Māori economic development is important not only for Māori, it is important for New Zealand’s overall economic performance. For the New Zealand economy to achieve its long-run potential growth, it must make the best use of all available resources.
One resource that is under represented in New Zealand’s economic growth potential is the contribution that can be made by Māori. Māori can make a considerable contribution to the future growth of New Zealand.
Māori are affected by economic trends in different ways. A key challenge facing Māori economic development is the disadvantage and disparity faced by some Māori relative to non-Māori.
Economic development priorities for Māori see Māori taking a lead in determining economic development aspirations and fostering development that works for us. Second, recognising Māori economic activity comprises a diverse range of players, from Māori individuals in the labour market, to the self-employed running Māori businesses, to tribal and pan-tribal Māori commercial entities.
A range of initiatives and programmes have been introduced over the years to support Māori economic development. More work and focus is now required to build on this.
Human capital is our greatest resource and improving the skills, training and qualifications of young Māori is paramount.
There is significant untapped potential in the Māori tourism sector and a need for more capability and capacity in Māori innovation, specifically in research, science and technology.
Māori enterprises are increasingly able to play their part as a significant export earner for New Zealand and more support is required to take Māori enterprises to the world.
The economic wellbeing of Māori depends on the health of the New Zealand economy. New Zealand’s economic performance is as important to Māori as non-Māori. By enhancing Māori economic prosperity and productivity, we contribute to the Government’s goal to grow New Zealand’s economy.
The growing Māori asset base is conservatively estimated to be worth $16.5 billion. There are likely a number of Māori business operators who are not identified as Māori and not included in this estimate. This figure relates to commercial interests only and does not include the assets and imputed incomes of Māori as homeowners.
Analysis by Te Puni Kōkiri shows that Māori participation in New Zealand’s GDP has lifted significantly from $2.6 billion (or 1.96%) in 2003 to $8.3 billion (or 5.35%) in 2006. There are opportunities to build on this significant growth. Vital to Māori economic development is improving the education, skills and training of Māori (human capital is the greatest resource for Māori).
The primary industries and tourism sectors can lead Māori economic success. These sectors have a strong Māori presence and are significant for New Zealand’s economic growth. The nature of the Māori asset base, cultural connections and ownership of tribal and pan-tribal entities, means that Māori assets, ownership, and wealth will always remain in New Zealand.
This untapped potential to grow Māori enterprises in the primary and tourism sectors allows for more use of the Māori asset base.
Fostering economic growth by utilising research and innovation will add value to existing Māori assets and interests in agriculture (dairy, meat), horticulture, forestry, and aquaculture.
Changes in Māori participation in the economy have occurred in recent years. Treaty settlements have added to the asset base coupled with an increase in the number of Māori employers and self-employed individuals.
There are opportunities for Māori to use our assets to increase economic prosperity domestically and internationally. The transfer of assets from Treaty settlements continues to enhance the platform for iwi and Māori-led economic development. Much of the asset-base iwi administer is in the primary industries and iwi are increasingly looking to emerging industries and exploring the possibility of private or Crown partnerships.
The age of the Māori workforce (more young and a lower proportion of older Māori) provides another opportunity to contribute to the future growth of New Zealand. While the average age of Māori is expected to increase, it will do so by less than non-Māori in New Zealand and the populations of many western countries generally. This may create opportunities, for example, because of increasing demands on service sectors, and creating new job opportunities and business prospects for the relatively youthful Māori workforce and growing Māori business presence.
The information outlined here shows how Māori engage with the industry training system, the level of Māori participation in primary sector qualifications and the benefits of raising Māori qualification levels. This section also highlights indentified improvements to the governance and management of Māori organisations with formal structures to meet the requirements of Māori asset holders and businesses, to improve productivity and economic outcomes.
Improved skills and training results in increased productivity and economic returns.
The similarity of New Zealand’s five largest export earners – dairy, tourism, meat, wood and seafood, to the Māori asset base points to the potential for good economic returns from improving skills and training for Māori in these sectors. This will improve productivity and export capacity for the wider New Zealand economy.
Māori have high enrolments in primary sector Industry Training Organisations (ITOs). In March 2009, there were 6,148 Māori industry trainee’s across AgITO (1265), Hort ITO (509), FITEC (3400) and Seafood ITO (974), accounting for over a quarter of all Māori trainees. Enrolments are heavily weighted toward Level 1-3 on the National Qualifications Framework (NQF) with increasing numbers at the Level 4 National Certificate level.
These figures show Māori have engaged in qualifications in the primary sector. The challenge is to translate these high levels of enrolments into improved outcomes (data on completions for ITOs is variable and contentious due to differences in how it is recorded by TEC, NZQA and their own internal auditing requirements) and transitions into higher level qualifications.
