study demonstrates:
• Mäori enterprises are able to borrow substantial amounts against the security of
Mäori land if the conditions are right.
• The importance of a clearly articulated strategic direction that it communicated early
to its bank.
• Maintaining frequent, good quality dialogue with the bank, helps the banks
understanding of the Incorporation’s business case. Bank staff were involved directly
in planning sessions and briefings.
• The bank had confidence in the governance displayed by the committee of
management, both in terms of the experience of the individuals, its ability to work as
a board an their unwavering commitment to resumption and settlement. The board
made significant investments in both strategic imperatives, which paid off.
2. Comparative governance of Mäori incorporations and companies
In 2008, there were 129 Mäori incorporations. The ten largest 6 collectively owned $1,000
million of assets or roughly 17 percent of Mäori enterprise assets. 7
Mäori incorporations operate under Te Ture Whenua Mäori Act 1993 (TTWMA) and
associated regulations.
Like companies, Mäori incorporations have perpetual succession, limited liability and are
governed by a board (called a committee of management).
When a Mäori incorporation is formed, the contributing landowners become shareholders
in the incorporation. Incorporations must establish and maintain a share register of
shareholders, their shares and contact details. Incorporation shares are restricted shares,
which may be traded only to other shareholders in the manner that shares in many public
unlisted companies are restricted.
Committee members are directly elected for three-year terms, while directors may be
appointed or elected according to the company’s constitution; shareholders usually but
not always participate in director appointments.
6. Wakatu Incorporation (Nelson Bays,
Marlborough), Parininihi Ki Waitotara
Incorporation (Taranaki), Wairarapa
Moana Incorporation (King Country,
Wairarapa), Mangatu Incorporation
(Poverty Bay), Atihau-Whanganui
Incorporation (Ruapehu), Taharoa C
Incorporation (Waikato), Mawhera
Incorporation (West Coast), Waitutu
Incorporation (Southland), Tahora
2C1 Incorporation (Hawke’s Bay) and
Mangatawa-Papamoa Incorporation
(Bay of Plenty).
7. Te Puni Kökiri estimated total Mäori
commercial assets in 2005/06 to
be $16,450 million, which included
$10,460 million of commercial assets
owned by individual Mäori.
25

Table 1
Comparative Governance Arrangements for Mäori Incorporations and Companies
Te Ture Whenua Mäori Act 1993 and Companies Act 1993
Item Mäori Incorporation Company
Legislation Te Ture Whenua Mäori Act 1993 Companies Act 1993
Perpetual succession Yes Yes
Limited liability Yes Yes
Constitutions
Modify constitution
Governance
Governance obligation
Mäori Incorporations Constitution
Regulations 1994 prescribe a
default constitution for Mäori
incorporations who do not have
specific constitutions.
Shareholders must approve a
special resolution to modify the
constitution.
Committee of management and
Mäori Land Court
Committees of management and
members have statutory obligations
to ensure “proper administration
and management” of the
incorporation’s affairs. (TTWMA, s
269(3)).
Companies not required to have a
constitution, s 26)
Shareholders must approve a
special resolution to modify the
constitution.
Board of directors
Company directors ensure
management of the business and
affairs of a company (Companies
Act, s 128).
Incorporation Mäori Land Court makes
and establishment order and
appoints an interim committee of
management to hold office until
the first AGM.
TTWMA s 269 (1) (2) and MIC Reg
14, s 1
Company can be incorporated with
shareholder and director consent,
and satisfaction of technical
formalities relating to registration,
s 12 – 14
Election of committee
members
Committee members usually
elected on a three year rotational
system. Most Mäori incorporations
stagger retirements so that
there is continuity of committee
membership. MIC Reg 22.
A company constitution will
generally outline how the directors
may be appointed or elected.
Shareholders usually, participate in
the appointment of directors.
Constitutions may provide for
rotation of directors or may only
allow directors to serve for a
specified timeframe, s 36.
26

Comparative Governance Arrangements for Mäori Incorporations and Companies
Te Ture Whenua Mäori Act 1993 and Companies Act 1993
Item Mäori Incorporation Company
Qualification and
disqualification
There are few qualifications
required of committee members.
Individuals may be disqualified
under TTWMA, s 272, however, if
they are:
• subject to a compulsory
treatment order under the
Mental Health Act 1992
• undischarged bankrupt
• convicted of any offence
punishable by imprisonment for
a term of six months or more,
unless they have served the
sentence.
Companies Act, s 151 (2) and (3)
provides significantly greater
grounds for disqualification of
directors:
• Bankruptcy,
• Under 18 years old;
• Is prohibited from being a
director or promoter of or
taking part in the management
of an incorporated or
unincorporated body under
the Securities Act 1978 or the
Securities Markets Act 1988 or
the Takeovers Act 1993;
• does not comply with any
qualifications for directors
contained in the constitution of
that company; or
• is not a natural person.
Performance standards
The TTWMA does not outline
for standards of performance by
committee members beyond their
administrative responsibilities.
• The Mäori Appellate Court
has noted for governance
purposes “the minimum
standard to be that of prudent
and competent administration
in the management of the
assets and the business of the
Incorporation”.
Explicit directions given for
directors’ duties in relation to
companies.
The Companies Act 1993 requires
directors to:
• to act in good faith and in the
best interests of the company;
(s 131)
• to exercise power for a proper
purpose; (s 133)
• not to act or agree to
the company acting in
contravention of the
Companies Act or the company
constitution; (s 134)
• not to trade in a manner likely
to create a substantial risk of
serious loss to the company’s
creditors; (s 135) and
• to exercise the care, diligence,
and skill of a reasonable
director (s 137).
27

Comparative Governance Arrangements for Mäori Incorporations and Companies
Te Ture Whenua Mäori Act 1993 and Companies Act 1993
Item Mäori Incorporation Company
Enforcement regime S 280 (5), (7)
There is a moderate enforcement
regime applicable for committee
members operating under the
TTWMA.
The Court can coordinate
investigation of an incorporation
under s 280 upon either an
application by shareholders
together owning not less 10
percent or pursuant to a special
resolution passed by a general
meeting of shareholders.
After a s 280 investigation, where
it is “necessary to do so” the Court
can under s 280(7):
• remove members or other
officers;
• appoint person(s) to the
committee;
• suspend members and appoint
competent persons to exercise
all powers of the committee;
• impose conditions on the
powers of the incorporation;
• give directions for the conduct
of the incorporation;
• suspend any provisions
of the constitution of the
incorporation;
• order the winding up of the
incorporation; or
• refer any matter to the
Attorney-General to consider
prosecution against any person
or persons.
S 165-168, 169, 164, 173, 174, 175
The Companies Act provides a
broader enforcement regime for
directors, including:
• a statutory derivative action by
shareholders in the company’s
name against directors;
(s 165-168)
• a statutory personal action
by shareholders against the
directors; (s 169)
• an application for injunction or
compliance order; (s 164)
• a representative action; (s 173)
and
• an application as a prejudiced
shareholder (s 174, 175)
The Companies Act provides
broad remedial options (e.g.,
injunctions, compliance
orders, disqualification and
compensation). It is also likely
that damages and other remedies
would continue to be available
in common law for breach of
directors’ duties.
Sources:
The article on which this case study is based was written by Bell Gully solicitor Tama William
Potaka and was first published in the New Zealand Law Journal, September 2007.
It is curious to note that TTWMA and the Companies Act were passed in the same year,
1993, although they each embody quite different models for the governance of corporate
entities. Arguably the corporate governance model underpinning the Mäori incorporation
is weaker than the company model, especially in the important areas of qualifications,
performance standards and enforcement.
Shareholders in Mäori incorporations do not, as a rule purchase incorporation shares and
an investment. More typically they inherit small parcels, even fractions of a share, and
as a rule would not find a functioning market should they desire to sell. Arguably as a
restricted minority, their position should be protected to an even greater degree than a
company shareholder by strong governance arrangements.
28

This case study exemplifies the weaker governance referred to in the body of the report.
3. Tuaropaki Trust
Conclusion
Tuaropaki Trust is an ahu whenua trust formed in 1952 as an amalgamation of land
holding interests of seven hapü.
The 1952 amalgamation enabled the land to be developed for pastoral farming under the
direction of Trustees and management of the Department of Mäori Affairs. By 1979 sole
responsibility for the lands was vested in the Trustees, with the late Sir Hepi Te Heuheu
as Chairman.
Tuaropaki land totals 2,734 hectares on which it runs sheep, cattle and deer and operates
a 1,300 cow dairy unit. The Station business unit 1,825 hectares and 24,000 stock units.
The Trust set up the Tuaropaki Power Company (TPC) in 1994 and with a multi-million
dollar Australian investment commissioned its first generator, Mokai 1, powered by
geothermal steam from beneath its land in 2000.
A second plant has since opened to produce a total 110MW of electricity while Mighty
River Power has taken a 25 percent stake in TPC.
In 2002 the Trust took a 25 percent share of Gourmet Mokai, a joint venture with
producer grower and exporter Gourmet Paprika and in 2002 built 5.5 hectares of
geothermal heated hydroponic glasshouses on its land. The glasshouse area has since
been increased by 6.2 hectares to provide more export crops including tomatoes and
paprika.
The Trust is also a 16 percent shareholder in Vinoptima Estates at Gisborne where the
9.7 hectare vineyard is expected to produce 78,000 bottles of gewürztraminer, mainly
for export.
The Trust has leased space on a US communications satellite for broadband internet
services to provincial and remote areas of New Zealand under its Inzone branding.
The Tuaropaki case study is an illustration of how strong governance and a clear
understanding of what it means to create commercial value have enabled the Trust to
progress through stages of development from a land-based business to a successful
commercial conglomerate.
Case studies illustrate the positive examples of where Atihau-Whanganui Incorporation
and Tuaropaki Trust have succeeded through strong governance, by forging links with
capital markets providers and being focussed on value creation.
The comparative governance case studies illustrate the weakness of the governance
model employed for Mäori incorporations when compared to the Companies Act. In the
Mäori incorporation case, the qualification requirements and performance expectations
of the governing group are not as high as the obligations placed on directors, when
arguably they should be at least equivalent.
29

REFERENCE GROUP, INTERVIEWS
AND CASE STUDIES
Prepared for:
Te Puni Kökiri
Prepared by:
Indigecom Ltd
30 June 2010
31

Contents
34 1. Introduction
34 1.1 Purpose
34 1.2 The Mäori enterprise & capital markets project
34 1.3 Mäori Economic Taskforce
35 1.4 Taskforce purpose & members
35 1.5 Reference group
36 2. Methodology and approach
36 2.1 Study methodology and approach
36 2.2 Framework for the study
37 3. Mäori enterprises & access to finance
37 3.1 Mäori economic development
38 3.2 Access to finance for Mäori enterprise
39 3.3 Investment, capital markets & enterprise reference group
39 3.4 Reference group
40 4. Reference group discussions
40 4.1 Introduction
41 4.2 List of reference group engagements
41 4.3 Reference group discussion of the challenges & opportunities
42 4.4 June McCabe, reference group chair
43 5. Interviews
43 5.1 Introduction
44 5.2 List of interviews
44 6. Case studies
44 6.1 Introduction
44 6.2 Selecting case study options
44 6.3 Case studies
44 7. The way forward
44 7.1 Conclusions
45 7.2 Recommendations
46 References
33

1. Introduction
1.1 Purpose
This report is about the role of the reference group in the Mäori enterprise & capital
markets project, the interviews that were conducted and case studies assessed. The report
outlines the approach Burleigh Evatt – the lead consultants, followed in engaging with
Mäori enterprise and capital markets participants for their opinions and views about the
project’s objectives, and the issues which were identified and how these were addressed
in the scoping report that followed. The report also sets out the context within which
the Mäori enterprises and the capital markets project has emerged, its objectives and
recommendations for the way forward with respect to the scoping study.
This report fulfils the requirements for a report in Schedule C, Reporting Requirements, of
the contract for service between Te Puni Kökiri and Burleigh Evatt.
1.2 The Mäori enterprise & capital markets project
In January 2010, the Taskforce endorsed the scoping study on Mäori enterprises & the
capital markets. Burleigh Evatt of Wellington were contracted to undertake the study and
presented their report to project sponsor Rob McLeod in June 2010.
The Mäori enterprise and the capital markets project, which is grounded in current
knowledge of the Mäori asset base and financial institutions in New Zealand, was
commissioned as a Taskforce initiative because:
• Accessing capital is necessary for productivity growth of Mäori enterprise and
associated collectively held assets.
• There is a perception and some previous research that suggests Mäori enterprise
experience additional challenges in accessing finance.
• The Capital Markets Development Taskforce has identified areas in which the
operation of the markets can be improved in relation to Mäori enterprises.
The sections that follow discuss the role of the Taskforce and the reference group in the
capital markets and Mäori enterprise project.
1.3 Mäori Economic Taskforce
The Ministerial Economic Taskforce was formed in March 2009 around the peak of the
global economic recession. The Minister of Mäori Affairs, and co-leader of the Mäori
Party, the Hon Pita Sharples set up the Taskforce with the expectation that it would offer
strategic advice to help mitigate the worse effects of the recession for Mäori, while at the
same time, positioning Mäori for future opportunities.
The Taskforce was set the challenge of coming up with ideas and actions Government and
Mäori could take to support Mäori through the recession – in other words, help Mäori
create and retain jobs, and their incomes and livelihoods amidst the recession. Advice
on positioning Mäori for future economic opportunities would encompass the necessary
skills, knowledge, resources, finance, capability and networks.
34

