• About this site|
• Site index|
• Contact us|
• Jobs

Māori Impacts from the Emissions Trading Scheme: Detailed Analysis and Conclusions

Acknowledgements

Foreword

1 Introduction

2 Māori Contribution to New Zealand Greenhouse Gas Emissions

3 Māori Economic and Socioeconomic Position

4 Likely High-Level Generic Impacts of the ETS

5 Likely ETS Impacts on Māori – Absolute

6 Likely ETS Impacts on Māori – Relative to Non-Māori

7 Summary of Findings

3 Māori Economic and Socioeconomic Position

3.1 Overview of the Māori economy

The most-commonly cited estimate of the Māori asset base and the Māori contribution to New Zealand’s economy is that provided by NZIER in its 2003 publication Māori Economic Development: Te Ohanga Whanaketanga Māori.⁶ This publication suggests the following:

1. Primary industries (including agriculture, forestry, fishing and mining) accounted for 50 per cent of Māori commercial assets, as compares with 11 per cent of assets of the New Zealand business sector overall.
2. Only 10 per cent of Māori commercial assets are in secondary industries such as manufacturing and construction, with the remaining 40 per cent of Māori assets being involved in tertiary industries.
3. Māori control up to 37 per cent of the domestic fishing quota in New Zealand, making them a disproportionate participant in this sector per capita.
4. Agriculture, fishing and home ownership account for 75 per cent of the output of the Māori economy.
5. Māori control around 10 per cent of New Zealand land involved in forestry, but this often arises through forestry rights owned by third parties.

The Māori primary sector asset base is weighted towards Bay of Plenty, Waikato and Northland, and also Nelson (presumably Sealord).⁷ In terms of total assets by region (ie, including secondary and tertiary industry assets), 48 per cent of the Māori asset base is located in Auckland, Waikato and Bay of Plenty.⁸ However, as mentioned in Section 1, most of the Māori land base outside of the main urban centres is located in six key regions, namely Waikato, Hawke’s Bay, Gisborne, Manawatu-Wanganui, Bay of Plenty and Northland. In terms of Māori employment the key agriculture, forestry and fishing sectors, as well as processing in each such sector, are of obvious importance in terms of possible ETS impacts.

3.2 Māori land-based activities

We turn now to describing the Māori interest in agriculture and forestry in greater detail. Using indicative data drawn from the Māori Land Information Base, as summarised in the 2006 Ministry of Agriculture and Forestry publication Māori Land Analysis Version 1.1: Results by Region, Figure 3.1 summarises the relative proportion of Māori and non-Māori land represented by each of 14 farm types at a national level. These 14 farm types account for 95 per cent of all land recorded in the Māori Land Information Base as summarised by Ministry of Agriculture and Forestry.

From this figure it is evident that sheep and beef farming constitutes the largest use of Māori land, with forestry (both exotic and indigenous, and both pre-1990 and post-1989), and beef cattle farming, the next most significant land uses. While sheep and beef farming constitutes only a marginally higher fraction of Māori land use than for non-Māori, the Māori proportions for beef cattle farming and forestry are markedly higher.

Figure 3.1 suggests a much higher proportion of non-Māori land being in native bush than for Māori, but this figure includes conservation estate managed by Department of Conservation, so the non-Māori proportion is biased upwards accordingly. The higher non-Māori proportion in sheep farming is likely explained by sheep farming in the South Island High Country. Given evidence of more conservative stocking policies on Māori-owned farms, these area-based comparisons may overstate the intensity of Māori farming relative to non-Māori farming for like farm types.⁹

Interestingly, according to this database a greater share of Māori land is committed to dairy cattle farming, although this constitutes the fourth largest use of Māori land behind sheep and beef farming, forestry, and beef cattle farming. These four farm types account for some 77 per cent of all Māori land, but only 53 per cent of non-Māori land (although this figure is biased downwards by the inclusion of Department of Conservation land).

To delve behind the national figures, Table 3.1 disaggregates Māori interests in the main land-use types for the six most significant regions in terms of Māori land areas. As can be seen, the Waikato (which also takes in the Central North Island and Taupo areas) ranks consistently high in terms of total Māori land interests across the major land uses.

Table 3.1: Most significant regions by area in which Māori have interest in major land uses

* Māori forestry interest understated as a proportion of Māori land.

Data from Ministry of Agriculture and Forestry on Māori exotic and indigenous forestry interests as at 2001 is summarised in Tables 3.2 and 3.3.¹⁰ This data underestimates the Māori forestry interest substantially, not least because the Māori Land Information Base does not classify general land owned by Māori for forestry as Māori forestry land. For example, not reflected in the Māori Land Information Base figures is the fact that Māori own almost 97,000 hectares of formerly Crown-owned Crown Forestry Licensed lands as a consequence of settled Treaty claims. Furthermore, the Māori Land Information Base data is quite dated – due to increased deforestation since 2005, as well as low new planting rates, it may not provide an accurate assessment of the current position.

With these caveats in mind, note that 31 per cent of the total exotic forest estate is located in the Central North Island. Note also that around 680,000 hectares of new exotic forests, or 38 per cent of the exotic estate, are estimated to have been planted from 1990 to 2006. This suggests 62 per cent of the exotic estate, or 1.12 m hectares, is in pre-1990 forestry. The vast majority of the private indigenous estate is likely to be in pre-1990 forests.

