Wednesday, July 23, 2014
Mike Butler: ‘Maori economy’ underperforms
Financial commentator Bernard Hickey puts his political correctness on show in his article titled “New Zealand's Maori economy: a powerful force in the Kiwi success story” that is posted on the ANZ website.(1) This promotional piece of advertorial writing from Hickey marks a seasonal event, the Maori New Year, by lauding the Waikato-Tainui announcement that they had assets worth $1-billion.
Hickey cites a 2010 study by Business and Economic Research Ltd for the government's Maori department, Te Puni Kokiri, that estimated the asset base of the Maori economy at $36.9-billion, up 18 per cent from 2006.
He did not define the Maori economy although another research unit, the New Zealand Institute of Economic Research defined it as including “all those businesses and transactions where ‘Maoriness’ matters. It includes the activities based on collectively-owned Maori assets, the businesses of the self employed who identify as Maori, commercial transactions involving Maori culture, services oriented to specific Maori needs, as well as the housing owned by Maori.” (2)
Despite the headline that shouted “powerful force in success story” BERL found Maori-owned businesses produced $22.2-billion worth of goods and services in 2010 or around 11 per cent of GDP”.
But Maori make up 15 percent of population, according to last year's census. If the Maori economy produced 15 percent of GDP it would be doing its bit. If it was doing 20 percent it would be over performing. At 11 percent, the Maori economy is still under performing and under-performance continues despite of generous servings or corporate welfare from central government.
Treaty settlements are the most visible form of this corporate welfare. A total of around $2.2-billion has been paid in the current round of payments to resettle grievances resurrected by a 1985 amendment to the Treaty of Waitangi Act that allowed any Maori to make any claim for anything right back to 1840.
The bulk of the financial redress in these “settlements” came as property and long-term leases to government departments. This meant that the new tribal capitalists did not have to source, finance, purchase, and rent out property—it was already done for them by the government and all the new tribal corporations had to do was collect the rent.
Furthermore, the new tribal corporations were permitted to function as charities and pay no tax. No charitable work was required. From April 1, 2003, any organisation that administers a marae on a Maori reservation may qualify. This exemption gave neo tribal commercial landlords at least a 30 percent advantage over their non-Maori peers.
To show how little charity results from much profit, Waikato-Tainui's Raupatu Land Trust had a total income $78.1-million in the 2014 year, paid income tax of $342,000 at a rate of 28 percent, and made charitable distributions of just $6.1-million. (3)
That $72-million a year available to these property investors for self-enrichment is a huge advantage over non-Maori property investors and Bernard Hickey appears oblivious to the non-level playing field and continuing Maori under-performance.
A further dollop of corporate welfare is delivered through contracts to the 177 Maori social service providers throughout the country. This functions as a parallel welfare system in which Work and Income clients may get a helper from a Maori provider to make appointments for them and drive them around.
As an example of the annual revenue of these providers, the Hastings-based Taiwhenua O Heretaunga recorded revenue of $11.05-million in the 2012 year. Supposing 177 such providers had government contracts receiving a similar level of reimbursement from government departments, the total for all such contracts in a single year would be $1.7-billion
Despite all this corporate welfare, Maori social indicators have worsened.
Maori unemployment in 1981 was 14 percent, in 1993 it was 24 percent, and in 2012, it was 36.5 percent. In 2002, 38 percent of those on the domestic purposes benefit were Maori, and by 2012, it was 42.7 percent. In 2002, 23 percent of those on a sickness benefit were Maori, while in 2012 it was 28 percent. In 2002, 19 percent of those on an invalid’s benefit were Maori, while in 2012 it was 22.4 percent. (4)
The term “Maori economy” is a politically correct construct. The high degree of exogamy by Maori, or “marrying out” of one’s ethnic group, means it is nonsense to talk of a Maori economy when many Maori have more non-Maori blood than Maori
If Bernard Hickey wishes to talk up the “Maori economy”, he would be more credible if he dropped the political correctness and addressed some inconvenient truths.
1. New Zealand's Māori economy: a powerful force in the Kiwi success story.https://bluenotes.anz.com/posts/2014/07/new-zealands-maori-economy-a-powerful-force-in-the-kiwi-success-story/#sthash.UAEWTZbf.dpuf
2. Maori in the economy. http://www.teara.govt.nz/en/te-maori-i-te-ohanga-maori-in-the-economy/page-8
3. Waikato-Tainui 2014 annual report http://www.wrrt.co.nz/wp-content/uploads/waikato-tainui-annual-report-2014.pdf
4. Mitchell, Lindsay, Maori and Welfare, NZ Business Round Table, 2009, p16
at 11:58 AM