Some of the these measures the Government has already introduced to deal with the
recession included a package of infrastructure projects spanning the housing, transport,
education and energy sectors at an estimated cost of almost $500 million, a small
business relief package designed to assist small and medium-sized businesses, including
a suite of tax changes costing $480 million over four years, an expansion to the export
credit scheme, extended jurisdiction for the Disputes (small claims) Tribunal, expansion of
business advice services, and a prompt-payment requirement for government agencies. 1
In effect, the Government’s response to the recession has been a mix of short and
longer term initiatives including providing immediate relief by maintaining (welfare)
entitlements, reprioritising government spending toward productive assets and
infrastructure, reducing public debt and trimming public sector costs, while introducing
regulatory reforms and incentives to promote productivity gains, innovation, export-lead
growth, and investments in skill development and education.
1.4 Taskforce purpose & members
The Mäori Economic Taskforce was established by the Minister of Mäori Affairs, the Hon
Dr Pita Sharples in 2009, with the following purpose:
“To provide on-going advice to the Minister of Mäori Affairs on actions Mäori
can take to work together to move Mäori towards active leadership and
participation in an economy which is innovative, high value, highly skilled,
diverse and resilient.”
Taskforce members and their respective areas of interest are:
• Hon Georgina te Heuheu, Associate Minister of Mäori Affairs
• Leith Comer, CEO, Te Puni Kökiri
• Daphne Luke, SMEs
• Bentham Ohia, Education, Training & Information Technology
• June McCabe, Investment Capital and Enterprise
• Hon John Tamihere, Social and Community
• Mark Solomon, Tribal Assets
• Ngahiwi Tomoana, Primary Sector
• Rob McLeod, Economic Growth/Infrastructure
John Tamihere has since resigned.
1.5 Reference group
June McCabe formed the reference group to assist her in advising the Taskforce on
the issues and possible solutions to improving the capital markets responsiveness to
investment in Mäori enterprises.
The reference group provides recommendations on policy that the Minister of Mäori
Affairs can consider, after consultation with the sector (including for example, the
Capital Markets Taskforce, financial institutions, iwi and Mäori enterprise leaders, among
others). The focus of the reference group is on what can be done to encourage greater
1 Treasury (2009) New Zealand Economic
and Financial Overview 2009, The
Economy of New Zealand: Overview:
Response to Recession and International
Credit Crisis, Wellington.
35

participation among Mäori enterprises in New Zealand’s capital markets, so Mäori can
more readily access the capital they need to maximise economic potential subject to
relevant kaupapa.
Members are invited to join the reference group for their expertise in Mäori enterprise
and/or in New Zealand capital markets. The present members of the reference group are:
• June McCabe, Mäori Economic Taskforce member.
• Franceska Banga, Chief Executive, New Zealand Investment.
• Adrian Orr, Chief Executive, New Zealand Superannuation Fund.
Other members may be invited to join the reference group as the work programme for the
group unfolds. Members are expected to attend up to six reference group meetings over
12-months.
2. Methodology and approach
2.1 Study methodology and approach
The reference group commissioned Burleigh Evatt, a Wellington based economic
consultancy to assist them in conducting the scoping study and the initial sector
engagement, with funding from Te Puni Kökiri.
The reference group’s expectation was that the study would culminate in a concise
and meaningful report on all the major issues and a presentation on the most salient
aspects of the study, along with clear recommendations on the way forward, and an
implementation plan for this.
The reference group also considered that selected in-depth interviews with key
stakeholders in the sector would add important insights about the issues. The interviews
were to be conducted as part of the scoping study.
2.2 Framework for the study
The reference group approved the following framework to guide the scoping study:
1. Define the Mäori consumers of capital and their unique characteristics and issues, in
terms of asset selection & maintenance, which will cover:
• The unique characteristics of Mäori enterprises as consumers of capital (i.e.
ownership, values, property rights, risk, asset classes).
• An appropriate way of organising and classifying Mäori enterprise in respect of
their demand for and consumption of capital.
• The characteristics and nature of governance and management structures used
by Mäori enterprises.
• How asset selection decisions are made, what assets will we invest in, hold and
develop.
• The managerial and governance capability of iwi and non-iwi Mäori enterprises.
• Regulatory environment affecting Mäori enterprises and how this affects Mäori
consumption of capital.
36

• An estimate of the size and scope of current and future demand among Mäori
enterprises for capital.
• Perceptions of risk among Mäori enterprises and how this affects demand and
supply of capital to Mäori.
• Any other impediments and competitive advantages Mäori enterprises might
possess in relation to accessing capital.
2. Define the suppliers of capital to Mäori enterprise and the challenges and processes
they apply in considering proposals for capital from Mäori enterprise and financing
Mäori assets, including consideration of the following issues:
• The assessment of character (track-record of applicant), capacity (cash flow
certainty) and collateral (security).
• Perceptions and assessment of risk among Mäori enterprise and investment
opportunities.
• The issues and considerations for equity and debt financing of Mäori assets and
enterprises.
• How financing of joint venture arrangements among Mäori enterprises and
outside business partners is approached.
3. How do we bridge the gap between the demand and supply for capital among Mäori
enterprise and collective asset holders This may include consideration of:
• Standards expected of Mäori enterprises and commercial investment
opportunities so they meet the capital markets expectations (e.g. good
governance, commercial benefits, managed risks).
• Financial products available to support Mäori specific consumers of capital, and
whether “re-packaging” these might be necessary:
I. Leveraging debt
II. Collectivising assets and structures among Mäori enterprise
III. Offering equity interests in Mäori investment opportunities
• Changes to the ‘rules of the game’ on the demand side and supply side of capital
to affect positive change in the interplay between Mäori enterprise and capital
markets.
3. Māori enterprises & access to finance
3.1 Mäori economic development
The New Zealand Institute of Economic Research report on Mäori Economic Development
in 2003, commissioned by Te Puni Kökiri, provided the most complete analysis of the
Mäori asset base, Mäori enterprise and economic activity up to that point. The key
findings were:
• Mäori value-added (akin to GDP) in 2000 was around $1.2 billion, equating to 1.4
percent of the national economy.
• Key sectors for Mäori were agriculture, fishing, owner-occupied dwellings and health.
• Mäori are net lenders to the rest of New Zealand (i.e. the Mäori economy has a
higher savings rate than the New Zealand economy).
37

• The Mäori economy is more profitable than the New Zealand economy (i.e. while
accounting for just 1.4 percent of value added, the Mäori economy generates
2 percent of operating surplus).
• Mäori remit $100 million more in tax than they receive in transfers (benefits).
• The implied growth of the Mäori economy generally exceeded growth of the
New Zealand economy between 1989 and 2000.
• Mäori are disproportionately open to the world economy (i.e. in 2000 the Mäori
economy accounted for 2.5 percent of total exports, despite accounting for only
1.4 percent of value added).
Further research has been conducted since. As at 2004, the Mäori commercial asset base
was estimated to be worth around $9.2 billion. 2 The Mäori asset base is centred largely
around two broad groupings: agriculture, fishing and forestry ($3.1 billion assets); and
property and business services ($2.4 billion assets).
Over three quarters of Mäori assets are held in the North Island, with Auckland, Waikato,
and Bay of Plenty the location for the lion’s share. Thus, opportunities for investing in
Mäori enterprise vary between the South Island and North Island, given Mäori population
differences and differing asset classes and activities. In Auckland for instance, Mäori
property assets are in the main held by Mäori employers and self-employed Mäori, while
major holdings in the other regions mirror the assets held by some of the iwi-based
organisations.
More recent research into the Mäori economy has focused on the key drivers to lift Mäori
economic growth and performance. 3 From Te Puni Kökiri’s research it was evident that
efforts were to be directed at increasing Mäori share of the (New Zealand) economy,
growing and diversifying of the Mäori asset base and broadening of economic activities
for Mäori. Five key interventions were identified to achieve this:
• Leveraging Mäori businesses into growth and strategic industries.
• Increasing export growth participation.
• Improving the qualification base for Mäori.
• Promoting higher levels of entrepreneurship.
• Nurturing innovation.
3.2 Access to finance for Mäori enterprise
2 Te Puni Kökiri (2008) A Time for Change
in Mäori Economic Development, Report
prepared by NZ Institute of Economic
Research, Wellington.
3 Te Puni Kökiri (2007) Discovering the
Mäori Edge, Wellington.
The NZIER report noted issues concerning access to finance for Mäori enterprise as a
development challenge for growing the Mäori economy. The report noted that access to
finance was important to facilitate Mäori asset growth. However, given the inalienability
of many Mäori assets (for example, collectively owned assets such as Mäori land
governed by the Mäori Land Act 1993 and Mäori fisheries quota governed by the Mäori
Fisheries Act 2004), the Mäori economy needed vehicles for securing debt against project
risk, rather than collateral (which is preferred by New Zealand financial institutions).
The report identified a range of reasons that Mäori enterprise might experience distinct
challenges in accessing finance (debt or equity) for commercial projects (but qualified
their comments because of the dearth of research and evidence). Some of the challenges
noted were:
38

• Limited overall management experience and education affecting perceptions
about risk.
• Socio-economic status limiting access to saving and family wealth.
• Culture and organisational structures, especially Mäori land trusts.
• Multiple ownership and asset location in undeveloped regions.
• Co-operative business models perceived as higher risk among investors.
• Low participation of Mäori business people in professional business networks.
• Reliance on retained earnings for finance by Mäori authorities.
• The absence of a market to trade shares and value equity in Mäori authorities.
• Limited cash flow to service debt.
• Problems for banks in realising their security over Mäori land assets.
• Lower rates of home ownership limiting access to personal equity.
• Lower relative earnings levels of the Mäori workforce and employers.
• Poor credit or savings history and track record on previous lending.
The main solution suggested by the NZIER in their report was to investigate the creation of a
‘culturally appropriate’ financial intermediary given Mäori authorities have substantial reserves,
are better placed to assess project risk than ‘mainstream’ financial institutions, and avoidance
of risk to mana. However, they caution that previous attempts at setting up a Mäori financial
institution have failed because these applied standard financial assessment procedures and risk
management.
3.3 Investment, capital markets & enterprise reference group
One of the Mäori Economic Taskforce’s seven work streams is the Investment, Capital
and Enterprise. The aim is to examine all aspects of investment, capital markets and
enterprise, including policy settings and regulation that impacts on Mäori participation in
the capital markets, and to explore prospects for Mäori-led investments.
The scope of areas covered within this work stream is:
• Investment: Mäori investing and participating in research and development linked to
economic development, and benefitting from innovation.
• Capital: which explores Mäori participation in and access to all forms of capital from
pre-commercial to venture capital (seed, start up, early and late expansion), private
equity and debt funding.
• Enterprise: which refers to building Mäori leadership in commercial activity to
reinforce Mäori participation in the economy.
3.4 Reference group
A reference group was formed to support the Taskforce’s work on capital markets,
investment and enterprise. The focus of the Investment, Capital and Enterprise reference
group (the reference group) is on what can be done to encourage greater participation
among Mäori enterprises in New Zealand’s capital markets, so Mäori can more readily
access the capital they need to utilise their assets at their full potential, that is to
maximise their economic potential subject to relevant kaupapa.
39

