Thursday, March 06, 2008

Never trust a politician

Plans for a long overdue overhaul of the Maori Trust Office could come unstuck because of a combination of political ineptitude, ignorance and gamesmanship.

It’s been clear for more than 20 years that change was needed in the Maori Trustee. In the 15 years after the 1975 Royal Commission on Maori Reserved Land, economically viable block were transferred out of Crown management back into the hands of owners – who now make up the membership of the Federation of Maori Authorities. That left the trustee looking after about 2200 blocks totalling 105,000 hectares for 186,000 owners, many of who couldn’t be found. Changes were needed to take account of the office’s changing role.

The proposals the government took out for consultation last year were sensible. The Maori Trust Office was to be split out of Te Puni Kokiri to stand alone. There would be changes to the way interest was paid in the Common Fund, ie, money held for landowners, in a way which would be to their benefit.

But when the Maori Trustee and Maori Development Amendment Bill was snuck into Parliament late last year, it included a major new proposal that had not been presented to the consultation hui. The trustee’s General Fund, which is accumulated profits from fees and investments, would be raided to the tune of $35 million to set up a statutory corporation, Maori Business Aotearoa New Zealand, “to further Maori economic development by utilising the potential of resources available to Maori.”

The board of this corporation will be chaired by the Maori Trustee with other members appointed by the Ministers of Finance and Maori Affairs.

The Government wanted to fold some other Maori funds into MBANZ, which it is keen to stress is not a bank. But the trust deeds of the Crown Forestry Rental Trust and Poutama Trust blocked those ambitions.

Interestingly, the Poutama Trust, which works to encourage small and medium size Maori business development, is funded with the residue of another failed development agency, the Maori Development Corporation. It is not clear that the current generation of policymakers is aware of or learned any of the lessons of that sad story.

The preamble to the Bill says the MBANZ fund would include “a significant contribution from the Government”, the Maori Trustee’s $35 million and “potentially, future contributions from other organisations”. Yeah, right.

The Government refuses to say how much it will put in or where it will come from – is it new money or a reallocation of putea already set aside for some Maori purpose? That has encouraged damaging speculation about its source.

The fund has been the rallying point for opponents of the Bill, and meant what should have been a relatively uncontroversial and essentially administrative move was challenged on its first reading.

Unfortunately, the challenges show that despite the high salaries MPs are paid, they don’t seem to be able to do the basic reading – in this case, the Bill in question and the Maori Trustee’s annual reports, tabled each year for their edification and available in the website.

National and the Maori Party tried to claim the moral high ground by saying they were standing up for beneficiaries whose money was being taken from them.

That is reprehensible. Tau Henare is a former Minister for Maori Affairs (who did nothing about this problem on his watch). Georgina te Heuheu was a member of the 1975 Royal Commission. The Maori Party claims to know everything there is to know about things Maori.

The key phrase is General Fund. According to the latest available annual report, for the year to March 31, 2006, that stood at $60 million.

It made up of $12 million in shares (representing its investment in Quantum Ltd, which owns and manages Copthorne and Millennium hotels), another $2.5 million in a joint investment company with Lake Taupo Forest Trust, $23 million in local authority and commercial bonds, plus government stock, commercial loans to Maori businesses, mortgages, cash and other assets. A conservative portfolio, as befits a trustee. While there may be arguments about the whakapapa of some of that money, it’s the Maori Trustee’s to do with as he likes in the continuance of his business.

Some 81 percent of his revenue came from investments, including $4.2 million in interest payments from the hotel investment, with the balance from commissions and fees. Income outweighed expenditure by $1.4 million, leaving a surplus to go into the, wait for it, General Fund.

The Maori Trustee also has what is called the Common Fund.

To quote from the report: “All money collected by the Maori Trustee from various sources on behalf of Maori owners is administered within the Common Fund. Sources of funds include rental, royalties, interest and income from primary sector activities.”

In March 2006 the Common Fund stood at $38.8 million. That’s the landowners’ money. It gets paid out every year to those it’s owed to. If the owners can’t be found, it sits there collecting interest until they or their successors turn up.

The Common Fund, the landowners’ money, has nothing to do with Maori Business Aotearoa New Zealand. But by saying it is, National and the Maori Party have dealt their credibility on this matter a major blow.

There are no unclaimed moneys going into MBANZ. All that money lives in the Common Fund. In fact, unclaimed money and money from what used to be called “uneconomic interests”, which were taken out between 1963 and 1993 and given to the Maori Education Foundation, Maori Purposes Fund and Maori Council, were put back on the balance sheet in 1994. There is still a $7.6 million contingent liability to cover any claims that may be made.

The Maori Trustee is an obscure and arcane institution, but one of immense importance to Maori, and the politicians could be doing a much better job of tackling the issue of reform.

For starters, it could be argued the issue of independence from the Crown is mishandled in the Bill. The Maori Trustee is a statutory Maori, a status she or he shares only with the Maori Council. That means the trustee is able to act on behalf of any Maori, perhaps to stand up to the Crown in court the way the Maori Council has. That is unlikely to happen while the office is under the thumb of the Crown.

There is no way the Public Trustee would be treated in the paternalistic way the Maori Trustee is being treated by this Government. The precedent has been set in broadcasting, spectrum allocation and fisheries for Maori to choose their own representatives on national bodies, so why is members of the trustee’s governance body totally at the whim of the minister, without even representation from the trustee’s beneficiaries?

Is Maori Business Aotearoa New Zealand needed? Romantic cant about furthering Maori economic development doesn’t tell us much. Which Maori? Why can’t they go to bank like other businesses? That’s where FOMA members go. What will make it succeed where the Maori Development Corporation (and Mana Enterprises) failed? What will is do that Poutama can’t?

There’s also the fundamental question of why the Government thinks it can carry out this raid on the trustee’s putea.

The Maori Trustee is a senior executive of Te Puni Kokiri, the Ministry of Maori Development, at least until this Bill is passed, and the staff of the Maori Trust Office are also Ministry staff.

Technically, there is supposed to be a money go round, with the Maori Trustee reimbursing the ministry for expenses incurred.

Back in 1994, the last time any serious attempt was made to do something about the Maori Trust Office, it was agreed that reimbursement up to June 30, 1994 be deferred, and that he use his best endeavours to pay expenses after that date.

No payments have been made while the future of the Maori Trust Office has been under review, and the amount owed the Crown by 2006 totaled $52,824,394 – most of the General Fund.

But is this debt real and justified? The argument the going on before 1994 was that the Maori Trustee provides a whole lot of highly specialised services which allow the Crown to meet legal and moral obligations to Maori, which otherwise it would have to pay someone like the Public Trust Office to perform.

The Maori Trustee, as an independent statutory being, may want to present the Crown with a bill for past services rendered.

Those are the sorts of arguments the Opposition could be having, rather than going off on wrong-headed attacks on behalf of the trustee’s existing beneficiaries – who will in fact be better off from the bill as it stands.


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