Part Four: Examples of Enablers

In response to questions about enablers to the realisation of aspirations, rather than pointing to generic mechanisms, owners related their success stories. As these were given by only a few groups at several of the meetings, they must be viewed as anecdotal. This part of the report describes those success stories. In general they illustrate progress, reflecting one or several of the following features:

• smaller and larger trusts and incorporations were beginning to work collectively on issues such as rates, owner education and investment opportunities
• use of whenua rāhui to protect land whilst partly capitalising on value to raise funds to invest in other lands or projects
• pooling of funds for investment in business or properties based on general land titles to provide freedom of action outside of TTWMA and avoid risk of loss of Māori land
• working with Māori Trustee or Māori Land Court officials who provide localised brokerage services to establish joint ventures and overcome barriers.

1. The Māori Trustee as Broker: an Opōtiki Kiwifruit Enterprise

Information was provided by the Māori Trustee in relation to the utilisation of Māori land for the production of kiwifruit. In terms of size it was indicated that the blocks that became involved in this kiwifruit enterprise are not big blocks with the largest one being about 5 hectares. During the initial stages of this project, trustees from a large number of blocks were approached and this resulted in the attendance of trustees from twenty blocks at a meeting to hear about the proposal.

Out of the 20 trusts, five decided to go ahead and explore the option further and a business plan was developed in relation to these blocks. In addition, the initial stages of this project involved a meeting with all the owners and it was indicated that once the business plan was put in front of them and they could see how it was going to work “the owners basically gave a sign off”. It was pointed out that prior to the kiwifruit enterprise these blocks were not producing any revenue for the owners. It was noted that: “the main grower was growing his maize and paying the money directly to the council [for rates], so the landowners were getting zero.”

…So they saw it as an opportunity, not only to get a return but work for the community. I guess that’s where we talk about and we say some of our values, tāonga tuku iho, when you talk about that. And it’s about holding on to our whenua, I hear that over here and putting together our agreement with the investors that was at the forefront of the owners going forward and our office going forward with it. We weren’t going to put the land at risk at any stage…

The five trusts all decided to become part of the partnership. There were two partners one being the investors and the other being the landowners represented by the five trusts. Each of those five trusts set up a board meeting with the investors and a 50/50 partnership was formed:

…the landowners put their land in that was their 50 percent, although the valuation didn’t equate to the development cost of the orchard so the landowners then had to put some cash in to make the 50 percent partnership. And so the landowners, every quarter we sit around the table, the Māori landowners have equal say to the investors at meetings as to how the orchards progressed.

In regards to Board of Management meetings it was indicated that two trustees from each of the five blocks would attend and in relation to big decisions these trustees would take the information back to a meeting of their full trustees. There were noted to be some complicated features to deal with in establishing this structure such as heads of agreements, lease documents and other matters. It was indicated that it had been important to take care and get advice through this process:

…you’ve got to be really careful once you set these up to make sure you have advisors there, you have a legal teams there to cover all the clauses of those agreements because even now we find that there are the odd things that we didn’t – we weren’t aware of at that time that are starting to slip in, so make ‘real sure’.

It was also pointed out that this group had used the knowledge gained through their experience to pass on advice to other owners that were going into agreements in relation to kiwifruit production.

This land remained Māori land which was one of the reasons that the decision was made to go with this enterprise. It was also noted that this did not have to go through the Māori Land Court because within the trust orders involved with each of those trusts was the ability to lease the land out and so the land was leased to the partnership.

It was noted that this land was now doing extremely well and returning between $80,000 and $130,000 a hectare. The trustees in the blocks went from having no money to dealing with hundreds of thousands of dollars. There was a difficulty in regards to how they would manage this. This problem was resolved through employing Te Puni Kōkiri to look at the issue. This resulted in all the trustees being involved in governance training and in up-skilling in investment development.

2. Ngā Whenua Rāhui

An attendee described how they had put part of the land under their trust into ngā whenua rāhui.⁷⁴ One advantage was that they no longer had to pay rates on this land. In this case they decided to capitalise the money that was received for this land being under ngā whenua rāhui. This meant that they did not receive the full amount that they would have got if they chose to just take a small amount each year. This money formed the financial basis of their trust and they were able to use this money to invest in a dairy farm. In regards to the land under ngā whenua rāhui it was pointed out:

We still own the land. We can still go in and get all those Māori things you want. We can still go in there and we still have a say and we can go in there. But that’s one of the things you can do with land if you’re not using it.

The use of ngā whenua rāhui money to invest in further purchase of land was also described by another attendee. In this case a number of blocks were collected under two main trusts. Some of this land was put under ngā whenua rāhui and the money obtained through this was used to purchase 4,000 acres of land that included some farmland and further bush land. This bush in the purchased land was also put under ngā whenua rāhui and this money was invested to provide ongoing income. The other part of the purchased land was used for grazing. It was indicated that rates were paid in relation to the whole of the grazed block. Of the original land, some of the owners want to revert it all to bush. However, one advantage of having the farm was that there was meat available for tangi and other occasions. It was indicated that the Māori owners received no income in relation to the farm.