Members are invited to join the reference group for their expertise in Mäori enterprise
and/or in New Zealand capital markets. The present members of the reference group are:
• June McCabe, Mäori Economic Taskforce member.
• Franceska Banga, Chief Executive, New Zealand Investment.
• Rob McLeod, Managing Partner, Ernst and Young New Zealand.
• Adrian Orr, Chief Executive, New Zealand Superannuation Fund.
Note that Rob McLeod has recently resigned from the Taskforce and is unlikely to be play
a further part in the reference group. However, other members are likely to be added to
the reference group to provide additional expertise about investment banking and Mäori
enterprise and economic development.
The reference group developed terms of reference to guide their activities and
involvement in projects. They determined that their purpose was to advise on:
“Ensuring Mäori collectively owned assets reach their economic potential by
capital markets playing their role.”
[Reference Group meeting 7 December 2009]
In addition, they set four objectives for the group, which are to:
1. Identify the current approach to investing in Mäori enterprise among financial
institutions in New Zealand’s capital market.
2. Identify the impediments to the Mäori enterprise (collectively owned asset holders)
accessing capital and participating in New Zealand’s capital markets.
3. Recommend solutions and changes to encourage financial institutions to invest in
Mäori collectively owned assets and enterprises.
4. Recommend solutions and changes that can be made to better assist Mäori
enterprises access the capital they need to reach their economic potential.
4. Reference group discussions
4.1 Introduction
This section of the report provides a summary of the reference group’s discussions about
the capital markets & Mäori enterprise project.
The reference group met on several occasions in the lead up to the capital markets and
Mäori enterprise project, then individually with members of the project team in one-toone
interviews. In addition, reference group members provided feedback on draft reports
of the scoping study as these became available. Thus, the reference group has been
intimately involved in the capital markets & enterprise project.
As project sponsor for the project, Rob McLeod was involved in several meetings with
Burleigh Evatt and June McCabe to discuss the project issues & direction. This concluded
with Rob McLeod’s commendation of the report and proposal for stage two to the
Minister of Mäori Affairs.
40

4.2 List of reference group engagements
The reference group engaged in the project on the following occasions by way of
meetings as a group and individually, as well as providing feedback on reports via email,
Skype and via telephone conversations, as follows:
• Monday 7 December 2009, Meeting with Adrian Orr, Pelenato Sakalia, Franceska
Banga, June McCabe with Jason Mika attending.
• Wednesday 3 February 2010, Meeting with June McCabe and Ian Dickson, Auckland.
• Friday 19 March 2010, 9.00am Arian Orr, NZ Superfund, NZ Superfund office,
Auckland, and Ian Dickson.
• Thursday 8 April 2010, Rob McLeod, Wellington, and Ian Dickson.
• Monday 10 May 2010, 4.00pm June McCabe and Rob McLeod, Ernst & Young office,
Auckland.
• Wednesday 7 April 2010, June McCabe – email correspondence about draft report.
• Monday 26 April 2010, Franceska Banga – email correspondence about draft report.
• Thursday 29 April 2010, Rob McLeod – email correspondence about draft report.
• Wednesday 28 April 2010, Adrian Orr – email correspondence about draft report.
4.3 Reference group discussion of the challenges & opportunities
During their meetings, the reference group explored the scope of work that the group and
its projects might focus on.
The reference group placed an emphasis on potential solutions to bridge the gap that
exists between the unmet needs on the asset and investor side in terms of financing of
collective assets. They noted there were issues in the governance of Mäori enterprises
and the availability of suitable financial tools and products for financing development
of collectively owned assets. They noted recent commentary that there may be an
opportunity for New Zealand to become a specialist jurisdiction among capital markets
internationally for financing collectively owned assets.
In their deliberations, the reference group took into account the work of the Capital
Markets Development (CMD) Taskforce because of its relevance to lifting New Zealand
capital markets performance. The CMD Taskforce’s final report was released 16 December
2009. The report was the culmination of an 18-month industry-led engagement,
recognising an urgent need to raise productivity through higher quality investment and
raising New Zealand’s low `birth rate’ of large and successful companies. The report
contained a comprehensive package of recommendations to address major challenges in
New Zealand’s capital markets as the Taskforce perceived them. 4
The reference group noted that major failures in the financial sector, such as finance
company collapses since 2006, have caused losses and dented confidence, and as such,
the Taskforce recommendations focused on improving information and products for
investors.
4 Press Release: Capital Market
Development Taskforce, published in
www.scoop.co.nz 16 December 2009.
41

The reference group also identified some of the challenges and opportunities for Mäori
enterprise & the capital markets, as follows:
The challenges:
• How do we encourage financial institutions to invest in Mäori enterprises so there is
no excuse not to do business with Mäori
• How do we improve the strike rate between capital markets (cash rich, asset poor
investors) and Mäori enterprise (asset rich, cash poor enterprises)
• How do we lower the hurdle to invest in Mäori enterprise, maximise returns on and
productivity of Mäori assets, without undue risk and adverse impacts
• What are the impediments to the Mäori enterprise (collectively owned asset holders)
accessing capital and how can these be overcome or eliminated
• How do we address challenges for Mäori enterprises around property rights, access
to expertise, relationships, leveraging endowments and advantages
• How can we ensure Mäori enterprise meets the minimum conditions for investment
– the “3 C’s”, of character, capacity and collateral
The opportunities:
• What innovations in financial products and services might best assist capital markets
to invest in Mäori collectively owned assets and enterprises
• What innovations in Mäori collectively owned assets might best assist Mäori
enterprises access the capital they need to raise returns without undue risk
4.4 June McCabe, reference group chair
Role of the Taskforce
In June’s view, “the Taskforce is about providing or facilitating Mäori economic
development. This means creating the environment for the Mäori asset base’s potential to
be fully realised.
June notes, “The difference between Mäori economic development and other kinds of
development in New Zealand is that for Mäori it is in perpetuity. This means our people,
our assets and tikanga, heritage and our contribution to the economy are all part of
the mix.”
“‘Cash is king’, it’s what helps us invest in social causes or commercial ones. The
challenge is how do we create an environment that provides the capital Mäori need for
commercial development”
“We still have lots of work to do around our capability and capacity, training and
development of our people, and putting ourselves into jobs and professions that are about
the future. So at one level it’s about access to capital, at another its people development.”
Capital markets, innovation and other projects
“I come from a background in banking, investment, housing and the public service.
So I have combination of public and private sector experience. I bring a commercial
42

pragmatic viewpoint. This can be challenging because this is not always understood.
Ahuatanga Mäori is not my core strength.”
“One day, I would like to see a Mäori focused investment entity that has strong iwi and
Mäori backing to unleash the potential of Mäori. The Taskforce is one way for us to
achieve that vision.”
“We need an investment vehicle for Mäori, which was an idea I had at that time and
still do. There is general tendency for an aversion to Mäori banking because of FDC and
MDC, but we have the need now to get access capital, technical expertise and the global
financial markets. My job is to prove this demand exists which is what we’re doing with
the capital markets work.”
“Recognition that Mäori assets have value and the potential to grow further. It’s
about bringing this potential into reality through a better focus of the Government’s
contribution to R&D and capital, and demonstrating this through the BERL Innovation
work stream.”
“The other major difference we can make is the development of a Mäori economic model
that has clarity about the measures of performance expected of Mäori enterprises that
incorporates kaupapa Mäori. This should include capability, capacity, access to capital,
and tikanga Mäori, among other things.”
5. Interviews
5.1 Introduction
A key part of the capital markets & Mäori enterprise project was the need to talk with
participants actively involved in Mäori enterprises and the capital markets. The purpose
was to discuss participants’ perceptions and experiences in financing Mäori commercial
projects, particularly those involving collectively owned assets.
The interview participants included:
• Individuals who have worked for and inside Mäori enterprises, and have been
involved in their governance, management and administration.
• Individuals who have been involved in providing loans, partnering or joint-venturing
with Mäori enterprises in commercial settings.
• Professional advisers such as legal, accounting, financial and consulting.
• The experiences and observations of both Mäori and non-Mäori individuals.
The interview participants covered the spectrum of Mäori enterprises. The spectrum
ranges from collectively-owned land, marae committees, trusts and incorporations,
through to statutory entities, iwi authorities, collectives, post-settlement governance
entities, social services providers and education institutions.
The interviews were conducted on condition of anonymity, which enabled free and frank
discussions about the issues. Report 2b provides more detail on the interviews with
participants in the study, key findings and interpretation of the issues.
43

5.2 List of interviews
A list of interviews conducted in respect of those involved in the capital markets follows:
• Thursday 18 March, Westpac, Wellington.
• Friday 19 March, Westpac, Auckland.
• Monday 12 April 2010 (teleconference), ANZ, Wellington.
• Monday 12 April 2010, ACC, Wellington.
6. Case studies
6.1 Introduction
The reference group considered that the study would benefit from a series of case studies
in which innovative approaches have been taken by Mäori enterprises and the capital
markets to ensure capital flowed to investment opportunities in Mäori collectively held
assets. Two case studies were completed as part of the study to provide practical insights
and reference points for the issues. The findings of the case studies have been presented
in Appendix A of Report 2a, rather than being replicated here.
6.2 Selecting case study options
A range of possible case studies were identified before deciding on the final two. The
broad criterion for selecting cases were that they involved a reasonably sized Mäori
enterprise, with collectively owned assets, and the enterprise had sought and secured
investment finance for a project from the capital markets. A further consideration was
the extent of publicly available information about the organisation and its activities. The
list of candidates included:
• Atihau.
• Ngäti Awa Group Holdings.
• Ngäti Whatua.
• Paraninihi Ki Waitotara.
• Te Runanga o Ngai Tahu.
• Tuaropaki Whänau Trust.
• Wakatu.
6.3 Case studies
The two we selected for inclusion in the scoping study report were Tuaropaki and Atihau.
This was because of the significant amount of published material about Tuaropaki and
the close involvement of the lead consultants in the Atihau.
7. The way forward
7.1 Conclusions
The capital markets and Mäori enterprise project set out to explore the issues affecting
the demand and supply of capital to Mäori enterprises so that Mäori could achieve their
economic potential, particularly those enterprises holding collectively owned assets.
44

This report discussed the important role the reference group played in the project. The
reference group met initially as a group then individually with the project consultants to
discuss the issues. The reference group members had since provided valuable feedback as
reports on the project became available. Their feedback is reflected in the scoping study
reports (Reports 2a and 2b).
This report also discusses the reference group’s expectation that that study would involve
interviews with industry “insiders” in the capital markets and Mäori enterprises. This was
to get firsthand accounts of the issues. The result is that many interviews were conducted
with leading participants in New Zealand’s banking and financial sector as well as Mäori
authority, business and community leaders who have been involved in investments
of recent times. Their views (a full account of which is given in Reports 2a and 2b)
constitute the main findings of the scoping study and recommendations on issues to be
further explored in the next stage of the project.
Conditions of anonymity helped bring about discussions that would not otherwise have
been possible. In addition,s the reference group’s networks helped identify and secure
interview participants.
The third aspect this report highlights is the reference group’s intention for case studies
to form part of the scoping study to add practical examples to the discussion. Of the
many cases considered, the two that were chosen – Tuaropaki and Atihau – provide a
useful coverage of the issues from the perspective of Mäori enterprises. The cases are
covered in Appendix A of Report 2a.
7.2 Recommendations
It is recommended that the Mäori Economic Taskforce:
(a) Note that this report fulfils the requirements for a report on reference group
discussions of the scoping study of Mäori enterprises and the capital markets (as per
Report 1 in Schedule C of the contract of service).
(b) Note that the reference group has performed an important role in advising on the
capital markets and Mäori enterprise project, including its methods and issues.
(c) Note that the reference group will continue to perform a governance and advisory
role for this project, with new members expected to join the group soon.
(d) Note that the scoping study has benefitted from the confidential interviews with
industry insiders involved in the capital markets and Mäori enterprises.
(e) Note that two case studies were analysed and covered in Report 2a, in terms of their
experiences in accessing finance for collective asset development.
(f) Note that other cases may feature in future work on the capital markets & Mäori
enterprise project.
45

References
Annesley, B. (2005). The Context for Mäori Economic Development. The Treasury, Wellington.
March.
Capital Market Development Taskforce (2009) Capital Markets Matter: Report of the Capital
Market Development Taskforce, report prepared for the Ministry of Economic
Development, December.
Chapple, S. & Rea, D. (1998). Time series analysis of disparity between Mäori and non-Mäori
labour market outcomes in the Household Labour Force Survey, Labour Market Bulletin,
Wellington, Vol. 1 &2, pp. 127-144.
Cornnell, S. (2002). The Importance and Power of Indigenous Self-Governance: Evidence from the
United States. Paper to the Indigenous Governance Conference, Canberra, Australia., April.
Department of Work and Income New Zealand. (1999). The Establishment of a Mäori Business
Financial Institution – An investigation into the Finance Needs of Mäori Business and
Options for the Establishment of a Mäori Business Financial Institution, Prepared by
Uenuku Associates Limited, Hamilton, for the Department of Work and Income New
Zealand.
Ernst & Young. (2003). The New Zealand Venture Capital Monitor 2003, Ernst and Young,
Wellington.
Gugler, K. (2001). Corporate Governance and Economic Performance. Oxford University Press,
Oxford, U.K.
Kukutai, T. (2003). The Dynamics of Ethnicity Reporting: Mäori in New Zealand: A Discussion
Paper prepared for Te Puni Kökiri. Ministry of Mäori Development, Wellington. January.
Levy, B. (1993). Obstacles to Developing Indigenous Small and Medium Enterprises: An Empirical
Assessment, The World Bank Economic Review, Vol 7, No 1, pp 65-83.
Mäori Land Investment Group. (1996). Securing Finance on Multiple-Owned Mäori Land –
Problem Definition Guide, Mäori Land Investment Group [Group Formed to Advise the
Minister of Mäori Affairs], Te Puni Kökiri, Wellington
Ministry of Commerce. (1988). Sources of Capital Available to Small to Medium Sized Firms,
Ministry of Commerce, Wellington.
Ministry of Economic Development. (2004). Bank Lending Practices to Small and Medium Sized
Enterprises, Report Prepared by Price Waterhouse Coopers for the Ministry of Economic
Development, Wellington.
Ministry of Economic Development. (2004). SMEs in New Zealand: Structure and Dynamics,
Ministry of Economic Development, Wellington, September.
NZIER (2002) Mäori Institutions and Capital Markets, A draft report prepared by the New Zealand
Institute of Economic Research for the Ministry of Mäori Development, Wellington,
September.
Ou C, Haynes G W. (2003) Uses of Equity Capital by Small Firms - Findings from the National
Survey of Small Business Finances; 14th Annual Conference on Entrepreneurial Finance
and Business Ventures; April May 2003.
46

