Apec 2021: Inclusion in the economy

Simon Power. Photo / Dean Purcell

It may not feel like it for those of us stuck in Tāmaki Makaurau right now, but there will be life after Covid-19, and it's time to start planning for it now.

For the Asia-Pacific region, that means thinking about the challenges ahead, but also opportunities to do things differently and better.

Many Apec countries have come through the pandemic relatively well, but as we've seen in New Zealand, the recovery has been in fits and starts, with some industries and communities still struggling. To build a truly robust and thriving economy, we need to be working together to ensure all parts of the economy are firing.

One of the key themes at Apec 2021 is connecting Indigenous communities across the region to encourage equitable growth. At Westpac we're also committed to working with communities to try to help everyone benefit from our economy, which in turn will lift Aotearoa's economic potential.

That's why as an Apec CEO Summit partner, we commissioned BERL and OpinioNative to look into the obstacles and opportunities ahead for the Māori economy. The resulting report gives cause for encouragement, inspiration and concern.

First the good news: the Māori economy already contributes about $18 billion a year to the wider economy and the number of small Māori businesses is growing, as are the number of workers. The Māori workforce grew 40 per cent from 2013 to 2018 — compared to 8 per cent for non- Māori — and will clearly play a huge role in driving the economy forward in years to come.

The report also highlights Māori businesses who've succeeded by staying true to values of mutual respect, responsibility and reciprocity — such as Bay of Plenty-based Manawa Honey, which refused to compromise on the quality of its ingredients when Covid-19 wiped out its tourist market, and switched to selling its award-winning produce in supermarkets instead.

But for every success story, the report finds ways Māori are being held back.

Māori are over-represented in lower-skilled and lower-paid jobs, which adds up to an income gap of around $2.6b with non-Māori. Raising education outcomes are critical to success, as that lower skills and pay contributes to lower home ownership rates among Māori, which helps lock in existing inequalities and deprives would-be entrepreneurs of an asset to borrow against to start their own business.

And when asked what were the main barriers holding Māori businesses back, the most common answer was "a lack of access to funding", both public and private. Some of this relates to lower home ownership rates and some to a range of other factors, including funders having a much shorter-term outlook than many Māori businesses.

These are complex and connected challenges with no easy answers, but we're working together with iwi, government and community groups to address them.

Aligning our lending to greater social outcomes is a key way we can help. In June, we signed Australasia's first ever Social Loan with tertiary education provider Te Pūkenga — the amalgamation of New Zealand's 16 Institutes of Technology and Polytechnics — worth $125 million. As part of the deal, Te Pūkenga will invest in new educational facilities and training programmes that should create better job opportunities. We're working to connect with more Māori businesses through our supply chain. We were the first bank to form a partnership with Amotai, a supplier intermediary that connects buyers to Māori and Pasifika businesses, and we've set a target of 25 per cent of our procurement coming from more diverse suppliers by 2025.

And we've partnered with iwi on shared equity schemes to help more whānau into home ownership. We've done this directly with iwi and last month we helped Kāinga Ora launch First Home Partner, through which first home buyers with a 5 per cent deposit can approach Kāinga Ora for an equity share, then apply to us for lending to cover the rest.

The key to all these initiatives is collaborative action. Hearing success stories from Indigenous business leaders at our recent Apec Live with Business event left me optimistic about what can be achieved.

There was tech entrepreneur Sir Ian Taylor, at his poetic best as he shared his own secret to success: "When we brought the skills that come from my Māori culture, that has this innovation going back centuries, and combined it with the skills and knowledge of my pākehā mates, we actually saw the whole of the moon."

Waikato Tainui's Linda Te Aho spoke of their shared equity scheme, supported by Westpac. It has not only raised home ownership rates but allowed whānau to build up enough equity to support their children into home ownership, while the development itself created new jobs.

And joining us from Canada, Saskatchewan Indian Equity Foundation chair Lucy Pelletier charted the journey of her own organisation, set up in the 1980s to offer developmental lending to First Nation businesses and now helping create substantial wealth across the community.

These are all great examples of development resulting from economic inclusion.

Another note of optimism came last month in the form of New Zealand's historic trade deal with the UK, with commentators noting that Māori exporters of food, fish and forestry stand to benefit handsomely from better access to the UK market.

Clearly, the opportunities are there — we just have to work together to grasp them.

● Simon Power is Acting CEO of Westpac NZ.