May 2013 Māori Law Review

Review of Te Ture Whenua Māori Act 1993 – Discussion Document

Tom Bennion examines the discussion document issued recently by the independent panel of experts reviewing Te Ture Whenua Māori Act 1993. Te Puni Kōkiri has asked for submissions on this document by 17 May 2013.

Download the Discussion Document here (1.2MB PDF).

Background

This review of Te Ture Whenua Māori Act 1993 follows on from recent analysis undertaken by Te Puni Kōkiri (TPK) and the Ministry for Primary Industries, Manatū Ahu Matua (MPI), which suggests that around 40% of Māori land is under-performing and a further 40% is under-utilised.

The issue of what to do with under-utilised Māori land is not new.

In the 19th century it was a perennial concern of settler governments. Back then, there were two broad policy approaches. The first was legislation to enable purchasing of individual blocks at a faster pace. Secondly, district wide schemes that attempted to identify all the areas that Māori might give up to European settlement for a song, while retaining a modest amount for themselves (usually disastrously small and poorly located).

In the 20th century the pattern repeated itself, with legislative interventions such as the forced sale of ‘uneconomic’ shares and the outright taking of land covered in weeds. These were accompanied by broader schemes of consolidation and amalgamation of remaining scattered Māori blocks. For the most part these overpromised and under-delivered, or were set up to fail. The Waitangi Tribunal has examined these issues in a number of inquiries.

Te Ture Whenua Māori Act 1993 was primarily intended, and has acted, as a Māori land preservation act. Very little land has left Māori hands since it was enacted. Its attempts at innovation in the management of Māori land – such as through whenua topu trusts – have not enjoyed such broad success.

Enter the National government, with its rural focus and a general interest in lifting the performance of rural land, and newly resurgent Māori businesses, including some post settlement governance entities with settlement cash to invest.

In March 2011 the Ministry for Primary Industries released a report entitled “Māori Agribusiness in New Zealand: A Study of the Māori Freehold Land Resource”.

The MPI report is a detailed business analysis of the current productive capability of Māori freehold land. That land is divided into 3 broad categories, with a number of sub-categories under each:

TIER 1 – WELL-DEVELOPED BUSINESSES

This tier includes well-developed businesses with the potential for further growth. The consensus from discussions is that Tier 1 probably involves about 20 percent of Māori freehold land (approximately 300 000 hectares). Considerable areas of general land are farmed in conjunction with the core collectively owned Māori freehold land.

TIER 2 – UNDER-PERFORMING ENTITIES

Tier 2 entities can be described as those with landholdings that are currently developed for productive use but which are clearly, often markedly, under-performing compared to similar enterprise benchmarks. The consensus from discussions is that Tier 2 probably involves about 40 percent of Māori freehold land (approximately 600 000 hectares).

TIER 3 – UNDER-UTILISED LANDS

Tier 3 represents a complex mix of circumstances and conditions – there is an amalgam of situations that contribute to this land being under-utilised. The drivers of under-utilisation range from the inherent physical production of the land not being realised, constraints on the physical capacity of the land itself through a lack of identifiable owners or management entities. There is also an under-contribution to the financial wellbeing of the ownership group. The consensus from our discussions is that Tier 3 probably involves about 40 percent of Māori freehold land (approximately 600 000 hectares).

The MPI report goes on to make 10 recommendations:

1. Develop a series of capability development programmes to assist those overseeing Māori entities.

2. Develop guidance, best practice manuals and training courses for those providing information to Māori land governors.

3. Establish bespoke support services (for both on-farm technical and financial management skills) for Māori land.

4. Develop training programmes for farm managers of Māori land.

5. Design capability development programmes specific to small entities.

6. Develop support networks for those tasked with governing Māori land.

7. Develop stronger communication channels between Māori and government.

8. Update Māori Land Court systems.

9. Update legislation to provide tools and options to deal with current issues.

10. Support trusts and incorporations to have greater input into the management of their assets.

Recommendations 9 and, possibly, 8 and 10 require changes to Te Ture Whenua Māori Act 1993.

