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Māori authorities

Māori authorities continue to focus on managing land

In 2015, a large proportion of Māori authorities’ operations were engaged in managing natural resources directly (eg farming) or managing the use of resources indirectly (eg forestry rights lease-management).

Māori connection to the land and sea is evident in these traditional land-based industries. Agriculture accounts for around 1 in 5 Māori authority enterprises. Modern adaptation to treaty settlement arrangements and traditional fiscal benefit from the land is evident in businesses in the real estate – non-residential property operators industry.

At February 2015, non-residential property operators accounted for around 1 in 3 Māori authority enterprises. Financial asset investing accounted for around 1 in 10 Māori authority enterprises. (Financial asset investing includes a diverse range of investment companies, mutual funds and trusts that may have been formed specifically to invest iwi funds.)

Figure 1 shows a small growth in industry and services other than non-residential property operators over the 2013–15 period.

Figure 1
Graph, showing distribution of Māori authorities, by industry

Employment and activity

Steady trend upwards is visible in filled jobs

Over the two years to the March 2015 quarter, Māori authorities averaged just under 10,000 filled jobs. This represents an upward trend. For example in March quarter 2015, filled jobs across Māori authorities declined 6.5 percent from the December quarter high of 10,460 filled jobs, but were 1.3 percent above March quarter 2014 and 8.2 percent above March quarter 2011.

Figure 2
Graph, showing filled jobs for Māori authority businesses, June 2010 to March 2015 quarters

South Island has 25 percent of filled jobs

At March quarter 2015, 25 percent of filled jobs were located in the South Island, 21 percent in Waikato region, and Auckland (14 percent) and Bay of Plenty (13 percent) each had about the same number of filled jobs as in the lower North Island (see figure 3). 

Figure 3
Graph, showing distribution of filled jobs for Māori authorities, by region

Generally speaking the share of each region in filled jobs has been steady over the last five years. The South Island experienced a share increase (2 percent), which represents real filled job growth of around 300 filled jobs above the 2011–15 average.

Number of Māori authority enterprises stands at 1,050

Information from our Business Register covering the 2013–15 period identified some 1,200 Māori authorities. The number at February 2015 stood (in rounded numbers) at 1,050.  

Worker turnover rate is normal

Over the two years to the March 2015 quarter, worker turnover rate for Māori authorities averaged 16.4. This is a very similar rate to the 16.0 for all private sector businesses.

Job vacancies easy to fill

In 2014, among the small proportion of Māori authorities sampled in the Business Operations Survey, the proportion of Māori authorities with job vacancies fell to around 82 percent – compared with 100 percent in 2013. Forty-four percent of those vacancies were hard to fill, a similar proportion to 2013. By comparison, 54 percent of all New Zealand’s businesses with vacancies found them hard to fill in 2014.

Figure 4
Graph, showing proportion of Māori authorities with job vacancies

Professional or technical skills are toughest to recruit

Thirty percent of Māori authorities sampled found it difficult to obtain job applicants with professional or technical skills. This is in line with Māori SMEs (27 percent) but significantly higher than all New Zealand business sampled (18 percent). To put this in the context of availability of recruits: Ministry of Education figures (Ministry of Education, 2015) show numbers of students completing level 5 diplomas or above to have been flat to gently declining from 2011 to 2014.

Figure 5
Graph, showing students achieving level 5 diploma and above

Māori authorities reported the next-hardest skills to find among applicants were management or supervisory, customer service or sales, and trade skills (20 percent each) – similar to all New Zealand. Team-working, computing, marketing, and oral and written communication skills were not difficult to find among applicants, again in similar proportion to all New Zealand.

Figure 6
Graph, showing proportion of Māori authorities with difficulty obtaining skilled applicants, by skill area

Almost all Māori authorities sampled in 2014 offered their staff training. Of those that did offer training, around 4 in 5 sometimes employed an external agency.

Investment activity is ongoing

Māori authorities sampled in Business Operations Survey 2011 to 2015, recorded ongoing investment in expansion of their business activities (see figure 7).

They also recorded ongoing and relatively common engagement in tourism and in exports of goods and services. In 2015, 44 percent recorded engaging with tourism (four percent above the 2011–15 average), and 33 percent in exports (seven percent above the 2011–15 average).