There is a strong link between higher level qualifications and potential earnings. Investing in skills and training provides an opportunity to improve the historical legacy of low qualification levels that has an adverse effect on Māori employment during periods of economic volatility (such as the recent economic downturn).
The 2006 Census revealed in relation to skills and qualifications for Māori, one third of Māori aged over 15 years have no qualification at all. While Māori accounted for 12% of Level 1 to 4 Post-School certificates, this dropped to only 7% of total Diplomas (Levels 5 and 6), 5.5% of all Bachelor Degrees and 4% of all Postgraduate Degrees (Hons, Masters and PHDs).
This trend has continued for Māori with participation rates in 2007 show enrolments at 15.5% in Level 1 to 4 Certificates, 3.6% in Diploma level courses, 3.5% in Bachelor level courses, and less than 1% in postgraduate level courses.
Considerable effort has been invested over several years, to strengthen the governance and management capabilities of Māori organisations by groups such as the Federation of Māori Authorities and Te Puni Kōkiri’s investment in the Strengthening Management and Governance (SMG) Programme.
Te Puni Kōkiri published the “Evaluation of Investments in the Strengthening Management and Governance Programme” in 2009. The evaluation recommended:
New Zealand’s tourism sector is a significant export earner with $5,947m in direct visitor expenditure in 2008. As tourist visits are expected to grow by 18.6% to 2.9 million people by 2015. This is forecast to produce flow through to an additional $2,268 million in expenditure which is roughly an increase of 38.1% (or 4.7% annually).
These growth forecasts exceed current GDP forecasts and represent a significant opportunity to increase foreign earnings for New Zealand.
If these forecasts do become reality and tourism increasingly grows in importance to New Zealand’s economy, there will be flow on impact on direct and indirect employment. The tourism sector currently (either directly or indirectly) supports 184,000 full time employees or 9.6% of New Zealand’s entire workforce. If the industry only achieved half the projected level of growth in employment, it would correspond to an additional 35,000 jobs created.
There are convincing arguments for positioning the tourism sector as one where additional government action can produce a high impact with minimum obstacles and risks.
The wider tourism sector should include a particular Māori dimension, encompassing Māori cultural tourism.
Māori culture offers a unique point to differentiate New Zealand’s services and activities to tourists. This unique contribution is incredibly valuable to New Zealand’s sector, and its value can be further enhanced through increased investment in Māori tourism.
There are strong grounds for increased direct investment in Māori cultural tourism to increase the economic contribution by Māori as part of the overall tourism expenditure in the industry. Māori tourism is a unique point of difference in the global marketplace and the demand for authentic Māori tourism products is increasing. Recent research indicates that over half a million tourists participated in a Māori cultural experience in 2006, and that the Māori tourism sector averaged 6% growth between 2001 and 2006.
One of the challenges for Māori tourism is to make sure that Māori are supported to deliver high quality experiences. In particular, the marketing of ‘Māori tourism’ experiences offshore is likely to be well received in international markets to attract overseas visitors to New Zealand. There is a significant opportunity for Māori inspired tourism to play a critical part in New Zealand’s economic growth.
Māori culture and its inclusion in New Zealand’s tourist services/activities can further improve on the forecasts above with increased promotion and support. Research indicates that tourists that participate in activities with a Māori cultural element tend to stay longer and spend more. On average, tourists that participate in activities with a cultural element spend an extra 36% more per day compared to tourists who have not (in 2006 this equated to $22.750 million per day of visit or an estimated $477.750 million for the year).
The figures for 2007/08 indicate that approximately 7% of tourists were interested in cultural activities but did not experience one (e.g. due to time constraints, lack of awareness or information).
If this latent demand for participating in a cultural experience was applied to the number of international holiday visitors in 2008 (roughly 1.183 million visitors), assuming a conservative 50% conversion rate (through better awareness, marketing, and quality of offering) from ‘interest in participating’ to ‘participating’ in Māori cultural activities, the benefit would be approximately an additional $2.070 million on average per day of visit earned or $43.475 million per year 1. (This also assumes no change in total spending and to the average length of stay of international visitors).
Further sensitivity analysis including the use of a different conversion rates and/or year of calculation can be provided, for example, using 2011 as the year of calculation and assuming a 50% conversion rate, the benefit is approximately an additional $2.212 million on average earned per day of visit or $46.460 million per year.
More investment to produce increased awareness, marketing and quality of Māori cultural experiences, could in 2011 provide an additional $46 million per year to New Zealand.
Māori enterprises are poised to grow and invest in science, research and development, innovation and promoting a culture of success.
