Biddy Livesey has examined two papakāinga development projects on Māori land, a topic which has gained recent attention from both the Office of the Auditor-General and the Productivity Commission as part of an effort to increase access to affordable housing and address barriers to development of Māori land. These projects provide an insight into landowners’ decision-making in the context of tension between the development and retention of Māori land.

Article by Biddy Livesey

Comment by Victoria Kingi - Papakāinga Housing at Mangatawa

Overview

Standing on the proposed housing sites at Mangatawa Papamoa land blocks, you look out across State Highway 2 over the spreading settlement of Papamoa Beach. Rangataua Bay lies to the west. Mangatawa Papamoa Blocks administers 750 acres of Māori land, governed by the Mangatawa Papamoa Blocks Incorporation. The land is prime real estate, a mixture of rural, residential and industrial zoned land situated in the last open land blocks in Te Maunga and Papamoa. Approximately 10.1 hectares, adjacent to Tamapahore Marae and on an ancestral maunga, was earmarked for papakāinga development in the 1980s by the Incorporation. In 1987 four single bedroom units were built as kaumātua housing and there are plans to develop a further thirty houses, staged in lots of ten over three years. The first ten were officially completed in March 2012. The project also includes a shared vegetable garden, a sports field, and a day-care facility for children.

Sixteen kilometres south, State Highway 2 bisects another cluster of Māori land blocks, owned by the Rangiuru 2G Ahuwhenua Trust. These blocks are bounded on the north by the Waiari Stream, and are adjacent to Makaehae Marae, with views out to Papamoa Hill, Maketu, Tuhua Island and the coast. The Rangiuru 2F, 2G, and 2H blocks are the remnant of a larger landholding which has been eroded by takings for public works. The location has hosted a settlement for a thousand years, but the last house on the block was removed in 2003. The Trust proposes building eighteen houses clustered near the marae, with the rest of the land remaining in maize. The houses will be supported by a communal building, a facility for health workers, walking tracks, native tree planting, and an arts and crafts centre.

Both projects are examples of papakāinga development on Māori land, a topic which has gained recent attention from both the Office of the Auditor-General and the Productivity Commission as part of an effort to increase access to affordable housing and address barriers to development of Māori land. These projects provide an insight into landowners’ decision-making in the context of tension between the development and retention of Māori land.

Background

Scope of research

This article discusses findings from research carried out in the western Bay of Plenty in 2010, which explored the effect of Māori land tenure on decisions to develop land for housing. The research also assessed how commercial imperatives - the basic rules of minimising risk and maximising return - might apply to the development of Māori land, setting ‘risk’ and ‘return’ in the context of the dual purposes of Te Ture Whenua Māori Act 1993 to promote the retention and to facilitate the development of Māori land. The research aimed to better understand how housing projects on Māori land differ from housing projects on general land, and why these differences arose. Findings are based on interviews with the project managers at Mangatawa Papamoa Blocks and Makahae Marae.

This research found that rather than aiming to maximise financial return through development, both projects have social and cultural objectives to provide affordable housing. Projects were also designed to be financially feasible (self-sustaining).The biggest risk is alienation of the land. These approaches to risk and return reflect cultural values and are reinforced by the requirements of Te Ture Whenua Māori Act 1993. There are also some similarities between the case studies and housing development on other kinds of collectively-owned land, such as community land trusts.

Legally, the term ‘Māori land’ refers to land held under Te Ture Whenua Māori Act 1993, which includes both Māori customary title (owned in accordance with tikanga Māori) and Māori freehold title (granted to an individual or trust by a freehold order through the Māori Land Court). An important characteristic of Māori land is that blocks generally have multiple owners – 10% of titles record only one owner, but at the other extreme, another 10% record an average of 629 owners (Isaac 2010). In New Zealand, attitudes to multiple ownership of land have changed over the years. In 1961, the Hunn report stated that multiple ownership obstructs utilisation because:

Everybody's land is nobody's land. That, in short, is the story of Māori land today. (JK Hunn Report on the Department of Māori Affairs, 1961 pp 48-49 in Boast 2004)

Multiple ownership is still cited by owners and government agencies as creating a barrier to development in some cases (see (Office of the Auditor-General 2011, Dewes, Walzl & Martin 2011). However, , the Māori Land Tenure Review Group’s view was that multiple ownership of land is a ‘positive value’, although it ‘...attracts some transaction and opportunity costs’ (Maori Land Tenure Review Group 2006). Multiple ownership is seen by some to reflect the communal nature of relationships to Māori land through the statutory recognition of a ‘customary’ collective form of ownership (Chief Registrar, Maori Land Court 2010).