Small Business Advisory Group. (2004). Small and Medium Businesses in New Zealand: Report of
the Small Business Advisory Group, August 04, Small Business Advisory Group, Ministry of
Economic Development, Wellington.
Te Puni Kökiri (2003) Mäori Economic Development Te Ohanga Mäori, A reported prepared by
the New Zealand Institute of Economic Research for the Ministry of Mäori Development,
Wellington.
Te Puni Kökiri. (1994). Access to Finance and Business Advice, Te Puni Kökiri, Wellington.
Te Puni Kökiri. (1997). (October): Finance Provision for Mäori Business, Paper Prepared by Te
Puni Kökiri for the Mäori Multiple-Owned Land Development Committee, Te Puni Kökiri,
Wellington.
Te Puni Kökiri. (1999). (January): An Evaluation of Aratohu Kaipakahi, Te Puni Kökiri, Wellington.
Te Puni Kökiri. (1999). Access to Business Finance – The Issues, Te Puni Kökiri Internal Paper, Te
Puni Kökiri, Wellington.
Te Puni Kökiri. (2004). Nga Tipu Whakaritorito: A New Governance Model for Mäori Collectives: A
Discussion Document. Ministry of Mäori Development, Wellingon, November.
47

FEEDBACK AND INTERVIEWS
1 July 2010
49

Contents
52 1. Introduction
53 2. The current landscape
58 3. Interviews
69 4. Interpretation
74 Appendix A - Research summaries
81 Appendix B - Terms of reference fulfilment
Status
This report is part of a scoping study into Mäori enterprise and the New Zealand Capital Market
prepared by Burleigh Evatt for the benefit of the Mäori Economic Development Taskforce (the
Taskforce) and its Mäori Investment, Capital and Enterprise Reference Group (the Reference
Group). This report is supplied on a confidential basis for the exclusive use of the Taskforce and
the Reference Group.
This report fulfils the requirement of Report 2b of the Mäori Enterprise & the New Zealand
Capital Market Project.
In preparing this report Burleigh Evatt has relied on the accuracy of information supplied to it.
Burleigh Evatt takes no responsibility for outcomes arising from any inaccuracy of the
information supplied to it.
The Taskforce acknowledges that it will use its own judgement in considering and using the
advice provided by Burleigh Evatt.
51

1. Introduction
The Mäori Investment, Capital Market and Enterprise Reference
Group (the Reference Group), chaired by June McCabe, is an advisory
committee of the Mäori Economic Development Taskforce
The Mäori Economic Development Taskforce was established by the Minister of Mäori
Affairs, Hon Dr Pita Sharples in 2009:-
“to provide on-going advice on actions Mäori can take to work together to
move Mäori towards active leadership and participation in an economy which
is innovative, high value, highly skilled and, diverse and resilient”.
Scoping study
The completion of a scoping study is the first phase of work by the Reference Group.
The scoping study seeks to define the market within which Mäori capital users and Mäori
capital providers operate. The scoping study is intended to draw out the potential range
of issues affecting the demand and supply of capital to Mäori enterprises, with a focus
on Mäori enterprises that hold and control collectively-owned assets.
The scoping study comprises:
• A separate report on the emerging issues affecting access to capital markets by
Mäori enterprises.
• This report describes the perceptions held by capital market participants and
individuals in positions of control and influence inside Mäori enterprises. This report
is based on interviews with sector stakeholders including members of the reference
group and people involved directly and indirectly with Mäori enterprises.
Report structure
The rest of this report document is structured in sections as follows:
• The current landscape, provides a brief outline of Mäori enterprise landscape.
• Interviews, describes the comments made to us.
• Interpretation draws together themes emerging from the interviews and background
analysis.
• Appendix 1 summarises previous research.
• Appendix 2 outlines how the terms of reference for this project have been fulfilled.
52

2. The current landscape
In section we provide a brief description of the current Mäori
enterprise landscape
High export dependency
In 2002, the New Zealand Institute of Economic Research 1 highlighted the strong primary
sector orientation of Mäori enterprises and the consequential high reliance on overseas
markets and export earnings.
It noted that the export dependency of the Mäori economy is nearly double the national
average. This means that Mäori enterprises, directly or indirectly, are shaped by market
developments overseas that are beyond their control. Adding value in such a market often
means investing in supply chains that bring the producer closer to the end consumer of
the products. Such investments are difficult, and require scale that is often beyond the
scope of individual businesses and unless they adopt a collective approach.
Multiple owned assets
Mäori enterprises holding multiple-owned assets include the following:
• Mäori multiply-owned tangible assets include:
– Residential and commercial urban land.
– Agricultural land (including pastoral, arable, dairy, horticulture).
– Forestry land (including pre-1990 forest land within the definition in the
Climate Change Response Act 2002).
– Fishing quota for wet fish and rock lobster and rights to a defined share of
species added to the quota management system.
– Interests in fisheries settlement assets including access to fishing quota and
income rights.
– Deferred purchase rights, rights of first refusal and top-up selection rights
contained within Treaty Settlements.
– Financial assets including shares in co-operatives and collectives.
– Joint venture interests, e.g., in energy production.
– Other property rights including, for example, gravel extraction.
• Mäori collectively through iwi have “ownership” of certain intangible assets that
nonetheless contribute value to them and the wider community:
– Standing as the Treaty partner with the Crown.
– Standing as tangata whenua and tangata moana.
– Standing in respect of the Resource Management Act (1991) and other
legislation governing resource use.
• Mäori have non-pecuniary, yet valuable interests in Mäori Television (a statutory
corporation under the Te Aratuku Whakaata Irirangi Mäori Act (2003)).
• Mäori individually and collectively possess:
– A unique culture, history and perspectives on contemporary issues that reflect
tikanga Mäori.
1 Mäori Institutions and Capital Markets:
Mäori Development Report, NZIER, 2002
53

– Artistic expressions that find outlets in art, design, music, dance, crafts and
other media.
– Other intellectual property.
• Mäori have disputed claims to tangible and intangible assets including water,
geothermal, minerals, air space, radio frequency spectrum etc.
Mäori enterprise structure
Mäori collective assets are organised under a range of structures including:
• Unincorporated structures:
– Hapü and whänau.
– Unincorporated trusts.
• Incorporated structures:
– Trusts (subject to Trustee Act (1956)).
– Mäori Incorporations and Trusts (Te Ture Mäori Whenua Act (1993)).
– Incorporated societies (Incorporated Societies Act (1908)).
– Post-settlement Governance Entities (PSGE) that have resulted from Treaty
Settlements.
– Pan-iwi governance entities that have resulted from resource settlements
including:
• The Crown Forestry Rental Trust.
• The Treaty of Waitangi Fisheries Commission – Te Ohu Kaimoana.
• The CNI Forest Iwi Collective.
– Iwi (tribal) authorities.
– Statutory corporations (e.g., Mäori TV).
– The Mäori Trustee.
The two key commercial structures that manage Mäori interests in land are ahu whenua
trusts and Mäori incorporations. In 2008 there were 129 Mäori incorporations and 5,201
ahu whenua trusts. Under an ahu whenua trust, land owners retain their direct interests
in the blocks administered by the trust. With Mäori incorporations, owners become
shareholders who hold shares issued by the incorporation.
A third structure of importance are whänau trusts. Roughly 15,000 whänau trusts
hold interests in about 15 percent of Mäori land. A key feature of a whänau trust is
that it consolidates the interests in land for the benefit the descendants of the named
tipuna. By preventing any individual disposing of an interest a whänau trust counteracts
fragmentation of the family’s ownership interest in land or in Mäori incorporation shares.
Mäori land comprises around 1.5 million hectares (five percent of New Zealand’s total
land area). 750,187 hectares (or 50 percent of Mäori land) is administered by ahu whenua
trusts, and 207,157 hectares (or 14 percent of Mäori land) is administered by Mäori
incorporations.
In 2007 it was estimated that the asset value of these organisations was around
$3,200 million. Around two and a half percent of Mäori land is held under other trusts
established under the Te Ture Whenua Mäori Act (1993).
Problem definition
54

The problem presented by Mäori enterprises gaining satisfactory access to external
financial accommodation has been previous characterised as stemming from a reluctance
to offer land as security.
It has also been characterised as stemming from a reluctance on the part of lenders
to accept such security because of the cultural attachment to land and the alienation
barriers imposed by Te Ture Whenua Mäori Act 1993.
This problem definition is an incomplete characterisation because:
• Some land-owning Mäori enterprises have been able to access debt funding in
satisfactory amounts and on satisfactory terms.
• Mäori enterprises that have sought capital for ventures that are not materially landrelated
have also experienced limitations on their ability to access suitable finance
on satisfactory terms.
Other aspects of the capital markets are prevented from operating when Mäori
enterprises hold controlling interest in assets. The NZIER noted in its 2002 report the
problems of Mäori enterprise ownership include the difficulty for outside investors to
purchase shares in Mäori enterprises. This reduces profitability because opportunities
for mergers and acquisitions do not exist to put pressure on management performance
in the Mäori enterprise context. The lack of a market which values the interests in trusts
and shares in Mäori incorporations is confusing for beneficiaries and shareholders, yet
this limitation is accepted by Mäori because of non-commercial considerations.
Mäori access to finance is affected by information gaps and the small size of business
ventures as well as cultural and organisational structures that are unfamiliar to capital
providers.
Expanding role of Mäori enterprises
Mäori enterprises are not as tied to land as a primary economic asset as they once were.
Mäori enterprises engage in an increasingly wide range of activities, and the trend is ever
widening.
The range of economic activities includes traditional agribusiness, horticulture and
forestry (as well as landlords to others undertaking such activities), commercial fishing,
aquaculture, tourism, property development, and electricity generation.
Mäori enterprises are also an important source of capital for business investment.
However, there is not an organised market as such to link capital providers with suitable
target businesses. The goals of the investment process are often not well articulated.
In the post-settlement environment iwi organisations have become increasingly
prominent in the provision of services to their members and their local communities.
Such organisations have come to be significant providers of communications, health care
and education services. Such organisations are also an important source of capital for
the development of tribal enterprises and infrastructure.
The appearance and growth of Mäori tertiary education institutions and pan-tribal
organisations in the fishing and forestry sectors should also not be overlooked.
Looking to the future
55

