The Palmerston North Māori Reserve Trust (PNMRT) owners are the descendents of the Taranaki people who settled in Wellington in the early 1800s. Through actions of the Crown, they were relocated from the Lowry Blocks of Wainuiomata to Palmerston North.
Up until the trust was established in the 1970s, the land and resource interests were principally administered by various appointed government agents. Since that time the owners have developed the trust into a significant economic organisation.
Professor Ngatata Love is the chairman of the Palmerston North Māori Reserve Trust and chairman of the Wellington Tenths Trust. Professor Love is also a director on a number of private and public companies. He lectures in commerce and business management at both Massey and Victoria Universities.
The Palmerston North Māori Reserve is a trust under the Te Ture Whenua Māori Land Act 1993. The Palmerston North Māori Reserves has, in accordance with its statutory requirements, a custodial trustee - the Guardian Trust - and 10 Managing Trustees appointed by beneficial owners at annual meetings.
The Trust has a number of subsidiary companies which include Metlifecare Palmerston North, Baxters Limited, Palmy 31 Limited and Fitchett Holdings Limited. These companies have been created to hold particular assets for both tax and risk purposes.
The decision to create a trust was made following the Royal Commission on Māori Reserve Land held in 1974-75. The options given at that time were to become an incorporation or a trust under the Māori land legislation in place at that time.
The major functions and the drivers of the organisation and its core purpose is to protect the asset, to grow the asset and to provide a return for beneficial owners.
The regulatory restrictions that the organisation has to deal with revolve around compliance with the Te Ture Whenua Māori Land Act, the Trust Deed and normal business legislation impediments, for example, Resource Management Act. There is also a need to keep a close association on the cultural and iwi developments which can impinge on decision making by trustees.
Key relationships are with beneficial owners, its sister trust - the Wellington Tenths Trust - the Māori Land Court, the Guardian Trust, accounting, legal and property advisers.
The Trust Deed provides for up to ten trustees and this is found to be an appropriate number which enables a broad representation from iwi groups.
The appointment of Trustees to the governance role is set down in the Trust Deed and is undertaken at the AGM each year, with trustees being appointed for a three year term. Each year up to a third of the trustees retire by rotation and are eligible to offer themselves for re-election. They may also contest the position against other nominees.
The skills required for the position of trustee are varied. It is important that the competency of the trustees is looked at overall so there is a balance of skills, ranging from tikanga and iwi relationships to financial management. They must also have an understanding of the statutory and legal requirements and responsibilities that trustees and directors have.
The development of skills for trustees and leaders involves enhancing their understanding through education, and experience in dealing with various businesses.
The Trust has the opportunity to engage with beneficiaries and stakeholders through its Trustees, annual meetings and other hui relating to claims and reserved land legislation. Every endeavour is made to keep beneficial owners informed of events. The annual meetings are a key part of their involvement.
Performance of the organisation and its management is measured by the usual measurements for a business entity, such as, capital growth, security of investment, limitation of risk, return on assets and future strategy to achieve medium and long term objectives.
However, the critical test is at the AGM where a review takes place of the work and performance of the Trust. The shareholders make an assessment and determine whether they are satisfied or not.
In terms of the governance role, the ideal person must be familiar with the history, tikanga, and cultural imperatives relating to the Trust. They must have sound judgement, a commitment to understanding business requirements including strategy development, understanding financial implications, familiarity with legal requirements and a sense of commitment to the kaupapa for which they receive negligible reward.
The Trust operates in a competitive environment in the property and rental market. A thorough risk analysis is undertaken for all developments to ensure that risks are being mitigated. The business environment the Trust operates in is highly risk averse.
Prior to development and investment, the Trust has a financial profile and risk management prepared by accounting experts. A market analysis is undertaken in terms of rental accommodation to ensure that trends and the anticipated environment will be favourable.
The Trust has a policy regarding investment which, in broad terms, has three bottom lines. These include:
This triple line policy means that the Trust is conservative in its approach to investment and does not look to maximise its returns, but is concerned with growth, long term stability and opportunity.
The environment is not regarded as over regulated. The regulations that exist are fundamental for the protection of both the Trust and the environment.
In terms of overcoming barriers, the Trust has developed a strong working relationship with local government and has a specially appointed manager within local government to assist fast track initiatives.
The development of a strategic approach and a vision for the Trust is undertaken as a means of providing a medium to long-term programme to capture opportunities which develop.
The nature of the business is such that projects can take some years to come to fruition, so it is important that strategies and fundamental approaches are thought through and opportunities taken when they arise. For example, the decision of the Trust to move from being a passive receiver of rents to the owner of property which it continues to develop and let, is the major strategic approach. This has changed the fundamentals of the Trust from being dependent on Māori Reserved lands for most of its income, to one of being an owner of the property and the developer of significant portfolios providing acceptable returns.
Each trust meeting is attended by the management team. Recent changes have enchanced the interaction between governance and management in terms of key management responsibilities.
Where there is disagreement between management and governance the responsibility rests with Trustees to make final decisions. This responsibility is taken seriously and management must abide by the decisions made.
The organisation has processes in place which report on a monthly basis, accounting and financial information, so there is a minimum of opportunity for problems to develop. The accounts to-date provide a good measure of on-going performance.
Great effort is made to develop relationships with all stakeholders and formal relationships have been established with local government.
The Trust is going through major development initiatives and the organisation is changing its management processes to better reflect the needs and growth opportunities that are occurring.
In terms of the regulatory environment, the difficulties relating to the taxation of Māori authorities need to be worked through. Also the relationship between fully owned companies of Māori authorities, and the tax provisions require further consideration.
A successful Māori organisation is one that beneficial owners are comfortable with in terms of the protection of their asset, the development of their asset and the returns they receive from the organisation.
A Māori organisation (because of the nature of the land holdings) must be seen as having a primary objective of retaining and growing the core asset and being risk averse in terms of its decision making.
With other businesses there is the opportunity to sell off the business and take a capital gain. However, for Māori organisations, more fundamental is that the asset is protected and grows. The Palmerston North Māori Reserve is a successful and vibrant organisation which has moved from a passive receiver of reserved land rent to a major part of the Palmerston North city commercial environment.
Government resources could be best placed in tidying up the problems associated with succession, streamlining the Māori Land Court to deal more effectively with business opportunities, and recognising the needs of fully owned companies of Māori authorities in regard to taxation.
Last modified: 7/06/2011