The Government has recently announced a review of Te Ture Whenua Māori Act 1993, focussing on ‘empower[ing] Māori land owners to achieve their aspirations while enabling the better utilisation of their land’ (Finlayson 2012). Since Te Ture Whenua Māori Act was passed in 1993, there has been significant public debate about the impact of the Act on the use of Māori land. A theme of this debate has been whether the legislation, as applied by the Māori Land Court, is striking the right balance between protecting the retention of the land in Māori ownership and allowing owners of Māori land to develop that land (e.g. Morad, Jay 1997; Maori Land Tenure Review Group 2006). The Terms of Reference for the latest Review Panel note that ‘recent research into the aspirations of Māori land owners found Māori land should be retained and used to enable it to be passed onto future generations and that the use of the land should balance commercial and cultural imperatives’ (Finlayson 2012)

The case studies at Mangatawa Papamoa Blocks and Makahae Marae illustrate the potential for generating collective wealth from a collective asset.

Discussion

Nature of risk and return in housing developments on Māori land

The managers of the projects at Mangatawa Papamoa Blocks and Makahae Marae described an interest in their land based on historical, spiritual and cultural associations with origin and place. These interests led to a specific perception of the risks and returns of housing development.

Return and Development

The ‘commercial return on investment’ is the expected financial profit from a development. Rather than realising dividends for landowners through leasing or sale of land for a one-off capital gain, both Project Managers considered that their projects aim to provide more affordable housing for their people, either through rental or home ownership. The proposed development at Makahae Marae was not intended or expected to deliver financial returns above the investment required to maintain the site and amenities. The financial viability and sustainability of the Mangatawa project was critical, because half of the capital fund to build the project was borrowed and required repayment. The Mangatawa papakāinga had to be financially sustainable while providing affordable rental accommodation for the kaumatua tenants. To achieve this, Mangatawa negotiated a commercial arrangement where dwellings are leased to Housing New Zealand Corporation at market lease rent, then tenanted by Housing New Zealand Corporation to Mangatawa shareholders at a subsidised rent. This arrangement generates an income for the Incorporation and enables repayment of the mortgage while keeping rents affordable.

Discussing the expected benefits from development, the Project Manager from Makahae Marae (Project Manager 2010a) stated that ‘...the whole philosophy and concept is to bring life back into the marae. And you do that by putting people there’. The Project Manager from Mangatawa Papamoa repeated that these kinds of housing projects are ‘...a manifestation of a broader vision to get whānau back on the land, and back in touch with each other’ (Project Manager 2010b). The emphasis on retaining connections between whānau and whenua is reflected in Te Ture Whenua Māori Act. Under s 147A, land to be alienated through sale or gift must be offered as a first right of refusal to the ‘preferred class of alienee’ – including the alienating owner’s children, whānaunga, other owners of the land and their descendants. Potential occupants of housing developments on Māori land must also apply either to the Māori Land Court for an occupation order (s.328), or to the trust or incorporation for a license to occupy. The Act restricts to whom occupation orders may be granted.

There are some similarities between the philosophy of these housing projects with the philosophy of community land trusts. Community land trusts, which sell or lease houses to residents while retaining ownership of the land, are common in the United States and becoming more popular in the United Kingdom. Land for community land trusts is sometimes acquired in areas of rapidly rising value to preserve land for housing low-income families (Bourassa 2007). Community land trusts use their collective governance structure to intentionally withdraw high-value land from the real estate market, as Bourassa explains:

Community land trusts maintain the affordability of housing by shielding residential property from market pressures. Land is held in trust by a board consisting in part of residents of the housing that is on trust-owned land and in part of other community representatives who are committed to supporting the public purposes underpinning the trust. (Bourassa 2007)

Considering the community land trust model, it is worth noting that some return could be realised for owners of Māori land through charging holders of licenses to occupy or occupation orders for the right to live on the land, although these charges cannot be attached to the order or license. As the Project Manager from Makahae Marae noted, people who live on the land will be expected to pay something for their right to occupy shared land, and to contribute to the marae community. This payment could be seen as recognising the fact that there is an alternative, income-generating use for the land (agriculture) and using land for housing means it cannot be used for agriculture. However, returns to individuals from agriculture on Māori land are not necessarily significant, and the implications of their loss for an owner’s annual income may be slight. For example, in 2005, the average annual income for a beneficial owner of Māori land administered through trusts and incorporations is just $130.43 (Annual Report of the Māori Trust Office April 2005 – March 2006, cited in Hitchcock 2008). Instead, the fact that landowners agree to forego commercial return in exchange for the chance for some of their whānau to live on the land supports the finding that the ‘return’ expected on investment in housing on Māori land is wider than a financial rate-of-return, and includes social and cultural benefits (Senior Adviser, Ministry of Maori Development 19 July 2010).