In regards to the trusts involved with this venture, information provided indicated that one of these trusts was established in 1998 and the other in 2008. Prior to this the land had not been under a structure. The formulation of the trusts was associated with a decision to take some action in relation to the land. The process of establishing the trusts and moving forward with putting the land under ngā whenua rāhui was said to cost about $25,000 and involved going to the Māori Land Court, getting a court order made, appointing trustees and getting a trust order.

In this case the process also involved flying owners over from Australia so they could see for themselves the land involved and realise that although beautiful there were difficulties in relation to access and therefore the land was not practical for many types of utilisation. The desire to protect the trees was also a factor in the decision to put the land under ngā whenua rāhui. The process of establishing these trusts was not seen as difficult but it was pointed out that somebody had to take responsibility for seeing through the process.

The trust deeds associated with these two more recent trusts were described as being quite different than older ahu whenua trust deeds. It was said that they were deliberately written in a way that gave the trustees wider scope for action.

…we’re talking about not only land as such. We’re talking about … and we use the phrase papatūpuna, and that’s … really where you have river beds, beach beds and that where there’s growth underneath, that’s still part of what we term papatūpuna because it’s giving life from those that’s underneath. And if there’s minerals underneath, if there’s gas underneath, and so … well, this is what we’re talking about, it isn’t just about land on the top and you grow some grass or something like that. I know it might not meet what the government terms as their definition of land, but it’s our definition.

It was noted that over a number of years the experience of the trustees with their river claim to the Waitangi Tribunal had led them to define “the holistic Māori view of the atmosphere” which covered aspects such as their association with the air and clouds above their land. It appeared that there had been no difficulties with the Māori Land Court in relation to putting in place a trust order of this nature.

It was indicated that there were about 3,001 owners associated with one of the trusts and that they were in contact with about 10%. Although the Māori Land Court’s benchmarks were higher than that, this had not caused difficulties and the Judges were said to have been very good in association with this. However, it was pointed out that the Māori Land Court process had been very slow.

Although it was noted that it was not hard to get the owners on board in relation to this venture, there were concerns raised in relation to putting the land under ngā whenua rāhui:

There were concerns, but it was what alternative do you have? …Oh, someone would say, “Here we go again”, you know you’re giving it over to government, you’re doing that sort of thing…

However, it was pointed out that the Māori owners were positive in relation to being able purchase further farmland. It was indicated that they had received about $500,000 for the initial area of approximately 3,000 hectares put into ngā whenua rāhui and that they received about $400,000 for the further land put under ngā whenua rāhui. This land was put under for a period of 25 years. The majority of the land was in virgin bush with some being in re-growth. It was also explained that the purchased land was originally ancestral land to the owners but that it had been acquired in the past and put under general land designation. The land was chosen as part of a general objective of the owners to acquire back, even by purchase, their original ancestral holdings.

In relation to the purchased land, the owners transferred it back to being Māori land:

…we found it was a protection, a better protection for the owners. Otherwise you could just sell it or hock it off like that, and it’s that retention idea. And because it was land taken in the first place, it was getting land back.

As to the land that was under ngā whenua rāhui it was noted that the owners remained as trustees over the land but that now there was a covenant over it. It was further indicated that there was still the potential for some activities to proceed on the land such as tourism -as long as the flora and fauna were protected. Some of the money obtained through ngā whenua rāhui was used for building huts on the land that could be used by members of their hapū that were employed in regards to pest or weed eradication. These cabins were also able to be utilised by hapū members that were hunting in the area. In addition, money was being used to do the tracks up and it was pointed out that this had the potential to assist in possible future tourism operations.

In relation to the money from the ngā whenua rāhui that was invested it was explained that this was invested to get the best return but also in safe ventures. It was indicated that they did not want to invest this in anything that posed a risk. Other uses being considered for the money were educational scholarships and projects such as bee-keeping. It was indicated that there were not going to be any dividend pay-outs. As the land had not been utilised in a commercial way before there had not been much expectation of dividends from the owners.

 

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3. Collective Dairying Venture

Information was provided in regards to a partnership of trusts established in relation to dairying. The land was originally Māori land sold some time ago as an estate. When the Pakeha owner decided to sell it, three trusts got together to buy it. The land was not covered by the Māori Land Court. So the trusts bought the land, formed a trust, put it under the Māori Trustee who subsequently gave the land back.

In relation to communicating with the various shareholders in regards to the establishment the following process was described:

Well, how we set it up was each trust have their own trustees and they go to their AGM and then they speak to the shareholders, and the shareholders give the trustees the right to do whatever, you know, we tell them what we are going to do. So we have a minute in the AGM and that is how it started and they agreed to it.

It was indicated that this process did not take long.

Some of the benefits gained through this venture were described during the hui. The initial blocks involved in this partnership were surrounded by a lot of Māori owned land that was under different trusts and belonged to various whānau. The size of some of these blocks meant that they were not economic. However, these lands were able to be leased to the trust running the dairying business. It was noted that the whānau involved in leasing their lands aspired to “build a financial base for the benefit of their mokopuna.”