The position of iwi organisations in the post-settlement environment is an important
change in the Mäori enterprise landscape.
There is a sense in which the role of iwi organisations is undergoing change.
Iwi play an important role in relation to local and regional resource management and
have formal standing under legislation such as the Resource Management Act (1991).
Thus they have assumed a quasi-governmental role in relation to resource management,
planning and development.
An expectation of iwi involvement in infrastructure development has the potential to
expand their role in the commercial sphere in the provision of such assets. Thus iwi are
likely to become over time an important conduit between government (at both central
and territorial levels) and the private sector because of their established relationship
networks.
This will make iwi organisations valuable partners to private firms seeking to supply
services to government. The difficulty that is evident is few iwi have the capital available
to participate meaningfully alongside such private firms.
Some Treaty settlements have offered successful claimants deferred purchase rights
and a first right of refusal in relation to Crown-owned assets. The assets involved cover
a broad range including state housing and farm properties. Moreover, settlements have
occurred which nonetheless reserved the position of claimants with respect to important
resources such as water, geothermal and certain minerals. There is potential, therefore,
for the future transfer of property rights in respect of such resources with a concomitant
requirement for capital to complete the transfer and for development.
Developments in industry
The picture becomes further knotted when trends in industrial structure in industries in
which Mäori enterprises are represented are considered:
• Consolidation of agribusiness activities is occurring. Both primary producers and
processors are seeking to control the vertical supply chain in order to reduce risk,
improve service quality to customers, improve product quality, and respond to market
imperatives relating to the traceability of product. The upshot is a consolidation of
ownership of breeding and finishing properties. Mäori trusts and incorporations that
own small- to medium-sized pastoral farms are at risk of missing the boat, meaning
that the profitability of their farming operations will be less than the norm.
• Owners of pre-1990 forestland face special challenges brought about by the
introduction of the Emissions Trading Scheme (ETS) by the Climate Change Response
Act (2002). Owners face a liability of roughly $20,000 per hectare if such land
is permanently deforested. The cash cost of avoiding such liability by planting or
replanting in radiata pine is approximately $8,000 per hectare. Such funds are
generally unable to be borrowed because the asset generates no cash flow until the
trees reach maturity. Without the ability to access such sums, landowners will be in a
weak position vis a vis their tenants.
• In the wet fish sector, partial fragmentation of quota ownership has resulted
from the fisheries settlement and the future addition of new species to the quota
56

management system with a reserve allocation for Mäori. Consolidation of quota
will allow more economic harvesting, especially for species which involve heavy
investment and boats in processing equipment.
• Lifting of the moratorium on aquaculture will potentially produce an upswing
in demand for investment in production, with a concomitant requirement for
investment capital and finance.
Conclusion
The project seeks to define the market within which Mäori capital users and Mäori
capital providers operate. What emerges is that Mäori enterprises have ownership
limitations, which restrict their ability to access equity investment. Joint ventures are a
means of addressing this limitation. Mäori enterprises are also active as capital providers
to a range of start-up, early stage and property-related development.
Mäori enterprises have material asset holdings in a range of key primary sector industries
(agribusiness, forestry, fishing) and tourism. Mäori enterprises also have contingent
assets in the form of deferred purchase, first refusal and settlement top-up.
Mäori enterprises have standing with the Crown which makes them important conduits
for private sector organisations that seek to do business with the government.
The development potential of the Mäori economic asset base has been highlighted. In
some areas such as fishing and forestry there has been remarkable progress. In other
areas such as agribusiness there is less discernable progress, and the issues being
discussed a decade ago are still the ones that surface.
The scoping study is intended to draw out the potential range of issues affecting the
demand and supply of capital to Mäori enterprises, with a focus on Mäori enterprises
that hold and control collectively-owned assets.
In the following section, we report on interviews with sector stakeholders including
members of the reference group and people involved directly and indirectly with Mäori
enterprises.
57

3. Interviews
In this section, we report on comments made to us in interviews.
In the subsequent section, we will draw together themes emerging
from the interviews and background analysis.
Interviews were held in strict confidence. Interviewees spoke frankly and freely about
their experiences, expectations and what they perceived to be shortcomings of Mäori
enterprises and capital providers. Many of the individuals were currently or formerly
associated with organisations that they commented upon.
The interviewed capital markets participants are active in providing capital to Mäori
enterprises. In some cases more than one individual was spoken to inside a given
organisation to get the differing perspectives of individuals in operational roles (e.g.,
relationship management and credit), and more senior institutional managers with an
overview of corporate strategic direction.
The banks in particular are sensitive to information about their respective strategic
positioning entering the public domain.
We also spoke with individuals working inside institutional investors in funds
management roles, and to corporate investors.
A number of individuals that are involved at management and governance levels of Mäori
enterprises were spoken to, as were legal accounting and commercial advisers to Mäori
enterprises (e.g., land valuers, forestry and agribusiness consultants).
This section of the preliminary report is a synopsis of the key information we have
received and an outline of the high-level issues that emerged from the interviews.
Organisation of interviews & feedback
We have organised this section under sub-headings relating to the framework that is
commonly used by lenders and other capital providers to determine whether to advance
funds as requested.
A common evaluation framework is the Five Cs of Credit: capacity, capital, collateral,
conditions and character.
• Capacity refers to the applicant’s ability to meet the loan service payments and
exactly how the applicant intends to repay the loan. The lender will consider the cash
flow from the business and the timing of repayment.
• Capital is the money invested in the business by its owners and is an indicator
of how much is at risk should the business fail. Lenders will generally want to
understand how much money the lender is being asked to lend (debt) in relation to
how much the owners have invested (equity).
• Collateral is a form of security for the lender. Banks usually require collateral as a
type of insurance in case the applicant cannot repay the loan in full. If the loan is
defaulted on, then the lender takes possession of the collateral in place of the debt.
58

Mortgage lending, under which land and real estate property is the security is a
familiar form of collateral.
• Conditions refer to the intended purpose of the loan, for example working capital,
acquisition of another business or additional equipment, or new premises and the
size of loan in relation to the intended use.
• Character is the obligation that a borrower feels to repay the loan. Since there is not
an accurate way to judge character, the lender will decide subjectively whether or
not the borrower is sufficiently trustworthy to repay the loan.
Matters raised in interviews are reported in turn below under these five sub-headings.
What we heard about capacity
“If Mäori want to access capital in mainstream, they need to get on board with the way
business is done in mainstream. It’s as simple as that. The world is awash with capital
looking for good investment deals but you need to trust people and offer a good deal.”
“The banks just don’t understand Mäori, its institutionalised racism. They say they treat
all customers equally but the reality is Pakeha staff are scared of Mäori.”
“Mäori don’t like going into banks. You get the eye all the time! … in fact no one likes
going into banks asking for money, it’s creepy.”
“… loan applications are often really not things banks would look at, more like situations
requiring equity investment.”
“Often there is no appreciation of what a bank does with a loan application.”
“ … its rare that there’s a business case, or one that makes any sense.”
“Getting the loan is what seems to be most important, more than what’s going to be
done within or how it will be serviced and repaid.”
“ … it would be overstating it to say {financial accumen} has stood still, its gone
backwards!”
“We {the bank} have got a long way to go to really understand what makes a Mäori
business tick.”
“The scandals and dodgy stuff in the paper all the time doesn’t fill you with confidence.”
“ ... you have to accept that the social obligations to iwi, marae etc., are going to have
priority over the bank. So you factor that in to how much you are prepared to lend.”
“Ngai Tahu have done it right, stuck to things they know about and can make money
at and the proof in the eating. Not spectacular but slow and steady wins the race in my
opinion. Take that lesson more widely and everyone will benefit.”
“… flash Johnnies, property deals, “bio” this and that, get-rich-quick schemes with other
people’s money, hotels where you know the staff are walking out the door with fillets
over their shoulders …”
“Best man for the job, doesn’t matter whether he’s a cus (sic) or not. If he doesn’t cut the
mustard he doesn’t get the job. That’s just the way it has to be or the thousands suffer
because one idiot gets a job.”
59

“Who knows how to value incorporation shares, certainly not the appointed valuers”
“They need an over-the-counter market in shares to improve liquidity for the whänau and
better pricing information.”
What we heard about capital
“Mäori enterprises are frequently well capitalised, in fact they might be described as
generally having lazy balance sheets, which means they are not optimising their cost of
capital.”
“For land owning Mäori enterprises: “… the balance sheet footing is often an illusion
based on break-up values, which of course will never happen.”
“Who knows what some of these businesses are really worth on a going concern basis,
there’s no transparency.”
“There’s not much truth in the accounting. Nobody really cares about it, or understands
what its about.”
“ … give it a big hair cut. Give everything a big haircut, and you might get to
some reality.”
“I think a lot of them are badly advised – by lawyers and accountants – and they
can’t afford proper business advice so they come up with schemes that we would
never touch.”
“Mostly we are asked to provide 100 percent finance.”
“Too many people tried getting on the property ladder without understanding what
they were getting into. Tears were the result. Tourism is another, its field of dreams stuff
unless you really know what you are doing.”
What we heard about collateral
“We lend on Mäori land as security. We know it will be difficult to realise but we would
if push comes to shove. Its just time consuming and costly and we know we’d get beaten
up for it but it still has collateral.”
“If you don’t have the insurance of security you just look harder at the credit quality and
the governance. How are they going to pay it back and who is in charge”
“The big ones face no problems, no matter whether its and iwi or a JV. It’s the little ones
that worry me, they don’t have a chance”.
“If collateral is offered, we take it, even over Mäori land. We appreciate the gesture
means a lot.”
“We face the same issue selling up with mortgagee sales in any rural community. People
won’t bank with us after.”
“We know they’re going to work hard not to put the land in jeopardy even if we’ve got
the security interest.”
“Too hard, Mäori land, just too hard.”
“Twenty, thirty years ago this wasn’t such a problem. We didn’t care too much about
Mäori stuff back then; we just wanted to hold onto the whenua so we had to farm it.”
60

