Lake Taupo Forest Trust was established in 1969 to provide a vehicle for a forestry joint venture between the Crown and Ngāti Tūwharetoa. This decision involved the owners of over 60 land blocks, comprising some 31,000 hectares, leasing their land to the Crown for a period of 70 years for forestry purposes.
It was a farsighted decision by Ngāti Tūwharetoa leaders and land-owners of the day who decided to forego an annual rental in preference to a share of the eventual stumpage profits. This long-term investment decision meant that many of the original owners had to forego their own personal gain in order to provide for the next generation. It also signified that Tūwharetoa wished to become involved in the forestry business, rather than simply act as landlords. An amendment to the lease signed in 2000 reduced the lease term to one rotation. Consequently, as the current crop is harvested, the bare land is returned to the Trust, which is replanting and managing the second rotation in its own right.
A unique aspect of the lease arrangement was the ability of the land-owners to negotiate certain terms with the Crown regarding the management of the lands. This included an insistence upon respecting the owners' cultural and ancestral links to their lands and respecting the land and environment through careful management practices. It was only after these matters were fully satisfied that the owners agreed to the forest being established.
George Asher is the General Manager of Lake Taupo Forest Trust, a position he has held since 1991. George has a Planning and Resource Management background. Put simply, George sees as managing the business and planning ahead. This involves planning for the return of the lease lands to the Trust, for the replanting and management of the next rotation, and putting the systems and plans in place to cope with the Trust's ever increasing business requirements.
Lake Taupo Forest Trust is an Ahu Whenua Trust established under the Ture Whenua Māori Act 1993. This legislation sets the framework for the Trust Deed. Governance principles are established in compliance with the Ture Whenua Māori Act and the Trustee Act 1956 and relevant case law.
George explained that within Ngati Tuwharetoa, trusts have historically been a more accepted form of land administration rather than incorporations. There is no clear reason for this. However, with the formation of the Lake Taupo and Lake Rotoaira Forest Trusts, there was a strong demand by owners to retain their ancestral links and mana whenua with specific land titles to which they had historically been associated. Given the number of blocks vested in these two Trusts (63 in LTFT, 71 in LRFT) this was an important precondition that was eventually satisfied by variation to the conventional legislation, at the time Lake Taupo Forest Trust was established.
The existing organisational structure results from the need to maintain owner accountability and appropriate standards of commercial performance, social and cultural outcomes. The Trust has established dedicated subsidiaries to ensure that Trust policy is properly implemented in accordance with the requisite standards and protocols. This also enables separation of the business functions from the political decision-making and allows trustees to exercise important governance and accountability functions at these levels.
The core business of the Lake Taupo Forest Trust is exotic plantation development. The Trust mission statements capture the most important drivers:
To protect the integrity and ownership of the Taonga Tuku Iho (core assets of land, forests and other resources) administered by the Trust on behalf of the beneficial owners.
To strive for optimal and sustainable asset growth and financial returns through development of the Trust assets to assist the long-term social, cultural and economic development of the beneficial owners.
Apply the principles of professionalism, honesty, and due diligence in the planning, management and operation of the Trust business.
The Trust must comply with all the regulations attached to land-owners by way of the Resource Management Act.
In 2002 the Trust's forests attained the (voluntary) Forest Stewardship Council (FSC) forest certification, which insists that Trust forestry operations are fully sustainable in economic, environmental and social terms. Important ongoing aspects of this certification include a reduction in the use of chemicals, the management of unplanted areas, and better information flow to the general public and other stakeholders in activities and plans. Further to this, the Trust is now a member of the NZ Forest Owners Association. This requires the Trust to recognise the NZ Forest Accord which effectively places a restriction on the type of vegetation that can be cleared for forestry development.
Other statutory and regulatory restrictions include the District Plans that include Trust land in their assessments of 'Natural Values Areas' and 'Outstanding Landscape Management Areas'. While there are no direct rules around such classifications, George notes there is a clear trend toward more control by local bodies, and the Trust expects increasing difficulty in gaining consents for the normal productive management of its lands.
In addition to formal regulations, the owners place cultural requirements on the manner in which the land is used, in particular the identification, protection and, if necessary, management of waahi tapu.
In terms of relationships, the Trust focuses on four key groups, the owners, its joint venture partners - the Crown, its (log buying) customers, and various forest industry bodies.
Lake Taupo Forest Trust has eleven trustees and this has been a historical number. George explained that this is a workable number from the point of view of achieving consensus at meetings while also having a reasonable range of areas of expertise and interest on the Trust.
Trustees are appointed through an election process. This includes a call for nominations of owners and election by postal ballot every three years. The particular demands on trustees are no less than those required for the directors of a medium to large business. However, George also thought it unrealistic to expect a similar level of skills, given the process of election and owners' specific expectations for representation at this level of governance. In essence, the trustees are elected on a mix of skills and popular vote.
George noted it is particularly important to understand that trustees themselves have high expectations for the Trust outcomes and accountability to owners. They engage independent, expert advice to ensure that appropriate systems are put in place and are regularly monitored.