In April 2011 Te Puni Kōkiri released a report on “Owner Aspirations Regarding the Utilisation of Māori Land

The authors of this report, Whaimutu Dewes, Tony Walzl and Doug Martin, drew on discussions from six hui to which owners were invited from a cross section of 4 different management types, similar to the 3 tiers in the MPI report:

  • Large management entities that were managing more than 1,500 ha
  • Māori land trusts or incorporations that were managing less than 50 ha
  • Māori freehold land blocks larger than 50 ha but not under a management structure
  • Māori freehold land blocks of less than 50 ha but not under a management structure.

The summary of owner aspirations suggests that most owners are quite conservative as to the future uses they wish to put their land to:

• to retain the land that had been handed down from tipuna thereby maintaining owners’ association with it

• to utilise the land within the context of exercising values associated with land as a tāonga tuku iho such as kaitiakitanga and manaakitanga

• to provide the opportunity for owners to directly utilise undeveloped land (e.g. for hunting and fishing, papakāinga, cultural observance)

• to achieve a balance between managing the land as a viable business but still maintaining the owners’ cultural connection

• to retain and improve existing long term businesses associated with the land, especially farming, and for owners to use the land directly rather than through lease

• to achieve the maximum financial return for the owners, provide employment for the owners where possible and to build a financial base for coming generations

• to achieve the best economic potential through exploring the possibility of diversification into new commercial opportunities

The report noted:

examples [of best economic potential] … were often comparatively low capital ventures including bee keeping, development of tracks and huts on undeveloped land for tourism ventures, and offering hunting and fishing tours.

The report notes at one point (at p 17):

It was acknowledged [by owners] that the commercial use of land inevitably raised the possibility of conflict with the maintenance of some types of cultural connection with land and that in some situations trade-offs would have to occur. The aspiration to retain or rebuild the cultural associations with the land was clearer and simpler when the land was covered in bush but less clear when there was a commercial venture such as a stud merino farm located on the land.

And also (at p17):

… a fair proportion of owners indicated that they were only beginning to think about their land and its utilisation for the first time and were only on the first steps of beginning to form any aspirations at all.

The owners discussed the hurdles they faced. The report also discusses the lopsided nature of Te Ture Whenua Māori Act 1993 in terms of land utilisation (at p 52):

The clauses of TTWMA essentially are proscriptive in relation to retention with clear boundaries placed around possible owner actions. In relation to utilisation, there is no such proscription.

Among recommendations of the report are several requiring review of the Act including:

Consider the benefits and risks of exempting from certain regulatory oversight any Māori land management entities that have met a set of benchmarks relating to governance, financial management and capacity:

.…

Identify and ameliorate clauses which potentially present barriers to Māori land management entities, and other ownership groups, working towards the utilisation of land and achievement of aspirations:

….

Consider ways in which the fragmentation of Māori land titles might be addressed

As will be seen, these directly inform the task of the review panel.

Discussion

The Review Panel and terms of reference

The independent expert review panel is chaired by Matanuku Mahuika. The other members are Tokorangi Kapea, Patsy Reddy and Dion Tuuta.

The panelists between them have considerable experience with the problems of utilising Māori land. They also represent the Māori business renaissance and are all involved in one way or another in Treaty settlements. They are well aware of the potential but also the risks when it comes to developing Māori assets on behalf of owners linked by whakapapa, often with keen expectations, but very limited capital. See for example Dion Tuuta's insightful piece on the disaster that befell the Ngati Tama claim settlement.

Although developed from ‘first principles’, the terms of reference for the panel were limited to recommending changes to Te Ture Whenua Māori Act 1993, informed by the earlier research and conclusions:

Te Ture Whenua Māori Act 1993 (TTWMA) Review Panel (the Panel) will make recommendations on what form of legislative intervention might best support the owners of Māori land in reaching their aspirations.