“Nobody would want to buy it so its useless as security.”
“We’d just take it back anyway”.
“Mäori are moving away from land as their main asset. It’s a red herring these days.
Character and credit quality are the main issues”.
“You can make Mäori land liquid by writing a lease over it that is fully transferable.
Problem is lawyers get hold of it and insist it terminates if the lessor defaults. The
trustees don’t know what to do so they follow the lawyer’s advice and the security is
useless.”
“Leases are a nightmare! The Property Law Act is a nightmare!”
“We need simple structures that everyone understands, like on a website they can go to
and say, that fits my situation I’ll use it.”
“Too many of the whänau live in the cities. They’ve got a view of the whenua being
beautiful bush clad with happy contented natives tending their gardens in some
sustainability paradise. They’ve got no idea this is farmland and has been for four or five
generations. It’s just a commercial asset.”
“The ETS has destroyed any value as security the land might have had.”
“What about a mezzanine market for Mäori Could that work”
What we heard about conditions
“There is a very poor understanding of how businesses create value, the role operational
management plays in value creation. The result is there is an unwillingness to pay for
management ability at all levels.”
“It’s all speculative. They just want to set and forget. No one understands how
businesses make money, really.”
“Money just burns holes in your pocket.”
“Capacity building was a waste of time.”
“So much is for show, new flash cars, premises, consultants, lawyers, it’s a crying shame.”
“I think we were funding lawyers and Treaty claims so I put a stop to it.”
“There is very little Mäori need to borrow to develop farms. Anyone spending money on
farm development today is nuts.”
“We should be taking back our land under our control, not share milking it. Yes, we’d
have to buy the herds but that’s the business we’re in.”
“Ten years ago we had to own everything. Now we don’t. We just need the freehold,
everything else someone else can own.”
“You have to look closely at who is in charge day-to-day, and what skills and experience
they have, and whether they can be trusted. There is a real shortage of individuals with
executive experience.”
“Consultants can’t do what executive managers do. I accept that change management is
an exception but you can go past having someone in charge on the ground every day to
give you confidence that the business will get done.
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“Why would I lend money to a Mäori organisation for property development I
don’t think I would lend money to a property development company for property
development.”
“I see too many proposals that are get-rich-quick. Softly, softly catch your monkey is a
better approach.”
“Everyone makes mistakes and most entrepreneurs have a failure or two behind them.
Mäori are no different, except the media makes a big noise about it. Ok, we made some
mistakes but we learned from them and won’t be doing it again.”
What we heard about character
“The big ones {iwi} have improved out of sight in the last 10 to 15 years. The small ones
have gone backwards.”
“There are some very smart people in high positions doing some really good things that
you can put your faith in. I think the future for Mäori is bright.”
“Far too many little organisations, all with a board, a chairman with a car, and a
secretary. The overheads are horrendous and there is not enough talent to go around.
Some of the people filling positions of responsibility make me shudder.”
“There is no real accountability to shareholders and beneficiaries. People in control are
milking it for themselves then shutting it down when they get questions.”
“Who is focussed on the future Nobody, they are just getting though the day-to-day.”
“People funded Treaty claims themselves, and so it’s natural they think they are owed
something in return. But it’s not right to just walk in and take it.”
“We have to stop covering up, even if its whänau doing it. Its doing us more harm in the
long run.”
“The {Mäori Land} Court adds huge cost and is a forum for the disaffected and idiots.
We waste too much time and lawyers (fees) on the Court.”
“The Mäori Land Court is an anachronism. We should have the power of general
competence and be regulated like companies.”
“I can’t see the Land Court adds value. I know they’ve tried to mobilise things.”
“They are like family businesses, and have all the same pressures that the Todds do:
beneficiaries who want money and jobs for extended family members who aren’t up to it.
They have a rule that family can’t work in the business which is fair enough.”
“Everyone knows family businesses have family pressures, but we {banks} pretend not to
understand that when it comes to Mäori.”
“We’ve banked Fonterra and its predecessors for 100 years so why not Mäori, they’re just
coops at the end of the day. So long as they don’t try to grow faster than their capital
will allow there’s no problem.”
“There’s a passion to do the right thing, its awesome.”
“Its just teething, we’ll get over it.”
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“Governance structures are in place but governance is weak. People are administering -
doing compliance - and not running a business.”
“The number of people doing IOD courses is a worry, it shows there is a real gap and
those courses don’t fill it.”
“We need a sort of Harvard Business School for Mäori enterprises to teach Mäori how to
run businesses and bankers how to deal with them.”
“The politics are fearsome, you would not want to get caught up in it. But it makes for
instability at a governance level.”
“You think you are going along fine with the group in control, and then there is an
election and suddenly the idiots are in charge.”
“There are too many small trusts and incorporations and not enough talent to go
around.”
“The Mäori Trustee could do more about this!”
“I think that long term relationships are really important from the bank’s perspective.
Continuity, seeing the same faces, knowing they understand the business and your
expectations as well as what they can achieve. When we’ve got a long history with an
organisation, and know and trust the people, we are very happy to lend them money.”
“Banks are not good at long-term relationships, we change our staff around too much
and we can’t afford to specialise.”
“I really look at the governance; understand who is on the board, their background and
track record, and how well the board works as a group. The secretary is important too.
But I like to understand how much they rely on him; too many of these trusts have a big
key men risk in their secretary.”
“They need better advice. The lawyers and accountants advising them are not up to the
task. They don’t understand the bigger picture.”
“We should be playing a bigger part in industry governance, and dragging the smaller
ones along with us.”
“If we had a fund it would encourage the land owners that are not big enough to make a
go of farming themselves to come in together.”
“The Fisheries model has worked. It kept the iwi out of the day-to-day and kept it in the
hands of professionals. People won’t admit that because the wounds are still fresh but
it’s true.”
What we took from what we heard
“We have recorded “sound bites” from the interviews that give a flavour of the key points
to emerge.”
“Weaving together the threads from the interviews, there seem to be some common
themes worthy of note.”
“We explore these themes in a preliminary fashion below.”
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Banks
Banks are not confident they are fully meeting the needs of Mäori enterprises for
core banking products: transactions services, debt, asset management and wealth
management.
Within the bank sector there are varying levels of confidence in the respective
relationship models but a belief that more could be done to understand Mäori
enterprises.
Banks are very sensitive to accusations of institutional racism and to the reputational
consequence of getting it wrong where Mäori are concerned.
There is a genuine desire to help and a belief amongst banks that servicing the Mäori
enterprise marketplace is a growth opportunity, but few ideas of how to make it happen.
NZ Super Fund
The NZ Superannuation Fund (the Super Fund) is a unique institution in the New Zealand
context.
Its role and Ministerial direction make it a very long-term investor in New Zealand with a
strategic interest in the development of the New Zealand capital market.
The Super Fund clearly sees itself as an ideal co-investor with Mäori enterprises that
share its long-term horizon.
The Super Fund has a Directive from the Minister to pursue “…opportunities that would
enable the Guardians to increase the allocation of New Zealand assets in the Fund should
be appropriately identified and considered by the Guardians.”
Importantly also, the Super Fund has set itself a goal for its contribution to the New
Zealand economy in relation to building general capabilities and capacity in the business
sector. It seeks to grow capital markets through:
• Encouraging adoption of good governance practices.
• Investing in new asset classes.
• Co-investment with global best-practice funds.
• Collectively-owned and cooperatively-owned assets.
The Super Fund has already made a strategic investment commitment in timber alongside
Central North Island iwi. The land is owned by the Central North Island Iwi Collective
(CNIIC), the trees in the forest are 70 percent owned by Harvard Investments and 30
percent by the Super Fund. The forest is managed by Timberlands Limited, a private
forestry management company.
The Super Fund also highlights that rural land is a relatively under-developed asset class
that has the potential to deliver a range of investment exposures including scope to
adding value through agribusiness management. This is important since just over 5,000
Mäori incorporations and trusts own approximately 750,000 hectares of land, much
of which is cleared for pastoral farming. The Super Fund has indicated that it expects
to invest up to $300 to 500 million over five years in agribusiness in food-producing
regions in the developed world.
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Corporate investors
For equity capital providers there is a recognition that Mäori enterprises are important
strategic partners in forestry and geothermal. Wind and hydro electricity are other
areas that are mentioned as having the potential for co-investment alongside Mäori
enterprises.
The possibility of Mäori enterprises taking equity stakes in infrastructure developments
and Private-Public partnerships (PPP) has also been raised in the context of high-speed
broadband Internet and privately managed prison facilities.
The Mäori enterprise sector is closed to passive equity investors because of the inability
to issue freely tradeable shares. It is possibly that Mäori enterprises of sufficient size may
be able in future to issue commercial paper and fixed interest securities that would find
acceptance by institutions.
Active equity investors are very explicit about their minimum requirements for coinvesting
with Mäori enterprises. In joint venture situations such investors require
day-to-day management control over resources, employment and over key strategic
decisions. Such investors probably have the most developed understanding of the
governance and mandate issues that Mäori enterprises encounter. They can also clearly
articulate the value creation model, what the Mäori enterprise contributes and what risks
attach to co-investment with Mäori enterprise partners.
Such investors say they need a share of the returns that justifies the risk to them of slow
or attenuated decision making by their Mäori enterprise partners.
Another issue raised by corporate investors is reputational contagion in the event
of failure. Co-investing in situations where there is a risk of failure becomes more
hazardous if the participants fail to understand the nature of the risk they face in a
business venture.
Corporate investors have found means to become equity investors alongside Mäori
enterprises. The investment models that work for both parties are joint ventures.
However risk and responsibility for operational and strategic decision-making are
shared unequally. Such arrangements reflect the corporate investors’ concerns about
governance and mandate issues that Mäori enterprises exhibit. The upshot of that is
that the share of returns going to the Mäori enterprise co-investor may be less than
otherwise might be the case, and the full potential for gaining commercial experience
may not be realised.
Amongst Mäori enterprises
A consensus that:
• Mäori enterprises should be active investors.
– Active investment includes seeding enterprises amongst the iwi, as well as
developing businesses owned and controlled by iwi organisations.
– Active investment contributes to broadening the tribal economic base,
supporting tribal infrastructure and employing “our people”.
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• The current mission of most Mäori enterprises is not strong enough in terms of:
– What should be the strategic direction
– What should be the preferred sectors and industries
– What should be the no go areas
– What returns should be targeted
– How will value be created
– What is our appetite for risk
– Who should/shouldn’t we partner with
– When and how value should be realised
• Too few individuals in positions of control or authority have the right skills and
experience, management ability and financial savvy.
• Value creation may be compromised by the perceived need to release annual
amounts to fund iwi, marae and shareholder/beneficiary expectations.
• The role of the Mäori Land Court in the regulation of Mäori enterprises needs to be
reviewed.
• The concept of capital having an opportunity cost that is the hurdle rate for
investment is not well understood.
At a governance level:
• Value creation requires a suite of skills including strategy formulation, planning and
execution. Administration and political management is not enough.
• Systematic business planning for every investment opportunity are not done, or not
done well, or not considered fully before making investment decisions.
• Board members should not become involved at an operational level in the ordinary
course.
• Exit strategies and risk on exit are not considered adequately before investments
are made.
• Boards do make enough of their existing networks.
• Boards are unwilling to cede day-to-day control.
• Board members should not be a “cause champion” for any asset or investment
opportunity.
At a management level:
• Only the largest iwi organisations and Mäori enterprises have the skills required to
add value to investments.
• Smaller iwi organisations, trusts and incorporations lack the necessary management
skills, and the critical mass to attract skilled and experienced people into
management roles.
• Collective approaches will provide the critical mass, provided boards can overcome
the reluctance to cede control.
• There is little confidence that management value add is recognised.
At an adviser level:
• Mäori enterprises need access to commercial advice.
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• Mäori enterprises have “key man” risk in relation to the role of secretary.
• Mäori enterprises need to break the Gordian knot with legal advisers.
Accountability:
• Lines are unclear.
• Is compromised by individuals who fulfil multiple roles without adequate separation.
Differing views:
• About the role that land and Treaty Settlement assets play.
– Many view such assets as too important to put at risk.
– Others view them as the engine for tribal revival.
• Whether commercial assets should be managed under the same formula:
– Some assets should be held to provide utility-type core earnings. Such assets
might include public-private partnership-funded infrastructure.
– A majority of investments should be in listed equities to provide liquidity and
good information on valuations.
– A minority of investments should be in start-up, early stage, property,
whänau-controlled.
– Investment opportunities consume too much attention and divert focus from
core business.
• Whether control or influence is necessary (e.g., this issue arose in relation to the
recent offering in 2degrees via Hautaki)
• What the investment horizon should be
• What returns should be targeted
Disagreement centres on the role of tradeable shares in Mäori enterprises:
• On the one hand, the view is expressed that there will be commercial benefits of
allowing Mäori enterprise assets to transfer to their highest and best use (with or
without change in land ownership).
• While on the other hand, strong opinions are expressed that such considerations are
an anathema to many Mäori and incompatible with spiritual and cultural values.
Capital providers
Banks and institutions have not yet developed an understanding of the key
characteristics of Mäori enterprises that distinguish them from “mainstream”.
The key distinguishing characteristics of such Mäori enterprises are the following:
• Like financial mutuals and cooperatives, Mäori enterprises lack the ability to
raise equity capital from their shareholders. Thus their main source of equity is
retained earnings or joint ventures. This limits the potential rate of growth of such
enterprises.
• Like mainstream family businesses, complex interrelationships are the ties that bind
the family business in the business family in the Mäori enterprise context. While
the business assets unite the family in a shared economic destiny, the overlapping
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interpersonal roles can create intense and stressful relationships. It is not unusual
for family history to be barriers for the development and maintenance of healthy
business relationships.
Banks and other financial institutions have developed ways of accommodating
cooperatives, mutuals and state-owned enterprises, on the one hand, and an
understanding of mainstream family businesses on the other; however, the application of
the corresponding principles to Mäori enterprises has not yet occurred. This is not to say
that there has been no recognition of these principles in any situations, but the market
lacks maturity and is viewing Mäori enterprises through such a lens.
Corporate equity providers have found means to joint venture with Mäori enterprises
in ways that allocates risk and responsibility. Such arrangements reflect the corporate
investors’ concerns about governance and mandate issues that Mäori enterprises exhibit.
Mäori business culture need maturity