Figure 7 shows research and development (R&D) was more sporadic: no expenditure was reported in 2013 but in other years the proportion reporting R&D was significantly higher than that for New Zealand business as a whole (which is typically 8 to 9 percent). In 2015, Māori authorities’ R&D rate was 22 percent, while the all-New Zealand business equivalent was 9 percent.

Figure 7
Graph, showing business activities of Māori authorities, last financial year at August 2011 to 2015

Māori authorities are relatively innovative

In 2015, the total innovation rate for Māori authorities sampled in the Business Operations Survey reached 56 percent, up 6 percent from 2013. These rates were higher than the innovation rate for all New Zealand businesses in the survey, at both those years. The innovation rate is the proportion of businesses that improved on, or developed, new goods and services, operational procedures, organisational/managerial processes, or marketing methods.

One-third of the Māori authorities sampled reported no barrier to innovation at all. Almost all barrier indicators improved on the previous reporting period, 2013. Generally, Māori authorities’ concerns about barriers to innovation were similar to business in general, but tended to be slightly less so. For example, 47 percent had a concern about lack of management resources such as time, compared with 53 percent for all business; and 33 percent felt costs to develop or introduce innovation was a medium-to-high barrier compared with 38 percent for all business.

Māori authorities had low levels of concern in two areas: access to intellectual property rights (only 11 percent were concerned, and all responses indicated the level of concern as ‘low’), and government regulation (22 percent, all low).

In comparison, these barriers were more of a concern for businesses in general: 17 percent for access to intellectual property rights and 30 percent for government regulation. This lower level of concern may reflect Māori authorities’ unique status as kawanatanga-mana holders (or governance authorities) and kaitiaki (guardians) over Māori intellectual property and governance. 

Figure 8 
Graph, showing proportion of Māori authorities with barriers to innovation, by degree of restriction

Māori authorities’ product development rates increase

A higher proportion of Māori authorities sampled engaged in product development activities in 2015 compared with 2013 (44 percent compared with 20 percent). The increase occurred generally, not limited to one type of product development activity.

Figure 9 shows all four areas of product development increased by at least 12 percentage points. In 2015, Māori authorities had a higher rate of engagement in research and development than Māori SMEs, who themselves, at 15 percent, had a relatively high rate. 

Figure 9 
Graph, showing product development activities for Māori authorities, last two financial years

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Engaging with world markets

Forty-four percent of Māori authorities sell overseas using experience, brand, quality, and uniqueness

In 2015, 44 percent of Māori authorities sampled in the Business Operations Survey, sold goods and services to overseas markets. All of them considered that staff experience, a unique intellectual property (mana whakairo hinengaro) or valuable brand (waitohu whaipainga), and quality or customisable goods and/or services were the key factors for competing in overseas markets. Cost control was the least important factor.

In comparison, only half of New Zealand businesses in the 2015 Business Operations Survey considered a unique intellectual property or valuable brand to be a key factor.

All Māori authorities are online and half use e-sales

All Māori authorities sampled in the 2014 Business Operations Survey had an internet connection for their business. Of those, 43 percent used it for receiving orders for goods or services in 2012, and this proportion grew to 50 percent for 2014. There is some indication that this growth was also reflected in the proportion of all sales that internet sales made up. The proportion of Māori authorities that sold 11–25 percent of all sales through the internet grew from negligible in 2012 to 20 percent in 2014.

Sales focus is world-wide

For those marketing goods and services overseas, the United States and Australia were the most common markets they accessed or engaged with. Australia and US were the markets for 44 percent of sampled Māori authorities (in other words, for all of the Māori authorities that marketed goods or services overseas), while the European Union and United Kingdom, China, and Japan were not far behind, at 33 percent.

Figure 10 
Graph, showing top markets for Māori authorities to market to

China largest contributor to merchandise exports

Goods exported by Māori authorities were worth $485 million in 2015, down $41 million (7.8 percent) from 2014. China remained the top export partner in 2015, receiving 41 percent of Māori authorities' total exports by value.

Kaimoana accounts for 63 percent of merchandise exports

Kaimoana (seafood) was the top export commodity in 2015, and accounted for $304 million, or 63 percent of all merchandise exports.

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Financial performance

Need for credit facilities stays the same

Around 15 percent of Māori authorities sampled in the Business Operations Survey requested finance in 2015. None sought to raise this through equity finance.