The trustees approve the directorship of all of its subsidiaries and hold annual general meetings, with full audit requirements and disclosure/approval of annual business plans.
The Trust general manager is charged with the responsibility to manage and deliver on policy and report back to trustees on all facets of Trust business at monthly meetings of the Trust. By setting up subsidiary companies, the ability to bring in specialist directors, who need not be owners, has been introduced with considerable success.
The trustees hold an orientation or issues workshop at the commencement of every new term following election. George explained that very little has been done beyond this although specialist advisors may be brought in from time-to-time to workshop governance and business related issues. A review of governance and management was last conducted in 2000.
An annual meeting of owners is called at the end of each year. An annual report is sent out to all owners whose addresses are known (around 50 per cent of the 10,000 owners). This report contains the audited accounts, chairman's report, and operational reports. Special meetings of owners are notified and called to resolve any major issues, expenditure, major change in Trust policy or proposed directions outside of the jurisdiction of the Trust Deed or a change in title.
Owners have the right to contact or meet with trustees and staff at any time during the working week. An owner services section has been established to accommodate this. In addition to the annual report, two newsletters are sent to owners each year which provide an update on topical issues.
The Charitable Trust has been established to apply funds for Māori community purposes for the benefit of owners and their descendants. These purposes include the promotion of health, social, cultural and economic welfare, and the provision of grants for education, sport and vocational training. Quarterly meetings are held with marae representatives on marae development, and other hui regularly held on community issues, funding and health.
The only measurement of governance performance is the achievement of policy output in accordance with budget constraints and assessment of projects to identify value-added benefit to the Trust. The three yearly elections of trustees is arguably an assessment of the performance of the incumbents. Management performance is measured and monitored in line with the achievement of key position tasks. Incentives are available for added value performance.
In terms of what an ideal director or trustee should bring to an organisation, George noted that a business high flyer would appear to be ideal, however, he is adamant history proves that Māori authorities can achieve a world-class business and performance with a governance of lesser commercial and academic attributes, a genuine interest in advancing both the short and long term interests of the owners and a conservative appetite for risk.
Forestry is a highly competitive business and LTFT is certainly in the thick of this competition. The Trust has only recently started to receive significant income and, with that, a range of options for its future development have become evident. LTFT is currently undertaking a strategic review of its business. Risk management is a key of this review.
The Trust's business remains one based on the productive use of its core asset - its land. Forestry remains the best use for this land and harvesting only commenced in the mid 1990s. It will be some time before the Trust can build up a portfolio of alternative investments, but at this stage there are funds invested effectively as a "forestry insurance" to enable the Trust to continue managing the second rotation even if forestry returns fall. These are invested in passive investments totally unrelated to the forest industry.
George noted that forestry is not particularly heavily regulated in itself, but there are numerous regulations relating to land use in general - in particular the Resource Management Act (RMA), but also others. To date the regulations have not had a large impact on Trust business in practical terms, but they have had added a significant cost. The Trust expects the cost, and the practical impact, of the various regulatory bodies on its business to increase over time.
The Trust employs experts to deal with regulatory issues (in particular forest management professionals but also legal advisors). This facilitates improved ability to overcome the barriers, though clearly at a cost. The Trust has employed external expertise to advise on strategic development. It is significant that all the strategic recommendations have been adopted and successfully implemented as planned. George believes there is further room within the Trust for improvement in this area.
The Trust reports monthly on all aspects of business, and follows strict meeting protocol so that matters arising from previous meetings are followed up. Organisational performance is constantly monitored and reported on.
Inclusive discussion between trustees and staff on direction, and strong backing from trustees and management on providing necessary tools/catalysts to ensure that desired relationships are established and maintained, are seen as important ingredients for success.
George explained that some changes made to the Ture Whenua Act designed to limit negative external intervention in business operations have been an improvement. However, he also believes one of the strengths of the Act is the accountability to owners.
George also noted that a limitation on the term of leases may still exist for certain long term projects associated with Māori land and this can cause problems for the Trust's business. Additionally, the Resource Management Act, district and regional plans, the Kyoto Protocol, reducing nitrogen loads in Lake Taupo, and taxation, are all issues faced by the Trust. George thought it was best for Government to keep out of the Trust's governance arrangements.
George believes Government resources would best be applied by facilitating a 'kick start' in developing productive land use on Māori land - possibly as lessor or Joint Venture (JV) partner (a return to the 60s type policies). Also removing or reducing regulatory hurdles, such as RMA, and ensuring a stable exchange rate to enable export industries to remain competitive. Removing international trade barriers would also assist the Trust's business.
Internally, George noted a sharper focus on HR related requirements would assist the organisation. He also thought improved governance and management training would benefit the Trust.
George believes a successful Māori organisation would comply with the requirements of protection and enhancement of taonga administered for the better enjoyment and benefit by future generations, as well as optimising the benefit of the taonga for current owners.
Additionally it should establish and maintain a world-class business in association with the development and protection of the taonga. For George being a successful Māori organisation also means demonstrating that economic and cultural objectives can be combined, and supporting other Māori organisations in their attempts to follow this path. George believes Lake Taupo Forest Trust fits this description.
Last modified: 7/06/2011