It was noted that there were some difficulties. However, it was all for the benefit of holding their tipuna’s land. The importance of not letting trustees have the full authority to go ahead and ensuring that they came back to the shareholders with big decisions was emphasised in relation to this venture.

It was also pointed out that one of the difficulties in relation to the venture at present was that it had gone from a farm to be more like a business venture and one of the trusts had possibly wanted to sell their shares but there was a lack of flexibility to make changes in the structure. There were also concerns that the trust may sell out its interest to a non-Māori partnership.

4. A Reinvigorated Farm Trust

Information was provided in relation to the use of a 1,500 ha block for farming. Records prior to 2000 indicated that this farm had been previously under-stocked with only 2,500 stock units. It was indicated that in the past the farm manager who had shares in the block had come from a position as head shepherd. He had been given incentives such as a free house and stock to grow for himself. However, there was not enough money to pay him and he had remained on a benefit.

The speaker indicated that around 2000 a meeting was held in relation to improving the land. It was noted that at that time there were 13 trustees involved in managing the land:

…it was all these family sort of leaders and they went on there for the wrong reasons. … so most of the discussion was really around the table about themselves and all the history and all … you know, their family did this to our family and … but the land kept on suffering.

To break the cycle, some of those sitting on the committee decided to step down and let new people come on. In addition, the number sitting on the committee decreased to five. These changes in governance enabled steps to be taken to improve the land. The need to base decisions on accurate information was pointed out. In relation to this in this case study the following steps were taken:

• Funding through Community Employment for an advisor. Advice was provided in relation to the fundamental steps that needed to be taken in regards to matters such as feed, fencing and water. It was noted that they did not have the expertise themselves nor did they have the money to pay for an advisor without accessing the funding.
• An aerial photograph of the property. This enabled them to see that there was only 225 hectares of effective land within the 1,500 hectares. This information led them to a decision to put 770 hectares into a ngā whenua rāhui. This gave them about $70,000 to $80,000 that they could then use to complete drainage on the property as this was one of the factors pointed out in the report from the outside advisor.
• A regular reporting system involving the farm manager and the accountant was put in place.
• Trustee meetings were held every two to three months with an annual AGM.

The relationship between the farm manager and the chairperson was considered crucial and it was indicated that communication and questions from the other trustees needed to go through the chairperson. There also needed to be performance measures in place in relation to the farm manager although in this case it was pointed out: “We couldn’t be too harsh, because we didn’t have much to offer …”

There were noted to be over 700 shareholders and in relation to communication it was commented: “How do you communicate with those 700 people? Do you really want them to come all to the AGM?” Trying to find owners was not an area that the Trust spent time on as they had no time to spend on it. Within this trust one family were noted to be the dominant shareholders and in regards to voting it was noted:

…There’s a clause in our trust order which says that you can do it by shares, and I said well that’s all we’ve got to do – you’ve just to get our whānau to turn up and block the meeting that way and get our resolutions through.

Over the nine years since the changes had been put in place, there was steady governance with the same five trustees remaining: “…every year there’s retirements by rotation, seeking re-election, [but] no one else puts their name forward.”

Overall, the trust had taken a conservative approach and had grown slowly. They had an overdraft facility and the banks had approached them in relation to lending them more money but they had refused because of the risks involved in getting into a position of not being able to keep up with interest payments. Their debt was noted to be at a manageable level. In regards to the type of farming they were engaged in it was also indicated that they had gone back to “tried and true” basic breeds.

Despite the fact that conditions were marginal and a lot of farmers had gone under, the speaker pointed out that they had managed to retain the land and that there had been improvements. These included an increase in stock units from 2,000 to over 5,000; the application of fertiliser; the completion of development work and the fact that the farm manager was also now being paid. In addition, the trust was also leasing a block of land in another area. Dividends were not paid out despite some requests from the shareholders.

Now that improvements had been put in place in relation to the farm, the trustees are considering other possibilities such as tourism and forestry. The amount of unpaid work involved in accessing information and completing feasibility studies in relation to exploring development options was pointed out.

5. Collective Actions by Trusts

It was described how a number of the large trusts in an area were creating a forum to meet together to consider various issues facing them. These included the various designations being put in place in the Taupō area in relation to nitrates and other issues. This process had been going on for a number of years and had intensified over the last five years in relation to the development of the district plan. These regulations had a potentially significant effect on the ways that the land could be utilised in future and the costs involved.

Aside from addressing future issues, at the time of the hui, the trusts’ forum were beginning to consider a number of development options.

…the thing is that we’ve got a collection here, we’ve got all the different trusts, so what we’re looking at was looking at the possibility of working together to strive -I suppose looking at the unity of our trusts to take us into the future. That’s probably what we’re doing now with our things, and we’ve identified areas that we would concentrate on. One was that we could look collectively at rates to deal with the situation. Secondly, we’re looking at some of the things that we thought would be good for us to work together on, and those were out there, the education and investment.

• Back to Part Three: Barriers to Achieving Aspirations
• Next: Part Five: Research Findings and the Current Regulatory Environment