In 2014, credit facilities for around half the Māori authorities sampled in the Business Operations Survey reported their credit facilities for fees, overdraft or credit limit, and security or collateral requirements ‘stayed the same’ as the previous year. Thirty percent experienced an increase in interest rates.

Figure 11 
Graph, showing change in credit facilities from previous year for Māori authorities

Māori authorities display a strong, conservative and growing financial stance

For the financial years 2012–14, Māori authorities, taken as a whole as far as sample size allows, displayed the kind of low-leverage, low-risk financial patterns more typical of public institutions than business (figure 12). While preserving this kaitiaki-based position, rapid asset growth was also visible.

See Technical notes and limitations for the data – Annual Enterprise Survey for definitions.

Māori authorities are highly able to pay off any short-term debt

  • The quick ratio averaged 176 percent, or $1.76 of liquid assets available to cover each $1 of current liabilities
  • The current ratio, which measures theoretical ability to pay off current liabilities with current assets, averaged 209 percent

Figure 12 
Graph, showing current and quick ratios for Māori authorities, 2012 to 2014

Debt ratio (31 percent) in 2014 was at a level similar to the arts and recreation industry, where public museums and art galleries are often of long standing and publicly funded. The two previous years were also at around the same level.

Assets have grown rapidly

This stability of debt ratio (and therefore equity to liabilities) does not imply static balance sheet behaviour. In fact asset expansion in 2014 was very visible, particularly current and ‘other’ assets, both of which grew rapidly compared with fixed assets’ relatively modest growth. (‘Other’ assets include items such as goodwill, trademarks, shares in associated and subsidiary companies, and long-term bond and loans.)

In 2014, Māori authority shareholders’ equity grew $1.2 billion to $10.3 billion. Total assets were up $2 billion (15.5 percent) to around $15 billion in 2014. The ‘other’ assets were the main contributor to the rise, up $1.3 billion (23 percent).

Current assets, which grew strongly from 2012–14, were up $342 million (15.5 percent) in 2014. Fixed assets also grew across the period, nearly 8 percent each year. These growth rates are comparable to those in the construction services industry over the same period (current assets for construction services grew 11.4 percent in 2013 and 14 percent in 2014; total assets grew 8.3 percent in 2013 and 15.9 percent in 2014).

Other features of the 2014 financial year for all Māori authorities sampled in Annual Enterprise Survey: 

  • Return on equity averaged 4.9 percent
  • Return on assets fell from 4.8 percent in 2013 to 3.4 percent in 2014
  • Surplus before income tax decreased significantly, down $110 million (18 percent) to $507 million.

Loans are relatively uncommon forms of debt

Only around 15 percent of Māori authorities sought fresh finance in 2015. Day-to-day business dominated outstanding debt in 2014 with over 80 percent of Māori authorities sampled having a debt to trade creditors or suppliers and over 70 percent owing holiday pay, PAYE, GST, or other debt.

Finance-sector debt such as bank overdraft, credit card debt, and loans with terms of more than a year were also reported by over one-third of those sampled. Mortgage loans, shorter-term loans, and shareholders’ current accounts were relatively uncommon forms of debt. This helps to explain the extremely healthy current and quick ratios shown in Figure 12.

Figure 13 
Graph, showing types of outstanding debt for Māori authorities

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How we identified and measured Māori authorities

In Tatauranga Umanga Māori 2016: Statistics on Māori businesses, we define a ‘Māori authority’ as an entity that aligns to a subgrouping of ‘entities for the collective management of assets’ in the Māori economy. This differs from the definition in the Income Tax Act 2007.

See Appendix 1: Defining Māori authorities for Tatauranga Umanga Māori 2016 for our full definition of a Māori authority.

To calculate the Māori authority enterprise population, we combined the authorities reported in the Business Register as existing in any of the three years together, and extracted information on those enterprises as they appear now. That means that acquisitions or sales of sub-enterprises that occurred before the present reporting period were incorporated, whereas cessation only relates to enterprises that were active across the three years.

Some of the collections we used to examine Māori authorities are comprehensive, and others take a sample. Where coverage of a collection is not total, we cannot be sure that a representative sample has been taken. There is no ‘total account’ of Māori authorities, only what we know so far. So there is no existing design of a representative sample.  

 

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