Iwi staking their claim

Tukoroirangi Morgan. Photo / Greg Bowker

When the Iwi Leaders Forum meets at Hopuhopu later this month as part of Koroneihana, the hui marking the anniversary of the Maori king's coronation, host Tukoroirangi Morgan from Waikato Tainui has just one item on the agenda.

He wants to form a consortium of iwi, land trusts and incorporations to buy stakes in any state-owned enterprises that may be part-privatised if National is re-elected in November.

"Infrastructure is vital to our tribal interests, and as far back as the negotiations over the Waikato River we sought a right of first refusal to the Huntly power station," Morgan says.

He expects a consortium would need to pull together $300 million to $500 to buy a serious stake in Mighty River Power or Genesis Energy - enough to get a seat on the board.

Morgan says iwi around the country have expressed preliminary interest in the consortium strategy, but more work is needed if it is to be ready by the time John Key's next government makes its move.

That includes seeking an on-account process, so iwi who have not yet settled their historical claims can take part.

"It's clear some of us are ahead in terms of our settlements, but the on-account approach says to the Crown if you invest in Maori you invest in a long term organisation that is not going to sell, unlike the mums and dads in this country. They will sell at the highest price. Iwi won't sell and the investment is intergenerational," Morgan says.

Ngai Tahu kaiwhakahaere or chairperson Mark Solomon is also leading the charge for an iwi infrastructure investment strategy.

"My view is iwi are the Crown's perfect partner," says Solomon, who was a member of Maori Affairs Minister Pita Sharples' Maori economic taskforce.

"We're never going to leave the country. Everything we earn stays in the country and what we do earn we reinvest in our own community. It's a win win for everybody. "

As is normal in settlements, the $170 million package Ngai Tahu got in 1996 included the right to buy some of the land and buildings used by Crown agencies, such as police and courts.

"It's a long term investment. Using the police station as an example, they are tied in to a 25-year plus lease and I don't care how bad a recession gets, police don't leave their building, courts don't leave their building, and infrastructure like that almost guarantees you a cashflow," Solomon says.

Ngai Tahu is keen to invest in water infrastructure - it has forestry land it wants to convert to dairy, so it would be a big user of irrigation assets as well as a supplier to others.

Solomon says the Maori economy to date has been concentrated in the primary sector - farming, forestry and fisheries.

There's a risk in that, which is why iwi and trusts need to diversify their balance sheets and invest in infrastructure which will deliver a long term, reliable yield, as well as give them influence over the way the country develops.

While their political leaders are working on the national picture, the commercial arms of Tainui and Ngai Tahu are building up their battle chests for opportunities closer to home.

The Bank of New Zealand is putting together a $200 million syndicated loan for Ngai Tahu Holdings Corporation.

Craig Treder, a Christchurch-based institutional banker, says it will give Ngai Tahu the flexibility it needs to seize opportunities coming out of the rebuilding of Christchurch, where it has a large number of buildings and development land.

BNZ has been banking the tribe since 2001, and Treder says the bank has confidence in Ngai Tahu's decision-making processes and management structures.

Ross Campbell, the head of the BNZ's infrastructure team, says the bank has been talking to a number of iwi who are interested in investing in infrastructure.

"They are long term investors, and most have a big percentage of their assets in property-related investments, so they are interested in other investments," he says.

"Infrastructure gives a degree of diversification. Typically infrastructure assets offer a long term stable rate of return, so iwi are interested," Campbell says.

He says energy generation and distribution will appeal to many iwi who already have geothermal resources, such as those in the Central North Island.

Water treatment and irrigation schemes, whether private sector or public private partnerships, would also be considered core business by some iwi.

Transport and logistics may be a reach for many, but Tainui Group Holdings plans to turn the former Crown agricultural research station at Ruakura into a major freight hub.

It leases a part of the block to AgResearch, but is drawing up plans to turn about 350 hectares of the balance and 130 hectares of a neighbour's property into an inland port.