Key drivers of change for Māori in ‘innovation economy’, include:
Innovation and science is a key enabler for the future to strengthen Māori economic growth. There are significant opportunities for Māori to use their resources, expertise and knowledge to create opportunities for increased Māori participation in science and tourism.
While Māori participation in the ‘innovation economy’ is currently minimal, there are significant opportunities for Māori to introduce new technologies both in existing sectors and new sectors of the Māori economy. For example, Māori can gain from technological innovations in the use and management of agricultural, fisheries and tourism assets, change the types of products and services produced, and open up new opportunities and markets for Māori businesses.
These opportunities highlight the need for R&D and innovation to facilitate Māori economic growth, for example:
A number of iwi are currently pursuing the use of science, innovation and technology strategies to better understand the potential benefits for iwi research, science and technology outcomes.
The five biggest export earners for New Zealand in 2009 were dairy, tourism, meat, wood, and seafood. These sectors perfectly match the Māori business asset base, heavily concentrated in sectors that are export focussed: fishing, forestry, agriculture and tourism. This presents a significant opportunity and advantage for Māori to play an increased role in driving forward “New Zealand Inc” exports and trade.
The dairy, fishing/seafood, tourism and other high earning export sectors are already recognised for New Zealand’s comparative advantage in export growth.
New Zealand’s largest business, Fonterra Co-operative Group, contributes approximately 25% of New Zealand’s total exports. It is not possible to state with certainty the number of Māori owned dairy farms contributing to Fonterra’s revenue stream, but it is likely that Māori dairy farmers will be receiving some benefit, reflecting the importance of the export sector for Māori businesses.
In the fishing/seafood sector, Māori own a significant share of the total fishing quota (20 to 25%), and Māori owned companies control about 40% of the catch, Māori are well placed to capitalise on the growth in fisheries and aquaculture industries. Māori fishing interests are also well placed to contribute to New Zealand’s export markets in the fishing sector.
The shift in the global power base from traditional economic superpowers Europe and America, to the vast and rapidly developing economies of Asia, in particular China and India, will offer opportunities for Māori. This could impact Māori by increased new investment and employment opportunities in these growing markets, particularly if New Zealand’s exports are adding value (i.e. not exporting only raw materials, but shifting into finished higher value added products).
‘Culture’ will be an increasingly important feature in doing business with Asia. It is frequently commented that there is a strong cultural empathy between Māori businesses and interests, and Asian companies, intermediaries and commercial interests. The measured and respectful relationship that Māori businesses tend to have when seeking commercial opportunities in Asia is well received and seen as an important benefit in the development and growth of New Zealand’s interests in the Asian region.
An increased focus on Māori internationalism and exports, aligns with the Government’s Economic Growth Agenda. A key challenge and where government has an important role to play is in supporting firms to operate effectively internationally, especially in new trading markets such as China and India.
Because of New Zealand’s small size and distance from world markets, New Zealand businesses face unique problems in operating abroad. This impedes the growth of traded products and productivity growth.
There has been some strong efforts made by New Zealand Trade and Enterprise for firms with high growth potential in international markets. However, there might be scope for targeted strategies to grow the number of Māori firms and related interests competing internationally.
While these effort are a useful step in the right direction for supporting firms to innovate and internationalise, there is scope to do more, including helping firms to build overseas networks and connections, especially in the growth economies of China and India, and other Asian markets. Free Trade Agreements recently negotiated with China and ASEAN countries (Association of South East Asian Countries) contain high quality trade facilitation mechanisms that need to be developed on an ongoing basis. Building the capability and capacity for Māori entities to participate in such networks would support Māori economic development and ultimately New Zealand’s economic growth.
Work has also begun on the merits of promoting ‘Brand Māori”. The aim is to gain support and technical assistance to position Brand Māori as a way of supporting, both internationally and domestically, Māori to market and sell their products and services for premium prices.
There is the potential for Brand Māori to be distinguished as the ‘gateway’ for the overall positioning of New Zealand Inc. in international markets. The uniqueness, resilience and innovativeness of Brand Māori should be seen as the entry point for Māori products and services – including the primary, tourism, and creative sectors – with the intent of Brand Māori adding value to New Zealand Inc.
The forthcoming Shanghai Expo 2010 (May to September) provides a significant opportunity for Māori businesses to establish new relationships with the Chinese and wider Asian market, as well as to enhance existing relationships with current Chinese clients and contacts. There will be opportunities for Māori businesses and sectoral interests to cultivate and build new relationships with Chinese business representatives, as well as renew existing business relationships.
1 These figures are indicative only - they use historical industry averages and tourist beliefs (i.e. a willingness to pay more for quality or environmental protection) which may not reflect the current economic environment or beliefs.
Last modified: 11/02/2010