Empowering Māori land owners to achieve their aspirations will involve making recommendations in four key areas:

Ownership: Māori land owners are affiliated and engaged with the land;

Governance: there are appropriate structures and trustees with expertise to support effective decision-making;

Access to resources: resources are available to enact decisions; and

Utilisation: the better utilisation of Māori land is enabled.

In addition, the Panel was invited to make recommendations to improve capability, in terms of skills and knowledge, in all of these areas.

The panel developed 5 inter-related principles from which it developed its specific recommendations. These were:

Proposition 1: Utilisation of Māori land should be able to be determined by a majority of engaged owners

Proposition 2: All Māori land should be capable of utilisation and effective administration

Proposition 3: Māori land should have effective, fit for purpose, governance

Proposition 4: There should be an enabling institutional framework to support owners of Māori land to make decisions and resolve any disputes.

Proposition 5: Excessive fragmentation of Māori land should be discouraged.

Looking at each of these in turn.

Proposition 1: Utilisation of Māori land should be able to be determined by a majority of engaged owners

The major proposal under this heading is that a new definition of “engaged owner” is included in Te Ture Whenua Māori Act 1993. This would be defined as “an owner who has actively demonstrated their commitment to their ownership interest by exercising a vote either in person or by proxy or nominee.”

The panel then proposes modest changes to the powers to dispose of interests in Māori freehold land, making use of the engaged owner, and reducing Māori Land Court intervention to proposals where loss of the whole of the land is a possibility.

The requirements for a decision to permanently alienate the land would remain unchanged. That is, 75% of all registered owners to vote in favour, and those who can affiliate to the land have a first right of refusal (at market price).

Those who affiliate would “include children and whānau of the owners and their descendants.” It is unclear, but this seems to be a lot narrower than the existing “preferred class of alienees” which includes “children and remoter issue” of the owners, “whanaunga … who are associated in accordance with tikanga Māori with the land”, “members of the hapu associated with the land”, and “descendants of any former owner who is or was a member of the hapu associated with the land” (s4 Te Ture Whenua Māori Act 1993)

Decisions which are less important, but still significant, such as long term leases or mortgages, would require approval from 75% of engaged owners.

All other decisions would require approval from 50% of engaged owners.

The Māori Land Court would have oversight only over decisions to permanently alienate the land.

Proposition 2: All Māori land should be capable of utilisation and effective administration

The panel proposes that where owners are not engaged or cannot be located, an external administrator of the land may be appointed by the Māori Land Court. This would be the Māori Trustee, or in some cases “Post Settlement Governance Entities, Māori trusts and incorporations with hapū or iwi affiliation to the particular Māori land.”

They would be appointed in limited circumstances. “The Panel considers that the threshold for such an intervention should be extremely high and is only likely to be used in exceptional circumstances.”

The Māori Land Court would keep a register of potential external administrators. It would appoint and maintain oversight of the external administrators.

The panel recognises that it would be undesirable if the external administrator bound the owners into arrangements which they might have great difficulty unwinding should they came back in administer the land. Consequently the administrator’s powers are strictly limited:

The Panel proposes that the role of the external administrator should be to administer the land as effectively as possible and, if possible, to identify potential owners and return the land in its current state or in a more developed state. Depending on the capability of the land and the issues associated with it, administration could range from designating it for cultural or environmental purposes (e.g. Wāhi Tapu, Māori Reservation, Ngā Whenua Rāhui), leasing or low intensity utilisation in order to maintain the property (e.g. pay rates, maintain fences), or higher intensity utilisation in order to generate a return.

In situations of cultural or environmental designation, identification should proceed if possible. In situations of low or high intensity utilisation, identification should occur after this has been achieved in order to fund identification activity as well as to encourage potential owners to succeed.

Since the external administrator is not the owner, utilisation decisions should be constrained so that if potential owners do succeed, they are able to make decisions about the land and not be bound in the long run by the decisions made by the external administrator.