Risk and retention

Risk and return are inherently linked, and the attitude towards risk expressed by the Project Managers at Mangatawa Papamoa Blocks and Makehae Marae reflects the nature of the expected return on these developments. External market risks were much less important than internal risks related to project momentum and getting access to funding without compromising owner rights over the land. It was also considered that confining the security for any loans given for development to the house itself, rather than mortgaging the land, was an essential part of mitigating the risk of alienating the land through loan default and maintaining the potential of the land for future generations. This attitude is given context by accounts of historical land loss.

The definition of ‘alienation’ in s 4 of Te Ture Whenua Māori includes a mortgage. The reluctance of owners to alienate land through mortgage default is reflected in s 150A of the Act which requires the consent of at least 75% of owners to sell or gift land. Although it is noted that the alienation of general land requires consent from all owners, (and this requirement is not generally regarded as a barrier to development), requirements stipulating the consent of a large proportion of landowners get exponentially more difficult to fulfil as the number of owners increases. The difficulty of meeting these requirements stems in part from the difficulties faced by trusts and incorporations in contacting many of their beneficiaries or shareholders (Hitchcock 2008). The Project Manager from Mangatawa Papamoa gave an example from an earlier project of visiting family around the country to gain the majority consensus required to establish a trust.

Beyond alienating the whenua, further risks identified included the risks of collective fiscal responsibility and inequal allocation of benefits. As trustees of the land and prospective investors (of time and effort as well as capital) in housing developments, Māori land trusts and incorporations are ultimately responsible to all their beneficiaries and shareholders. If a trust is loaned funding for a housing development, liability for the debt is spread over all owners unless security is held by individuals against specific dwellings (as required in the Kāinga Whenua loan programme administered by Housing New Zealand Corporation). Shareholders in incorporations have limited liability for debts (s.262). In either case, the benefits may only go to a few because not every owner of Māori land can live on their land. Statistically, the ratio of Māori people to hectares of Māori land has fallen from around 150 hectares per person in 1806 to 3 hectares per person in 2006. Hectares of land per person will continue to decrease as the Māori population increases (Durie, 2010). It is estimated that only 1% of Māori land is zoned for residential development of any kind (Chief Registrar, Maori Land Court 2010). Practically, residence on Māori land is limited to the number of people who can live in the quota of houses the site can support, and to those who are granted occupation rights. Housing is therefore an exclusive benefit which in most cases cannot be extended to all landowners.

The projects at Makahae Marae and Mangatawa Papamoa Blocks have employed different strategies to address potential inequalities arising from development. Both projects questioned landowners to gauge interest in homes on collectively-owned land, and found high demand and support for housing for kuia and kaumātua, as well as for low-income families. These kinds of dwellings have been given priority in both projects. The development at Makahae Marae also includes a communal building which will provide temporary accommodation for non-resident owners.

On the positive side, collective ownership can help to mitigate some risks for of homeownership by ‘...spreading costs and financial risk across multiple shareholders [which] may make the decision to buy a home easier for first-time buyers and those with limited assets’ (Saegert, Benitez 2003). In his 2009 report on the potential use of community land trusts in Australia, Johnston reports that ‘...owner-occupiers in dwellings on community land trust land have been able to manage the stresses in the mortgage market better than other homeowners’. The resilience of homeowners on collectively-owned land against the recent global financial crisis are attributed to a number of factors, including ‘...the greater affordability of dwellings on community housing trust land, ...the financial counselling given to purchasers of dwellings on community land trust land, monitoring of mortgagors’ loans by their community and trust, and general support for the resident’ (Johnston 2009).

Conclusion

The case studies at Mangatawa Papamoa Blocks Incorporated and Makahae Marae suggest that developing housing on Māori land is a very different proposition than developing housing on general land. Both return on investment and risk are seen as intergenerational issues, assessed more on social and cultural outcomes than financial criteria. In contrast to the textbook perception of the relationship between risk and return, the returns resulting from ‘getting whānau back on the land’ are dependent on minimising the risk of alienating the whenua itself. Responses to the difficulties associated with developing multiply-owned land illustrate the tension between retention and development enshrined in Te Ture Whenua Māori Act 1993, as well as other forms of housing development on collectively-owned land.

