Iwi making big inroads

By Brierley Penn

Maori groups are engaging directly with businesses on major projects

The Ngawha geothermal field is of interest to Ngapuhi.
The Ngawha geothermal field is of interest to Ngapuhi.

As iwi find themselves financially able to invest in more sophisticated, high-value infrastructure projects, their choices will have a lasting impact on the economic and social framework of the community.

Demonstrating the scale of these investments, Mike Pohio, of Tainui Group Holdings (TGH) suggests that, "Subject to a host of variables, our modelling out to 2030 suggests that Tainui Group Holdings will continue to grow at our current rate and aspirationally, total assets are likely to be in the $2 to $3 billion range."

Iwi are directly engaged with mainstream business on the infrastructure projects, such as Tainui Group's investments in The Base and the Novotel Auckland Airport. These high-scale, high-quality projects, have required contributions from a range of business partners. Says Pohio, "We note and highlight the value we place on these business relationships that have led to mutually beneficial outcomes."

Over the past seven years, Tainui Group has been gearing up towards the proposed Ruakura development.

The iwi has worked closely with Waikato District Council and other economic and regulatory advisers to develop the project, whose nature has changed from its more humble beginnings. "What started as a largely residential development quickly turned into an inland port and major freight hub," says Pohio.

Specifically, the East Coast Main Trunk Line and the yet to be built Waikato Expressway intersect over 500ha of land from the 1995 Waikato-Tainui Raupatu settlement process. This land represents a key asset in TGH's balance sheet, and the investments proposed for Ruakura are vast. Pohio explains that it is a mixed-use development, comprising at least 2000 residential sections, retail facilities, a major freight hub, light industrial, and an inland port.

The plans for what Ruakura will look like have been included in the Hamilton City Council's district plan.

In late June, an application was lodged to have Ruakura advanced as a project of national significance, with the support of the council. Pohio explains the many direct and indirect economic benefits of such a large-scale project. The development is expected to generate over 11,000 jobs, and contribute more than $4 billion to national GDP.

The Ruakura development is also expected to aid the wider Waikato Expressway project, increasing the benefit cost ratio (BCR) from 1.4 to 2.9. Though a decision from the Environment Minister on the project is still to be made, acceptance should mean resource consents can be applied for within the next 12 months.

Though the planning process has been long and arduous, Pohio is confident of the viability of the project. "We have no doubt that there are refinements to make to the plan but based on the work that we have done to date, we have confidence that we meet all of the known regulatory requirements to develop and operate all activities proposed at Ruakura."

The long term vision of Pohio and TGH is clear.

"Our appetite for growth is strong but is balanced with strong corporate governance, discipline in terms of financial stewardship and clear recognition of our shareholder needs. Having the responsibility for delivering the tribe's economic returns means that we have to keep an eye on not only the current generation but all the ones that follow."

Ngapuhi are confident of making steps toward successful infrastructure investments in future.

As CEO George Riley explains, "We're yet to receive our mandate, and once Ngapuhi have received compensation for some of the breaches of the treaty, then we'll be in a position to be investors in infrastructure in what I expect will be the sort of public-private partnerships that are topical at the moment."

Once the settlement process is completed - and this is expected to occur within the next three to five years - Ngapuhi is interested in two broad categories of infrastructure development; first for community uses and sustainability, and second for employment. It is hoped the settlement process will give Ngapuhi the financial clout necessary to consider construction or co-investment in infrastructure beyond their current focus on so-called social and cultural infrastructure.

Ngawha Geothermal Resource, the second largest geothermal field in New Zealand, also lies within the iwi's region. Riley describes this as "a field of interest for us"; the opportunities provided by this resource will invariably play a role in ensuring growth.

The iwi are well aware of the need to emphasise returns to the community, as well as pure financial returns, in their choice of investment. In recent times, discussions have centred on the role the iwi could play in investing in prisons, alongside groups like Circo. Riley says rehabilitation is an area of interest, in allowing the iwi to work for the benefit of its community alongside its financial goals.

Wastewater treatment plants have been a topic of discussion, as the iwi's people are directly affected by the harmful effects of pollution in waterways due to a close proximity to the ocean and reliance on shellfish beds.

Finally, Ngapuhi are interested in charter schools and how investment may be geared towards lifting Maori educational outcomes. The approach is largely a waiting game, but Riley is confident Ngapuhi will be prepared when the time arrives.

As the iwi's population continues to move away from its traditional provincial Northland roots, investments in new geographic areas, particularly Auckland, will become vital. The lack of certainty surrounding provincial populations in the future, as well as the need to support the community, suggests a need to think strategically about where their asset base will lie in the future.

A common thread running through the investment choices of all iwi is the need to have a long-term focus. Ngati Whatua CEO Rob Hutchison has expressed this as a commitment to "long-term strategic planning, looking at 150 years and beyond". Combined with the possibility of more partnerships with local and central government, this conservative growth strategy should help to ensure returns, however they are measured, remain sustainable.

A shift in focus

Many iwi are looking to the challenges of shifting focus from treaty negotiations to governance of an organisation with a broad mix of investment, commercial and social objectives.

Says Ross Campbell, BNZ's head of infrastructure, "It is important that they partner with the right parties and get quality advice ... An understanding of Maori culture is an important component of our vision of enabling a higher achieving New Zealand."

BNZ has developed a strong focus on engagement with the Maori business community, and is actively working to grow these relationships. The bank's relationship with iwi groups spans the spectrum of transactional banking, provision of major debt facilities and specialist services such as project finance, and it has supported Ngai Tahu, Tainui and Ngati Whatua Orakei in a range of infrastructure projects.

Campbell notes a trend of iwi looking more towards partnerships or joint ventures in their investment decisions, with other iwi and non-iwi groups.

Such arrangements can assist in reducing the risk associated with large-scale investments, while allowing for collaboration in the provision of capital and expertise.

"Iwi remain relatively conservative in terms of investments generally," Campbell says.

"Most cash [mainly derived from treaty settlements] is still being held in term deposits."

Nonetheless, he believes some iwi are well-positioned to invest in infrastructure. These large-scale assets can support the main objectives of working towards a longer-term, inter-generational investment strategy.

- NZ Herald

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