The Panel proposes that any environmental or cultural designation, leasing or other activity undertaken by the external administrator that has the effect of locking up the land for a significant length of time should be constrained (e.g. lease duration is limited) so that any potential engaged owners can eventually make their own decisions.

Proposition 3: Māori land should have effective, fit for purpose, governance

The panel recommends that governance requirements for trusts and incorporations should be more clearly spelt out, and be more consistent across the different types of arrangements that can apply to Māori land and parallel those for ordinary companies.

Governors should be acknowledged and remunerated for good performance but should also be punished for poor performance. The Panel proposes that the duties, responsibilities, and required competence of governors of Mäori land should be specified in detail including introducing civil penalties for negligence (e.g. not filing returns) and criminal penalties in the case of fraud.

A potential starting point for considering what the duties of governors could be is provided in the current approach to the duties of company directors.

The Panel suggests amendments that would provide a higher bar to seek intervention by the Māori Land Court than at present (where applications require little more than broad allegations and a modest filing fee).

Proposition 4: There should be an enabling institutional framework to support owners of Māori land to make decisions and resolve any disputes

The proposition is that Te Ture Whenua Māori Act more closely follows employment and family law in promoting mediation as the first stop in disputes.

Proposition 5: Excessive fragmentation of Māori land should be discouraged

The panel notes that 27,308 Mäori freehold land titles are currently held in 2,710,214 individual ownership interests and proposes simplifying succession provisions, but has no particular ideas on how to do this. A “central registry that records Māori ownership interests” is also mooted.

Finally the panel wonders if a way to prevent further excessive fragmentation is to introduce a threshold under which an ownership interest can’t be divided further. “If such a mechanism were introduced, the decision-making rights of owners would be limited to those engaged owners with minimum threshold interests.”

Analysis

Despite the concern about under-performance and under-utilisation on which the review is based, the proposals are for the most part quite modest. That perhaps reflects the relatively conservative, and diverse, aspirations of owners. There is no suggestion, for example, to amend the retention or utilisation clauses in the Act to tilt towards utilisation. Instead, the proposals attempt to free up owner decision making processes in some situations.

Some of the proposals appear light on detail. Defining an “engaged owner” as “an owner who has actively demonstrated their commitment to their ownership interest by exercising a vote either in person or by proxy or nominee” does not suggest that detailed consideration has gone into how the Māori Land Court currently manage votes in land blocks with large numbers of owners who cannot be located and the “reasonable efforts” approach that is taken in such circumstances.

The proposal for a mediation service likewise does not seem to appreciate how informal Māori Land Court processes currently are. On many occasions the Māori Land Court already acts as a kind of whānau counselling service. This is evident from reading almost any month’s worth of transcripts of proceedings.

A specialist and focussed mediation service might be a good addition. However, to work effectively, there need to be real incentives to settle. In the case of most courts the incentive is the costs of having to take the case to a hearing, and the risk of significant costs orders in favour of other parties if you lose. Mediation without significant external incentives is likely to be no more than a waypoint on the road to a court hearing.

In terms of the proposal for external administrators, this would presumably allow post settlement governance entities and strongly performing trusts and incorporations to take blocks of Māori land “under their wing” as part of their business development.

A key factor will be the circumstances in which this will occur and the returns to the administrator. Will they administer with an eye to recovering only their expenses, or will they be allowed to seek a profit via a management company? What if the land performs poorly and debt increases, or leases fall in with covenants poorly enforced (as has occurred historically with the Māori Trustee)? I wonder if post settlement governance entities, who have enough on their plate already (see the Tuuta article above), would have the time or resources for this role.

Note

Te Puni Kōkiri is seeking comments by 14 June 2013. These can be sent to TTWMA@tpk.govt.nz or Te Ture Whenua Māori Act Review Panel, c/o Te Puni Kōkiri, PO Box 3943, Wellington.

In addition, a series of regional hui will be held until 17 May 2013.

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