Maori land is no bloody good unless it's working for us
Maori land is no bloody good unless it’s working for us. We never fought over useless land. We fought over the warm land that lay to the north because it grew the biggest kumera. We fought over the forests where there was abundant bird-life. We fought over the pathways to the seafood, because that was life to us, but we never fought over useless land.
Rangitihi of Te Arawa
Today, nothing has changed. Maori land still has to work for Maori, but in a different way. It needs to be able to return an income for the current beneficiaries and their descendants.
Today Maori own some $4 billion worth of land. Some is performing well. Some is not. This article endeavours to identify and draw attention to some of the problems that arise in respect of the governance and management of Maori-owned land.
One of the major difficulties is attracting the right people to become members of boards of governance of Maori Authorities (trusts and incorporations). A typical example is a Maori-owned forestry trust with an asset base of some $23 million. It is only permitted by the trust deed to pay for twelve meetings a year at a rate of $125 per board member per meeting. Needless to say this does not attract people with high-calibre business skills.
Let’s compare a board of trustees with that of a board of directors of a company. The 1999/2000 PriceWaterhouseCoopers/Institute of Company Directors survey revealed that the average remuneration for non-executive directors of a company with a $30 million asset base is $16,700 p.a. In comparison, the non-executive trustees of the $23 million asset base trust are each paid $1500 p.a.
This has to affect the trust’s results. A trustee is the equivalent of a company director and should be providing the direction, monitoring the results and arranging the resources for the trust to meet its goals.
In the case of the trust above, over the last five to ten years nobody has monitored income, markets or harvesting. Like many others, this trust does not have a manager or a CEO, so everything falls back onto the Board. If the board is made up of non-business-people there is unlikely to be any strong, effective governance provided. Things float rather than being made to happen.
Maori desperately need the leaders and specialists who are able to maximise the potential of the land. Most of them tend to end up working for organisations who are prepared to pay appropriately for the expertise that they bring and are consequently lost to Maori. Maori people have traditionally understood that a fair price had to be paid for the services of experts. However, with some Maori there is now a belief that when you are working for the people that there should be little or no charge, or that Maori should be prepared to accept a lessor amount. It is difficult for some people to come to grips with the realisation that Maori aroha does not put bread on the table or pay the power bill.
The Maori Land Court is tasked with ensuring that as much Maori-owned land as possible remains in Maori hands. It is also required to hold an overview of the management and utilisation of Maori-owned land. A Maori trust is formed by the multiple owners of Maori land making application to the Maori Land Court for the creation of a trust. As is normal there must be a settler, trustees, and property capable of being settled upon the trustees who then become the nominal owners. The purpose is to form a legal entity that can deal with the property to the best advantage of the beneficiaries. The beneficial owners nominate the trustees, and the Court appoints them.
The Te Ture Whenua Maori Act 1993 states in section 222(2) that "[t]he Court, in deciding whether to appoint any individual or body to be a trustee of a trust (a) Shall have regard to the ability, experience, and knowledge of the individual or body; and (b) Shall not appoint an individual or body unless it is satisfied that the appointment of that individual or body would be broadly acceptable to the beneficiaries.
The Court tends to give more credence to (b) while ignoring (a). To my knowledge, only once, about 5 years ago, has a Judge ever questioned the ability of potential Maori trustees. Generally, providing there is support from the beneficiaries, the judge will appoint. The need for "ability, experience, and knowledge" has been drawn to the Courts’ attention but the response has been that it’s not the Court’s job to tell beneficiaries how to run their business. That is, if Maori want to nominate people who are not up to the job, they are allowed to do so without question.
In my view, this is not just a problem for the Court. Maori have to fix this. Maori have to get away from the tall poppy syndrome, nepotism, and the popularity vote and appoint smart business-people who can maximise the returns from Maori owned land. Appointments to key trustee positions are often based on a popular vote, rather than expertise. In the case of rotation Maori have to shake off the unfortunate habit of firing the good guys. Maori tend to keep those who lobby well and attend all the hui as against those doing the work.
In my view, the two crucial questions that the Court should be asking of all potential Maori trustees are:
1. What commercial expertise will you bring to this Board? and ,
2. What evidence can you supply of having been successful in business whereby you have put your own money at risk?
It is very easy to take risks with other people’s money.
This brings us to another major issue - performance measures and accountability. If you pay people decent money, then you can demand results. Most substantial businesses will have some combination of audits, reviews of board capacity, and evaluations to identify board members’ skills and training needs. Key performance indicators and industry comparisons also play a part in determining how efficient the board is and how hard the trustees are working. Few Maori authorities have implemented these systems (those who have should be commended) and unfortunately the implementation has not received the support of the Maori Land Court.
Succession is another problem. Many Maori trusts that have developed farms and substantial forests have done so with boards that were basically figureheads. In the early stages, much of the development was done by advisors to the Department of Maori Affairs or large forestry companies. There are still lots of "old type" trustees still in place. The Hamilton Enterprise Agency did a survey and found that most trustees are aged 45 to 85 and have few formal qualifications. Many don’t even have School Certificate.
The next phase will require a different set of skills to that of the establishment phase. Do the current trustees have those skills and what attempts have they made to get them? One of the biggest concerns is that they have generally not upskilled themselves in any way since they became trustees. There are exceptions but they are rare. The Maori Land Court prints booklets on being trustees, and land development but, with all due respect to them, even if they were read by Maori this is like giving someone a booklet on how to fly a plane and letting them go.
It’s not all bad news. There are successes. A diary farm in Paengaroa area had contractual claims against it for over $400,000. The trustees settled at $13,000. It’s now a very successful farm.
Another trust, a very substantial farming operation in the Te Kuiti area, was in trouble. The Court-appointed trustees increased asset base from $25 million to $30 million and doubled annual turnover from $3.5 million to $7 million in five years. The business has moved to producing a value-added product. It exports low fat beef to the US, Singapore, Japan and Korea and is now one of the leaders in its industry.
In each of these cases, the work was done by a professional trustee who has been able to devote full time to making it work. They did not work for peanuts; they didn’t spend all their time at hui, they devoted a great deal of time and energy to making the businesses work; and they were not novices in business. There is a lesson here for Maori landowners.
Jim Gray - jimgray@xtra.co.nz - is a Fellow of the Institute of Directors, a Fellow of the New Zealand Institute of Management, and was National Trustee of the Year 1998. He has been involved with the management of Maori land since the early 70s. He is a Senior Registered Trustee working as a professional trustee to Maori authorities. He was the Executive Trustee of the Maori authorities that won the National Maori Trust of the Year Awards for 1998 and 1999.