The recommendations of the Te Ture Whenua Māori Act 1993 Review Panel are anticipated to focus on ownership, governance, access to resources, and utilisation. The challenge for the Review Panel is to reconfigure the Act to allow landowners to better respond to commercial imperatives. However, it is important for decision-makers to consider that the nature of risk and return, as documented in this research, are grounded in a worldview – Te Ao Māori – which is reflected, rather than created, by legislation. Finally, landowners themselves must resolve any struggles between developing land for the benefit of current owners, and preserving access and use of the land for future generations.

Note

This article is based on research Biddy Livesey completed for an MSc in Urban Management and Development at the Institute of Housing and Urban Development Studies, Erasmus University Rotterdam.

After completing undergraduate study at Victoria University Wellington (BSc Ecology and Biodiversity, BA Te Reo Māori), Biddy Livesey (Pākehā) was employed by the Ministry for the Environment as an urban policy analyst. While living in the Netherlands, she worked with the Institute for Housing and Urban Development to assist with courses on land policy and infrastructure financing. Biddy is a member of the New Zealand Centre for Sustainable Cities, an inter-disciplinary research centre with links to five New Zealand universities. She currently works at Auckland Council.

References

Boast, R. 2004, "The Evolution of Maori Land Law 1862 -1993" in Maori Land Law, eds. R. Boast, A. Erueti, D. McPhail & N.F. Smith, Second edn, LexisNexis NZ Limited, Wellington, New Zealand, pp. 65-119.

Bourassa, S.C. 2007, "Community Land Trusts and Housing Affordability" in Land Policies and their Outcomes, eds. G.K. Ingram & Y.H. Hong, 1st edn, Lincoln Institute of Land Policy, Cambridge, Massachusetts, pp. 333-366.

Chief Registrar, Maori Land Court 2010, Interview with Julie Tangaere, Maori Land Court, Maori Land Court, Wellington, New Zealand.

Dewes, W., Walzl, T. & Martin, D. 2011, Ko Nga Tumanako o Nga Tangata Whai Whenua Maori - Owner Aspirations Regarding the Utilisation of Maori land, Te Puni Kokiri - Ministry of Maori Development, Wellington, New Zealand.

Finlayson, C. 2012, 3 June 2012-last update, Te Ture Whenua Maori Act review announced [Homepage of New Zealand Government], [Online]. Available: http://www.beehive.govt.nz/release/te-ture-whenua-m%C4%81ori-act-review-announced [2012, 08/21].

Hitchcock, J. 2008, "Financing Maori Land Development: The Difficulties Faced by Owners of Maori Land in Accessing Finance for Development and a Framework for the Soultion", Auckland University Law Review, vol. 14, pp. 217-243.

Isaac, W. 2010, Governance Structures for Māori Land, Presentation to Whenua - Sustainable Futures on Maori land conference edn, Rotorua, New Zealand.

Johnston, C. 2009, Community land trusts: what are they?, Shelter NSW Incorporated, Sydney, Australia.

Maori Land Tenure Review Group 2006, Maori Land Tenure Review, Hui Taumata Action Taskforce, Wellington, New Zealand.

Morad, M. & Jay, M. 1997, "The Reform of Maori Land Tenure and the Quest for Sustainability in New Zealand", Development Bulletin, vol. 41, pp. 44-46.

Office of the Auditor-General 2011, Government planning and support for housing on Maori land, New Zealand Government, Wellington, New Zealand.

Project Manager, M.M. 2010a, Interview with Dean Flavell, Makahae Marae Papakainga Project, Tapuika Iwi Authority Trust, Western Bay of Plenty, New Zealand.

Project Manager, M.P. 2010b, Interview with Victoria Kingi, Mangatawa Papamoa Blocks Incorporated, Mangatawa Papamoa Blocks Incorporated, Tauranga, New Zealand.

Saegert, S. & Benitez, L. 2003, Limited Equity Housing Cooperatives - A review of the literature, Taconic Foundation, New York.

Senior Adviser, Ministry of Maori Development 19 July 2010, Interview with Pauline Tangohau, Ministry of Maori Development, Ministry of Maori Development, Rotorua, New Zealand.

Author: Guest Author

View all posts by Guest Author