Part of the barrier to such an acceptance of Mäori enterprises are perceptions that the
business also needs maturity. Two issues relating to the ability of capital providers to put
their trust in Mäori enterprises sit to the fore:
• Perceptions of self-dealing and conflict of interest.
• Perceptions of individual political rivalry resulting in instability in governance which
acts as a discouragement to individuals with management ability and financial savvy
participating in Mäori enterprises.
A second dimension of the perceived maturity issue relates to the quality of business
proposals. There is a perception that business proposals are inadequate because debt is
sought when the underlying business risk is more suitable to equity.
Moreover a summarised view is that business proposals generally lack an understanding
of how value is created in a business seeking investment and how risks are managed. The
comment that was passed is of a perception that investing money is the beginning and
end in business proposals lack an understanding of the need for and role of operational
management in the achievement of business value. Hand-in-hand with this goes an
unwillingness to pay for management ability and, instead to seek administration as a
suitable substitute.
Conclusion
At a strategic level the Mäori enterprise sector is seen as important by banks and
corporate investors and the NZ Superannuation Fund. The inability to issue tradeable
equity securities means that the sector is closed to passive equity investors. Banks and
institutions have not yet developed an understanding of the key characteristics of Mäori
enterprises that distinguish them from “mainstream” enterprises.
Amongst Mäori enterprises there is a consensus that they should be active investors.
The focus of active investment includes seeding enterprises amongst the iwi members,
developing businesses owned and controlled by iwi organisations, broadening the tribal
economic base, supporting tribal infrastructure and employing “our people”. However,
the investment mission and mandates are not strong enough and too few individuals in
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positions of control or authority have the right skills and experience, management ability
and financial savvy.
Mäori enterprises need access to better commercial advice.
Disagreement centres on the role of tradeable shares in Mäori enterprises:
• On the one hand, the view is expressed that there will be commercial benefits of
allowing Mäori enterprise assets to transfer to their highest and best use (with or
without change in land ownership).
• While on the other hand, strong opinions are expressed that such considerations are
an anathema to many Mäori and incompatible spiritual and cultural values.
In the next section, we distil from this the central and subsidiary themes that will inform
the next stage of the scoping study.
4. Interpretation
How well Mäori enterprises are able to put their hands on the
mainstream tools of the capital markets: the “markets” for financial 2
and reputational 3 capital is critically dependent perceptions held by
capital market participants and individuals in positions of control
and influence inside Mäori enterprises.
In this respect, the report is not based on measurements that can be reproduced and
independently verified. It is a distillation by the writer of the perceptions gained by
numerous individuals who have had close and personal experience of dealing with Mäori
enterprises:
• They include individuals who have worked for and inside such enterprises, and have
been involved in their governance, management and administration.
• They include individuals who have been involved in providing loans, partnering or
joint-venturing with Mäori enterprises in commercial settings.
• They include professional advisers; legal, accounting, financial and consulting.
• They cover the spectrum of Mäori enterprises. The spectrum ranges from collectivelyowned
land, marae committees, trusts and incorporations, through to statutory
entities, iwi authorities, collectives, post-settlement governance entities, social
services providers and education institutions.
• They include the experiences and observations of both Mäori and non-Mäori.
There is a striking similarity to the observations made by these individuals about what
characterises Mäori enterprises.
2 Financial markets are the
mechanism that allows people to
buy and sell financial securities
and other fungible items of value at
low transaction costs and at prices
that reflect the efficient-market
hypothesis. Financial markets are
used to match those who want
capital to those who have it, and
they facilitate:
• Raising debt and equity
capital (in the capital
markets).
• Transfer of risk (in the
derivatives markets).
• International trade (in the
currency markets).
3 Reputational capital is represented
by the value of corporate intangible
assets including business processes,
patents, trademarks; reputation
for ethics and integrity; quality,
safety, sustainability, security, and
resilience.
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Mäori enterprise characteristics
The writer’s interpretation is that there are four inter-related and overlapping
characteristics present in Mäori enterprises.
Those characteristics are:
1. Weak governance arrangements and mandate.
2. Poor definition of property rights including decision rights.
3. Lack of understanding of commercial value creation.
4. There is no understood Mäori commercial model
Such characteristics are not all present in every Mäori enterprise; some are present
in many, and a few Mäori enterprises are free of most. However Mäori enterprises
as a group appear to suffer contagion by association with those that do exhibit the
characteristics. Dealing with these perceptions in a constructive manner is essential for
the future development of Mäori enterprises.
In the following paragraphs, we elaborate on what is meant by each of the threeidentified
characteristics.
What do you mean by governance
• We interpret the exercise of governance to mean the following four things:
• Keeping the promise. This begs the question of what promise is made (about
organisational purpose and performance) and to whom (which relates to property
rights).
• Effectively representing the organisation externally (which means projecting
trust to key stakeholders, investors, regulators, the community, potential business
partners, and the like).
• Being an effective internal control mechanism. This means ensuring the organisation
is well run day-to-day and intervening appropriately when deviations occur.
• Avoiding the unacceptable. This relates to the management of risk of all kinds,
including loss of reputation.
Not every Mäori enterprise is beset by problems in any or all of the above-mentioned roles.
But there is sufficient perception amongst Mäori and non-Mäori alike that governance
is weak. This is sometimes described by reference to slow decision making requiring
extensive consultation, and even at the end still subject to veto or re-litigation. Insensitive
personality politics puts members of governing groups under personal pressure if they go
one way or another on key decisions. The threat of the Mäori Land Court review is another
factor. This adds up to a brittleness about governance in Mäori enterprises.
What do you mean by property rights
Mäori enterprises are by and large corporatised such that there is separation of control
and ownership of assets. Private property rights in the European context are generally
understood to be static, exclusive and perpetual, although this is not the only way that
property rights may be viewed.
Nevertheless property rights only have meaning and value if they are recognised, valued
and are capable of being enforced.
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For the present purpose it is evident that in connection with Mäori enterprises, property
rights are either not defined or are so diluted as to provide very little incentive (and
imbalance of costs and benefit) in enforcement. For example:
• These arrangements may be trusts, in which case there are no ownership rights in
the normal sense of the entitlement to receive (a share in) distributions, information
and to alienate the entitlement.
• These arrangements may be variations on a body corporate, such as a Mäori
incorporation. The distinguishing characteristic of the modern corporation is the
separation of ownership of the assets of the corporation from control of those assets.
While ownership of the assets is vested in the shareholders, control over these
assets is in the hands of professional managers of the corporation. Hence, managers
take actions whose consequences are largely carried by the shareholders of the
corporation.
The difficulty with the property rights entailed in these arrangements is that under
trusts there is no entitlement for the beneficiaries to receive distributions and it is
largely a discretionary matter for trustees as to how distributions are made. In the case
of Mäori incorporations the splitting of shareholdings one generation inherits from the
previous, combined with low returns (from land-based activities) and high administrative
overheads mean that shareholdings represent nothing of material significance in many
cases. In other words, the assets add little value for their owners, although owners
may attach immense cultural and historical value to their continued connection with
ancestral lands.
Treaty settlements too suffer similar problems of weak property rights. Perceptions
are that small elites control the resources gained and held in PSGE and these assets
contribute little to improving the lot of Mäori unless they are directly involved in the
business of the iwi.
There is no agreement about this question of definition and tradability of entitlements
amongst individuals involved in the Mäori enterprise sector.
The other sense in which property rights are weak concerns the mandates given to
individuals in governance and management positions.
What do you mean by understanding of value creation
Value creation describes the processes by which businesses increase the wealth of their
owners.
A business creates value for its owners in a year in which the return to capital providers
exceeds the required return on equity and debt provided; in other words when returns
exceed expectations.
Shareholder value, or shareholder value added 4 as it is alternatively called, are difficult
concepts to master. There is no market in which shareholder value may be observed
(since it rests on unobservable parameters such as the required return on equity and
movements in underlying assets value) and generally accepted accounting policies do not
reveal or calculate it.
4 Shareholder value added = increase
in market value of equity + dividend
distribution – outlays for cash issues
+ share buy-backs – conversion of
convertible notes.
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Even more difficult is to identify the means by which value is created within businesses
by executive managers.
“Value” is an impressive and loaded word. People talk about value creation, value
propositions, customer value, value chains, enterprise value, shareholder value, value
management, etc. Others talk about value chains, without a specific definition of the
chain or what comprises the links in the chain.
Many Mäori enterprises have a mission to create or preserve value. How do they define
and measure the value they are creating or preserving How do they know if the strategy
is any good How do they know it will be implemented fully and faithfully
Few, if any, actually plan and build up managed value in the implementation of strategy.
Some speculate in property development. Some engaged in funding start-up and early
stage business proposals without recognising the risks of loss are so high that only a
few specialised investors will usually bank roll such enterprises. Many strategies relate
to investment on the mistaken belief that shifting from one asset class to another, more
risky asset class will add value. It may, but it is unlikely to be the case. Simply taking
money from the bank to invest in an asset which over the long run will just compensate
for the additional risks of loss by holding that asset class does not in itself add value. You
actually have to consistently beat the required return on the riskier asst class, and get
your investment back, to add value.
A valid question is whether it is possible to have one basic definition of value creation
that all can use to manage Mäori enterprises
The most consistently successful businesses understand that their purpose is to
create value for customers, employees, and investors, and that the interests of these
three groups are inextricably linked. The first focus should be on creating value for
the customer, but this cannot be achieved unless the right employees are selected,
developed, and well rewarded, and unless investors receive consistently attractive
returns such that they will provide the capital necessary to achieve the first two. The
expectations of all three need to be exceeded, regularly and consistently.
What do we mean by no understood Mäori commercial model
A related, but subsidiary issue is the question of a recognisable Mäori enterprise model.
The answer is that there is not an understood model amongst capital providers. Capital
provider participants in the study variously tried to relate Mäori enterprises by analogy to
mainstream entities such as co-operative companies and family businesses.
Banks and other financial institutions have developed ways of accommodating
cooperatives, mutuals and state-owned enterprises, on the one hand, and an
understanding of mainstream family businesses on the other.
The application of the corresponding principles to Mäori enterprises has not yet
occurred. This is not to say that there has been no recognition of these principles in no
situations, but the market lacks maturity and viewing Mäori enterprises through such a
lens. Partly this is because these analogies fail to provide a complete description of the
characteristics of Mäori enterprise.
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The development of models which promote understanding of the Mäori enterprise and
how it might be structured to improve performance in business is an are for fruitful
research in the future.
Conclusion
In this section, we have provided the writer’s interpretation of the interviews, feedback
and previous research on Mäori enterprise and the NZ capital market.
What emerges are three central issues that relate to the characteristics of Mäori
enterprises as they are perceived. This report is about perceptions held by capital market
participants and individuals in positions of control and influence inside Mäori enterprises.
Those characteristics are the following:
1. Weak governance arrangements and mandate.
2. Poor definition of property rights including decision rights.
3. Lack of understanding of commercial value creation.
4. There is no understood Mäori commercial model
These are the foure core issues that permeate the discussion on Mäori enterprises and
their interaction with capital market providers. Fundamentally the most fruitful avenue for
future enquiry is going to be to understand and come to grips with the cultural dimensions
of how people think about these issues. This comes down to individual’s mindsets.
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Appendix A Research summaries
This Appendix summarises previous research.
Mäori Economic Development, Te Ohanga Whanaketanga Mäori
Report was prepared by the NZ Institute of Economic Research (2003).
The report looked at the broad picture of Mäori economic development. It found that the
Mäori economy is proportionately significantly smaller than the overall role of Mäori in
the NZ economy, and is very volatile because it is disproportionately weighted towards
primary and service sectors, with little manufacturing.
Mäori must determine their own path, with commercial success underpinning social
development. Opportunities include vertical integration, improved returns through joint
ventures, diversification of product ranges and scale for efficiency, growth of cultural
services, and the growing role of the private sector. A key issue is how to ensure that
innovation becomes a pervasive feature of Mäori institutions while still protecting the
base of traditional cultural values. In modern commercial areas, this can be seen in
tourism enterprises, rural-based education needs, social networks via the Internet, and
commercial investment.
The New Zealand banking system has developed a strong focus on property collateral
rather than securing debt through management of project risk yet the latter, given the
inalienability of many Mäori assets, is what the Mäori economy needs. Mäori trusts
and incorporations face unique problems of access to finance because of multiple land
ownership, asset location, asset specificity and quality, and a perception of higher risk
lending among financial institutions. Mäori authorities also face higher costs and barriers
because of sections of the Te Ture Whenua Mäori (TTWM) Act 1993 and the oversight
function of the Mäori Land Court (MLC).
There are also governance issues. Large organisations like iwi can function like
government, with deliberative processes affecting decisiveness and outcomes. The
vast number of Mäori organisations makes it difficult to retain skilled Mäori to act as
trustees, although there is a trend to consolidate small landholdings to a size where they
can support more coordinated management.
The report concluded that the role of Government is to support Mäori through improved
trustee training, helping Mäori business organisations work within Mäori networks, and
examining the TTWM Act and the MLC to see if they are flexible or accountable enough
to allow for the sustainable growth of Mäori wealth.
Mäori Economic Data & Benchmarking Report
Report prepared by the Hui Taumata Action Taskforce (2005).
There is currently no regular survey on the size or scope of the Mäori economy or
its value-added production and overall contribution to the New Zealand economy.
Also, there is no full-time dedicated resource at Statistics New Zealand focusing on
Mäori economic development. (Although it has adopted a working definition of what
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constitutes a ‘Mäori business’ and invested resources into matching business lists
provided by stakeholders to the department’s surveys).
Many analyses depend on financial statements as the primary means to assess the
economic position of Mäori. Mäori Economic Development, Te Ohanga Whanaketanga