Chief executive Mike Pohio says TGH is seeking to have the land rezoned and doing the planning and consultation needed to get the project off the ground.

The land adjoins both the rail line and the planned Waikato expressway, which the government wants completed by 2019 as a road of national significance.

"That unlocks the whole of Ruakura. However, the expressway is not required to allow the first stage of development to start," Pohio says. He aims to have the first tenants in place by 2014.

He says Tainui needs to work closely with Hamilton City Council.

"This is a major growth node for Hamilton. It represents not only economic growth and development but jobs, additional housing, improved infrastructure.

"We need to work through not just the regulatory framework but on how, between the council and ourselves, we can get the right infrastructure in place to unlock the value of Ruakura and to ensure that fits within the total Hamilton network of infrastructure.

Pohio says the development will be similar to Tainui's transformation of the former air force base at Te Rapa into Te Awa, which has 80,000 square metres of retail space as well as movie theatres and an entertainment precinct opening this month.

"We secure anchor tenants, get the committed cash flows to underpin the capital spend and develop in stages," he says.

"Our target is to build buildings so we can lease land and buildings specific to tenant requirements."

Pohio worked in the dairy industry and managed Port of Tauranga's container terminal before coming to TGH, and the company's chair, John Spencer, also shares KiwiRail, so they bring considerable industry expertise to the project.

"New Zealand is a long way from its markets. Being able to get imports in efficiently and cost effectively and to move our exports out, it is a difficult space," Pohio says.

He says once a container is loaded from a ship on to a truck or train at Auckland or Tauranga, it is a marginal cost whether it gets dropped off at East Tamaki or Hamilton. That could make Ruakura attractive to importers, given the most likely next customer for the container.

"Fonterra requires about 30,000 dry boxes for milk powder and casein and about 10,000 refrigerated containers. To a large extent those containers are railed out of Auckland to Hamilton so there is a lot of fresh air being moved.

"If an importer is located at Ruakura, the distance to move that air is only 3 kilometres to Fonterra's Crawford St facility, so some benefits can be shared between Fonterra, KiwiRail and the importer."

To strengthen its balance sheet ahead of what is likely to be a $200 million plus development, TGH lifted its debt facility with BNZ and Westpac by an extra $50 million to $250 million.

After banking the proceeds of selling its stake in Ryman Healthcare, bought through a partnership with Ngai Tahu, it now has about $90 million at hand. Some of that money will also need to go on finishing off Te Awa The Base, but its other major recent project, the Novatel Auckland Airport hotel, is now bringing in revenue.

Infrastructure can be considered a trophy investment that enhances the mana of the tribe and makes a statement about the place of Maori in society.

A pioneer was Sir Graham Latimer's Tai Tokerau Maori Trust Board, which almost 20 years ago bought stakes in the Waitangi Resort Hotel and Top Energy's Ngawha geothermal power station.

Sir Ngatata Love from the Wellington and Palmerston North Tenths Trusts and the Port Nicholson Settlement Trust says investing in community assets is a way of reminding people of an iwi's history and connection to a place.

The Port Nicholson trust is nearing the deadline for choosing which Crown assets it buys as part of its settlement, with the iconic Wellington Railway station on the list. "It's the most used public facility in New Zealand," Love says.

As well as keeping KiwiRail on as a tenant, the trust could collect rent from Victoria University, which uses about half the building for its business school. He says like the other assets, the decision is likely to come down to whether the deal will satisfy the inherently conservative banks.

"If it is bankable, it will grow into a significant asset."

He says the banking sector now has much better engagement with Maori than even a decade ago, meaning larger deals can be put together ... if the numbers stack up.

Love says the trust is also keen to be involved in any attempts to generate power from the tides of Cook Strait.

But he's not convinced the government should be selling down the state owned power companies, so he's unlikely to leap aboard Tukoroirangi Morgan's consortium.