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Appendix 1: Defining Māori authorities for Tatauranga Umanga Māori 2016

Māori authorities one subset of Māori businesses

We hope to eventually identify all types of Māori businesses so we can provide data about them in future. Our first step in 2012–13 was to identify Māori authorities. In Tatauranga Umanga Māori 2016: Statistics on Māori businesses, we treated Māori authorities as one of the subsets of Māori businesses – the other being Māori small and medium-sized enterprises (SMEs).

Our definition of Māori authority

The role of Māori authorities and their subsidiaries is to receive, manage, and/or administer assets held in common ownership by Māori. Māori authority leaders are likely to be mindful of the collective relationships and responsibilities to ‘place’, and the health and wellbeing of the collective.

Māori authorities include any commercial business that supports the authority’s business and social activities, and sustains or builds a Māori authority’s asset base. Ownership, control criteria, and investment models appear to be characteristics of Māori authorities.

In order to identify statistics about one of the subsets of Māori businesses in Tatauranga Umanga Māori 2016, we defined a Māori authority as a:

  • business with a collectively managed asset, which uses current Inland Revenue eligibility criteria (Inland Revenue, nd) to be a Māori authority (irrespective of whether the enterprise elects to be a Māori authority for tax purposes)
  • commercial business that supports the Māori authority’s business and social activities, and sustains or builds a Māori authority’s asset base
  • business that is at least 50 percent owned by a Māori authority.

Our definition of Māori authorities:

  • is based on previous research (Statistics NZ 2012, 2014, & 2015)
  • uses the Business Register grouping structures to identify businesses that support a Māori authority
  • is efficient because updates are automatic from administrative data sources, such as our Business Register.

    We have attempted to address the need for Māori business statistics over the past 20 years. However, we had not published Māori business statistics until Tatauranga Umanga Māori 2014: Statistics on Māori authorities (Statistics NZ, 2014,b), mainly because of the difficulty in agreeing on a definition of Māori business. We are now taking an iterative, incremental approach to this process.

See Tatauranga Umanga Māori – consultation paper (Statistics NZ, 2012,b) for more information on our steps to define a Māori business; and Tatauranga Umanga Māori summary of 2012 consultation (Statistics NZ, 2015,a).

How Statistics NZ’s Business Register enables identification

The Business Register is a database of the individual economic units that make up New Zealand’s economy. It includes private businesses – from self-employed individuals, farms, and small stores, to large corporations. It also includes organisations such as clubs and societies, government departments, local authorities, churches, and voluntary groups.
At February 2015, the Business Register had information for approximately 502,170 economically significant enterprises, up 1.9 percent from February 2014, and the locations (geographic units) where they operate.

The maintained population for the Business Register is ‘economically significant enterprises’. An enterprise is said to be economically significant if it meets one or more of the following criteria:

  • annual expenses or sales (subject to GST) of more than $30,000
  • 12-month rolling mean employee count of greater than three
  • part of a group of enterprises
  • registered for GST and involved in agriculture or forestry
  • over $40,000 of income recorded in the IR10 annual tax return.

The Business Register is the basis for all Statistics NZ business surveys. It provides the survey population from which we choose business survey samples.

Identifying Māori authorities on the Business Register

We have a Māori business indicator (MBI) in the Business Register database, which we maintain through regular monthly updating that uses Inland Revenue records for Māori authority tax codes (ie MA and MT).

As part of an annual maintenance process in 2015, we reviewed how we apply the MBI. As a result, we applied an economic significance threshold and now only New Zealand-based businesses are included. While this is a good starting point, we know that not all Māori authorities register under these tax codes and therefore our coverage is not complete.

Inclusion and exclusion issues

There are issues of definition within the Māori authorities we have identified. This affects the classification we are developing for this group. We will need an agreed definition and a data source for Māori authorities in order to automatically update the population in the Business Register. Degree of ownership matters for the definition, as do views on whether we should include emerging Māori collectives (eg ‘by Māori, for Māori’, as Māori service providers) in the definition.

The Business Register also contains information about business group structures. These are tiered groups of businesses where the ‘parent’ has 50 percent or more ownership of a ‘child’ business, which may also have subsidiaries of its own. Currently we do not capture authorities in which a number of Māori authorities part-own a child business, but with none owning 50 percent or more. For example, when a business is owned by three iwi, each having (say) a 33 percent share, that business is not flagged in the Business Register as a Māori authority. This is a problem we hope to solve before we produce our next release of statistics on Māori businesses.

An automated process sets the MBI for ‘other enterprises’ in an enterprise group where a 'parent' enterprise is flagged as Māori-owned – but this process only works downwards and for ownership relationships of at least 50 percent. We can set the MBI manually where a business is not flagged as being Māori-owned by Inland Revenue. However, manually flagging businesses is a subjective process and not guided by clearly stated rules or definitions.

For Tatauranga Umanga Māori reports, if a Māori authority is identified as part of a group then all businesses linked below it are automatically included in the data, see appendix figure 1.

Appendix figure 1
Figure, Identifying a Māori business within a business group

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Limitations of the tax-code approach

Voluntary identification

Relying on tax codes to identify Māori authorities has shortcomings. Although a Māori authority is eligible to use the Māori authority (MA) or Māori trust (MT) tax codes, they may choose not to. This creates problems in automatically identifying Māori authorities in the Business Register.

To address this, we used existing lists from the Business Register to help identify businesses. However, we can increase the number of businesses we collect information on if we use lists of Māori authorities and their support businesses directly from our partners such as the Poutama Trust and NZ Māori Tourism.

To avoid manual updating of these information sources, it would be beneficial to update them using automated links.

Business structure and ownership

The criteria used for grouping businesses together in the Business Register also present us with issues to address. Māori authorities identified in the lower tiers of a business group will be identified as Māori authorities, but those higher in the group (enterprises A and B) or in a different branch (enterprise C) will not. At present, we need to manually check information to determine if the other businesses in the group are Māori authorities.

Joint ventures are not listed under business groups because the ownership structure is a 50/50 split, not a majority shareholding. The advantage of being part of a business group is lost in these cases and requires manual identification. Information from our partners will prove crucial for successful identification.

The limitations of the approach we’ve taken so far to identify and measure statistics for Tatauranga Umanga Māori 2016: Statistics on Māori businesses highlight that further partner engagement and feedback will help identify Māori authorities, and help develop further stages of this project. They also highlight that identifying Māori businesses is no simple matter. 
 

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