Mäori 2003 (the ‘Mäori Economic Report’) received its information from Statistics New
Zealand which had gathered the core data from 436 Mäori trusts and incorporations
that had Mäori Authority tax status and were on the Business Frame. This is the only
identifier for Statistics New Zealand to isolate collectively owned Mäori organisations.
However, an additional 300 Mäori organisations with Mäori Authority tax status were
not assessed. Neither were a huge number of organisations that had not yet applied
for, or been granted, Mäori Authority tax status in 2001, or might have been on the
Business Frame under a different tax status; and nor were many organisations that may
not have qualified for the Business Frame because of a lack of GST sales or purchases,
or insufficient employees. Yet the ‘Mäori Economic Report’ is the most widely quoted
report on the total asset figures and other basic economic reporting regarding Mäori
organisations. The real wealth of Mäori organisations is probably much more than this
report estimated.
Very few reports on Mäori economic development have quantified items of value outside
of the financial statements yet these can affect the overall wealth of organisations.
This report’s survey found that, among participating Mäori organisations, goodwill and
branding, minority investments and offshore investments were generally valued but
rights of first refusal, concessions and intellectual property as items were not.
There are very few public lists of Mäori assets that show comparative or annual
changes to their size so Mäori organisations cannot measure how successful they are
(independent of achieving internal strategic objectives); neither is there benchmarking
between Mäori or other organisations. This report seeks to initiate a benchmarking
regime for collectively owned Mäori organisations by reflecting on the level of net equity
amongst the largest of these organisations.
Mäori Institutions and Capital Markets: Mäori Development Report
Report prepared by the NZ Institute of Economic Research (2002).
The report found a number of constraints on Mäori development.
The Mäori commercial base has a strong primary sector orientation. Farming, forestry
and fishing are all highly reliant on export earnings, and the export dependency of Mäori
assets is nearly double the national average. However, the long term trend in this sector
is for falling returns.
Mäori property rights were initially designed to preserve land of spiritual and cultural
significance so there is conflict when shareholder objectives become increasingly profitdriven.
The problem is most significant with trusts and incorporations. Also, with several
thousand Mäori trusts administering land assets, finding enough skilled and commercially
experienced Mäori to act as trustees is difficult.
Problems of ownership include the difficulty in getting expansion finance because it is
almost impossible for outside investors to purchase shares in Mäori bodies. This also
reduces profits because opportunities for mergers, etc, do not exist to put pressure
on management performance. The lack of a market to transparently value the shares
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in Mäori trusts and incorporations is confusing for shareholders, yet this limitation is
generally accepted by Mäori because of non-commercial considerations such as shares
being allocated according to an individual’s “mana”. Finally, there are informal limitations
on the voting power of major shareholders, such as the “one owner – one vote” policy.
Mäori access to finance is affected by information gaps and the small size of business
ventures as well as socio-economic status, culture, and organisational structure. Also
a problem is the perception in the banking industry that it is often “too hard” to lend
to Mäori trusts because of sections of the Te Ture Whenua Mäori Act 1993 and the
oversight of the Mäori Land Court.
The report concluded that the Government needs to support small independent Mäori
business associations, better coordinate trustee training, enhance property rights to
reinforce the value of shareholder property rights, involve Mäori more in the governance
of their land, and provide incentives to amalgamate small uneconomic trusts. Finally, a
new class of Mäori commercial entity needs to be created with features of the limited
liability company, as defined in the Companies Act, while still maintaining the guardian
relationship Mäori have with their whenua.
Let’s Settle This! Through Settlement to Sustainable Mäori Enterprise
Blueprint prepared by the New Zealand Business Council for Sustainable Development
and Westpac New Zealand (2005).
Engagement and communication: Beneficiary lists are often incomplete because
members are scattered. Full lists would reveal skilled people within the iwi who need to
be encouraged to contribute their skills even though there may be limited resources to
pay them, other members might resent ‘outsiders’ being employed, and a place has to
be found for them alongside the more traditional leaders. Tribal expectations need to be
managed, and future relationships developed with local councils and businesses.
Settlement: Successful settlements have a visionary leader able to communicate the
aspirations of their iwi, recognise that consultation with beneficiaries can take at least
two years to be effective, and have a competent set of managers and carefully selected
advisors. Lasting satisfaction with the settlement will largely be determined by how
successful settlement investments become.
Governance and enterprise development: Iwi are traditionally governed by structures that
are formal (trust boards) and informal (tribal leadership). However, the Crown’s criteria on
governance must be met before Treaty claims can be progressed, and changing existing
structures can result in a loss of control for iwi. Mäori must establish governance
structures for their commercial enterprises that meet the demands of both the business
world and the cultural wishes of the iwi. This process can result in a blurring of roles
between settlement governance and enterprise governance, and between enterprise
governance and enterprise management. These problems can stem from a lack of
commercial or management skills among the leadership.
Economic development: Pre-settlement, claimants face significant costs yet often there
is no economic base to start from. Settlement negotiators need to understand that
the economic value should be the one used in settlement rather than any other value
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otherwise there will be a long-term impact on the sustainability of the settlement.
Social issues: The settlement process has led many Mäori to believe that settlement will
immediately improve conditions and provide personal benefits. Treaty settlements are
with tribes, not individuals; however, investment of the settlement sum may provide the
seed capital for funding employment, education and welfare support programmes.
Environment issues: The majority of tangata whenua groups lack resources and expertise
to participate effectively in environment issues. This means that environmental issues
that do not attract government or commercial contracts, or funding, are a lower priority
in these groups. Mäori need to consider developing an asset database identifying which
issues and resources are important to them for their interactions with groups like local
authorities.
Securing Finance on Multiple-owned Mäori land: Options for Government
Report prepared by the Mäori land Investment Group (1996).
The report identified four significant problems for Mäori landowners wanting finance to
develop multiple-owned Mäori land.
Ownership and management structures were the main problem. The complex Mäori land
ownership structures were often confusing for financiers or fell outside the usual range
of organisations recognised by normal lending criteria.
Of the five main ownership structures – Ahu Whenua Trusts / 438 Trusts, incorporations,
statutory bodies, trust boards, unincorporated / unstructured owners - only
incorporations that could manage their assets by designating land as either “corpus” or
“investment” gave legal certainty to prospective financiers. The Te Ture Whenua Mäori
(TTWM) Act 1993 and the Mäori Land Court (MLC) were seen as placing retention of
Mäori land above the commercial feasibility of a project.
Being unincorporated / unstructured was the most significant barrier to landowners
getting finance for the development of their land. Landowners were prevented from
forming an ownership structure by out-of-date succession records or by being unable to
locate some owners.
Poor strategic and financial management and a lack of administrative expertise limited
Mäori organisations from successfully accessing capital markets. Traditionally, many
trustees or managers are chosen for their “mana” rather than management skills.
Finally, land inalienability and mortgage security were a problem. Mäori are reluctant to
use multiple-owned land as security, and banks are also reluctant unless the appropriate
land ownership structure is in place to provide some legal certainty to the contract.
However, banks and landowners were developing alternative security arrangements such
as control mechanisms like floating charge arrangements.
The report concluded that Mäori landowners should have greater choice over the
organisational governance of their land and have the same choices given to non-
Mäori organisations through the Companies Act 1993. The MLC’s power needed to be
investigated. Owners need support from the Government for pre-commercial facilitation
services, up-skilling of Mäori asset managers, and legislation put in place to support
owners wanting to use their land as security for a mortgage.
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Mäori Land Development
Report prepared by the Mäori Multiple Owned Land Development Committee (1998).
The report looked at the big picture to find out why some landowners, but not others,
take the initiative and form collectives for their economic benefit. Ahu whenua trusts
and Mäori incorporations are more commercially oriented than other Mäori structures.
40 percent of Mäori multiple owned land is underdeveloped and 20 percent has no
management structure. There are a number of reasons. Many Mäori are confused
because of the number of government agencies now involved with Mäori land
development. The Te Ture Whenua Mäori (TTWM) Act 1993 is able to restrict options
for land use and development. The Mäori Land Court (MLC) is seen as conservative and
failing to manage the balance of spiritual and commercial imperatives, yet has absolute
power over land development initiatives.
The historical imposition of an individualised title system over Mäori land by the Crown
led to multiple ownership and the subsequent problems. Few financial institutions
comprehensively understand the TTWM Act and land management structures. A
number of alternative security options are possible, like insurance schemes funded by
shareholders, but they are not always allowed by the MLC. Rate arrears are a significant
factor where there is an increase in unoccupied land, although there are legislative
provisions in the Rating Powers Act to have an appropriate rating regime relative to
Mäori land. There is a lack of basic management and business skills among Mäori ,
which impedes their economic development aspiration and can lead to disputes over
multiple owned land. Generally, there are problems with ineffective design, targeting and
coordination of current pre-commercial facilitation providers.
The Committee reported that Mäori need better formal access to information like
agency services, eligibility requirements for assistance, pre-commercial facilitation, and
information about successful working models. Better information also means bringing
Mäori land ownership lists up-to-date and ensuring that they are continually updated. A
Mäori Land Information Service (MLIS) would investigate why some land is unoccupied or
abandoned, and investigate whether it has potential economic use. The Committee also
recommended the creation of a Special Programme Vehicle (SPV) with a focus on Mäori
land development operating in a commercial framework. It recommended reviewing
the TTWM Act to improve structures and systems, and examining both the TTWM Act
and the MLC to determine whether judicial discretion is preventing the use of land as
security. It also agreed on a need for leadership, with the Ministry of Mäori Development
possibly having a more direct role than just policy and advice.
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Financing Mäori Business
Report prepared by Alan Groves for the Ministry of Mäori Development – Te Puni Kökiri
(2000).
Business development is seen as potentially a major driver of Mäori economic and
social development. However, Mäori are impeded from accessing finance for a number
of reasons: lack of sufficient equity, a lack of proven cash flow, a lack of proven
management capability, a lack of sufficient security, perceived negative attitudes of
financiers to Mäori business, higher perceived risk, and inappropriate borrowing vehicles.
Mäori business people tend towards debt financing rather than equity financing to
establish or maintain their businesses. This is because of no obvious equity financing
sources being available, poor planning, a reluctance towards sharing ownership, and
Mäori possibly being more risk averse than non- Mäori. The Te Ture Whenua Mäori
Act 1993 reinforces this risk aversion by encouraging asset retention over optimal
commercial utilization.
Mäori business-specific financing facility: This would be run on a strictly commercial
basis, and would work with existing enterprise assistance bodies to provide co-requisite
free and subsidised pre- and post-loan support and monitoring services. Current Mäori
business initiatives are the Poutama Trust, the Mäori Women’s Development Inc, and
the Ministry of Commerce’s BIZ programme, which has Mäori business as the focus of a
range of targeted services. However, the Poutama Trust is seen as failing to increase the
pool of successful Mäori businesses because it is adopting an investment rather than a
development approach with its assets. Some of the more prominent Mäori commercial
entities, such as Lake Taupo Forestry Investments Limited, are utilising pooled resources
to become active in the finance and equity markets,
A review of indigenous business financing and support programmes in Canada, Australia
and the United States shows that these countries have been proactive in developing
programmes of an interventionist nature. Ethnicity-based credit unions are seen as
effective because they are able to provide a culturally friendly interface while developing
financial management capacity among their own people. Successful ethnicity-based
unions in New Zealand are the Manukau Urban Mäori Authority (MUMA) and Torere and
Districts Credit Unions.
Ngä Kaihanga Hou / For Mäori Future Makers
Report prepared by Te Puni Kökiri (2007).
At present, the Mäori share of the innovation economy is minimal, yet having an
innovative Mäori society may be more important for growth than having a high rate of
capital investment. New Zealand has one of the world’s fastest growing biotechnology
sectors so Mäori may be able to develop high value producers from commodities and
other fauna and flora that were previously of low value. There may also be changes
within existing sectors, such as improved agricultural productivity or growing crops for
bio fuel.
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The economic emergence of India and China will present both competition and
opportunities for New Zealand, with an expanding opportunity for Mäori niche products
and tourism experiences. In the people-hungry service sector, the relatively youthful
Mäori population base will have new opportunities, while the increasing wealth of older
Mäori will offer opportunities for Mäori business. Adapting to climate change will require
the uptake of new technologies to mitigate potential climate-related shocks. Resource
pressures will offer opportunities like wind farms or potential markets in ‘clean’ and ‘grey’
water systems. Mäori experience in aquaculture will place them well for advising other
nations on quota systems for fisheries management.
Mäori businesses have changed over time, adjusting to commercial and social demands
with higher levels of sophistication and participation in the economic system. Successful
Mäori businesses are characterised by the following: low debt-equity levels, the
separation of commercial from non-commercial activities, diversifying assets, a focus
on the quadruple bottom line, the valuing of being Mäori, and the recruitment of the
best-skilled people. Research shows that the creation of investment companies, the
provision of low-interest loans, and the availability of credit guarantee schemes for small
businesses have all contributed to the establishment of new Mäori businesses.
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Appendix B Terms of reference fulfilment
This appendix demonstrates how the terms of reference for this
project have been fulfilled.
REPORTS OUTPUTS FULFILMENT
Report 1
Report 2a
Report 2b
Report 3a
Report 3b
Reference group discussions on the
scoping study, interviews and case
studies, and recommendations on
the issues and way forward.
A scoping study and report of
the issues affecting the demand
and supply of capital to Mäori
enterprises based on previous
studies and current analysis.
Report on the feedback from
interviews with sector stakeholders,
including those from the capital
markets and Mäori asset holders.
Case studies of financing for Mäori
enterprise and collectively owned
assets (two to three case studies).
A proposal on the forward work
programme of the Mäori Investment,
Capital Markets and Enterprise
Reference Group, including detailed
outputs and budgets.
Separate report .
Separate report entitled “Mäori
Enterprise & the New Zealand Capital
Market: Report 2a scoping report”.
This report.
Case studies relating to Atihau-
Whanganui Incorporation, comparison
of governance arrangements for a
company and a Mäori incorporation,
and the strategic focus of the
Tuaropaki Trust included as Appendix
B of Report 2a.
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Contact the Taskforce
Chair of the Mäori Economic Taskforce: The Hon Dr Pita R Sharples, Minister of Mäori Affairs
Taskforce Secretariat: Carol Berghan
Postal Address: PO Box 18041, Parliament Building, Wellington 6160
Address: Level 7, Bowen House, Wellington
Contact: Phone : 04 817 9800 | Fax : 04 817 6525 | Email : met@tpk.govt.nz | Web : www.tpk.govt.nz