Table 3.2: Māori and non-Māori exotic forestry interests as at 2001

Table 3.3: Māori and non-Māori private indigenous forestry interests as at 2001

3.3 Issues with the ownership and use of Māori land

Māori land ownership differs in a number of important ways when compared with non-Māori land ownership. Notably, the Māori Land Act 1993, or Te Ture Whenua Māori 1993, defines different classes of Māori land, and provides for a range of governance entities and processes for controlling the use and retention of Māori land. These governance entities include the commonly-used Ahu Whenua Trusts (covering 50 per cent of Māori land area), as well as incorporations (covering a further 13 per cent of Māori land area). The processes for controlling the use and retention of Māori land include requirements for consensus-based rather than simple-majority based asset management decision-making, as well as the capacity of the Māori Land Court to intervene in asset management decisions made by Māori asset-owning trusts and incorporations.

This capacity derives from the distinctive provision in Te Ture Whenua Māori for the retention of Māori land assets by such bodies, as provided by the Act’s strong restrictions on the “alienation” of Māori land. Alienation relates not just to the outright sale of such land, but also to the granting of leases over that land, and the granting of mortgages for raising debt capital, among other things. A consequence of these strong restrictions is that Māori land-owning bodies constituted under Te Ture Whenua Māori typically face considerable difficulty in raising external capital, and it is extremely difficult (ie, prohibitively costly or otherwise impossible) to rationalise the ownership of Māori land assets.

The difficulty in raising capital is made worse by the fact that much of the land such bodies own is often of low productive potential and hence security value, is small and often poorly located, is not surveyed (and hence titled), and has a relatively large number of owners (increasing over time as succession rules pass ownership to each new generation). It is also made worse by lenders’ reluctance to lend to such bodies for fear of being unable to realise asset value in the event their loans go bad, and negative publicity potential where Māori ancestral land is forcibly sold to repay debts. The capacity of the Māori Land Court to intervene in land management decisions where the retention of Māori land is at risk raises additional complications and risks for would-be lenders.

As to the nature of Māori land itself, until recently more than half of Māori land blocks were thought to be unsurveyed and hence untitled (the Māori Land Court advises that the figure now stands at 21 per cent). Māori land blocks are typically small (average of 57 hectares, with 68 per cent less than 10 hectares in size), are non-contiguous (hence harder to rationalise), have multiple owners (average of 80 per block), and a third are landlocked. Furthermore, over 60 per cent of such blocks have no management structure, and 81 per cent of Māori land is non-arable (compared with 71 per cent of all land nationally). The 2.3 million ownership interests in Māori land compare with the total number of interests represented by the other 94 per cent of land in New Zealand. The implied cross-ownership interests in different Māori land-owning bodies means for many Māori landowners their share of returns from a given land block constitutes a negligible part of their overall income, meaning they have little incentive to invest much in the governance and management of such blocks.¹¹

Given both the institutional peculiarities of Māori land ownership, and the specific characteristics of Māori land, much Māori land is undeveloped or relatively under-developed.¹² Indeed, as two commentators put it:

“Much Māori land is currently locked out of development although it can be adjacent to highly productive land and located in a market driven economic environment”.¹³

“... Māori land may suffer from fragmentation of development effort, increased transaction costs and slower development timeframes. The more complicated ownership structure and possible non-economic drivers for development that differentiate the development process for Māori land from general land must be recognised as they are central to an understanding of wider land development issues.”¹⁴

Such factors serve to limit the economic use and ownership rationalisation of Māori land, and may impede the ability of Māori landowners to take advantage of opportunities under the ETS and complementary measures (eg, the Permanent Forest Sinks Initiative). On the other hand, between 40,000–50,000 hectares of marginal Māori land is in pasture, and could be suitable for reforestation or scrub regeneration such as that envisaged under the ETS in respect of post-1989 forests. Much of this land is located in the Gisborne/East Coast and Northland regions.¹⁵

These factors also serve to affect the value and riskiness of Māori land assets. The alienation restrictions imposed on Māori land under Te Ture Whenua Māori amount to what in economic terms are called “liquidity constraints”. Such constraints are commonly found in both theoretical and empirical studies to impose considerable value discounts relative to comparable assets without such constraints.¹⁶ This means that Māori land subject to alienation restrictions should be worth less than comparable land not subject to those constraints. Moreover, a predicted consequence of the asset illiquidity imposed on Māori land by Te Ture Whenua Māori restrictions is to make the holding of other, non-constrained assets less risky.¹⁷ Hence, Māori land should be worth less than otherwise comparable non-Māori land, and ironically other land should be a less risky investment for its owners by virtue of the Te Ture Whenua Māori constraints.

Based on such theory and evidence it might be inferred that any adverse value impacts of the ETS on Māori land should be less than that on non-Māori land. However, while Māori land should be worth less than otherwise comparable non-Māori land, it cannot be immediately deduced that any loss of conversion potential on non-Māori land is also relatively less than for non-Māori land. This is because the potential conversion value on Māori land may be high relative to that for comparable non-Māori land, for example due to relative under-development (whether due to financing constraints, institutional restrictions on land ownership, or otherwise). Hence, any further constraints on Māori land development as a consequence of the ETS could in fact result in even higher proportionate value losses for Māori land than non-Māori land.

3.4 Māori socioeconomic position

The socioeconomic position of Māori relative to non-Māori can be measured using various combinations of indicators.¹⁸ Among these indicators include:

1. a similar urban/rural split to the European population
2. a lower life expectancy than non-Māori
3. the highest unemployment rate of all ethnic groups, and lower employment rate and median hourly earnings than for European New Zealanders
4. a high proportion of Māori are on low incomes (although this may reflect a younger age distribution), and Māori have much lower net worth than European New Zealanders
5. a high incidence of household overcrowding, and relatively low home ownership rates.

[ Previous|Next