Power politics behind $4m Pacific deal

Ulu Aiono. Photo / Natalie Slade

Until JR Pereira approached him in mid-2006, Manukau software millionaire Ulu Aiono had stayed aloof from South Auckland's struggling Pacific community from which he sprang.

Aiono was five when his parents were part of the first generation of Samoan immigrants to New Zealand in 1960, and eight when they moved into the new Otara housing estate on the day John F Kennedy was assassinated in 1963. His father got a job as a freezing worker.

From childhood Ulu and his four siblings were trained for better things. "My father made it his business to raise his kids away from the strong influences of the extended family," he says.

Young Ulu was sent to Auckland Grammar and Otago University. He started his own business, Cogita, in 1983, and has grown it into the world's top-selling agent for US-based Epicor software, with 60 staff across Australasia and annual sales in the tens of millions.

"Apart from the fact that I'm a Christian, I felt no obligation to society except to pay taxes," he says. Then along came JR Pereira, the regional economic development adviser at the Ministry of Pacific Island Affairs, who had his own business pedigree as manager of a Pepsi bottling plant in Samoa before coming to New Zealand in 2001.

"When he finally got to see me, he said, 'The community thinks you lead a selfish life, you're up here in your ivory tower, you're married to a Palagi [European]'," Aiono says. "I said, 'What they think doesn't bother me because I haven't had any help from the community."'

But Pereira persisted. "If you understand that significant inequities in society are really bad for society, not just for you but for your children and your children's children, then you will make time for the Ministry of Pacific Island Affairs to get to grips with the root causes."

"Finally," says Aiono, "I said, 'If we have to do one thing, what would it be? Pereira said form an organisation that we can attract support for in a targeted way so that we can help lift people's incomes."

Four years later, Aiono chairs a new 165-member Pacific Island Chamber of Commerce. He has also worked closely with Pereira to win a controversial four-year $4 million allocation in this year's Budget for a company wholly owned by Pereira, Pacific Economic Development Agency Ltd (PEDA).

The case for doing something to boost Pacific development is clear. Mose Saitala, a Tuvalu-born development economist who brought his wife and four children here in 2005 after a career with the United Nations, was shocked to find that the proportion of Pacific New Zealanders in hardship actually increased slightly in the four years to 2004.

"The economy was buoyant since the late 1990s and everyone was economically better off, and it was staggeringly surprising to me that the economic living standards for Pacific people was going the other way around," he says.

He had been commissioned by the Waitakere Pacific Board to contribute to a Pacific plan for the area, and on his own initiative began work on a wider development proposal for his people. His analysis can be summed up in two or three numbers: the Pacific population was growing by 3 per cent a year but real wages were growing by only 0.8 per cent a year in the low-skilled jobs in which 68 per cent of Pacific employees worked.

Saitala's solution was to upskill his people. He proposed a databank of 40,000 Pacific people, mentoring to help workers get training, contact with industry groups to find better paid jobs and contracts with training providers to teach basic skills such as literacy and numeracy.

The programme was to have four full-time staff plus part-time staff and mentors. Saitala costed it at $16.8 million for five years.

He took an early version to Pereira and others at the MPIA in mid-2007 and presented a final version to the Auckland Regional Economic Development Forum in September. He got verbal support, but no money was available.

In November, Saitala, JR Pereira, JR's brother Tino Pereira and Henderson accountant Alesana Talopau registered PEDA. They went back to Waitakere City, which had backed Saitala's early work through economic development adviser Peta Si'ulepa.

The council gave PEDA $50,000 to profile the city's Pacific workforce and connected it with TrainSmart, a training subsidiary of the council's business arm, Waitakere Enterprise, to create a one-year pilot pre-trade course for 10 young Pacific people in 2008.

TrainSmart manager Peter Roselt says the agency used its normal tertiary education funding to run the level 1 National Certificate in Employment Skills course, but with a dedicated Pacific tutor.

"We collaborated with PEDA. They provided pastoral care for the course and helped us recruit students, and helped us keep tabs with the students after the course," he says.

He considers it a success because six of the 10 trainees went on to Unitec. The other four found jobs or did other things.

Meanwhile JR Pereira pursued other potential supporters. He had represented the MPIA on the Metro Project and worked closely with the Government Urban and Economic Development Office (Guedo) in Auckland.

When he left the ministry in a restructuring imposed by new head Dr Colin Tukuitonga in early 2008, he and Saitala began working with the Pacific Island Chamber of Commerce on a major conference later that year to draw up an "Auckland Pacific economic and social transformation agenda" (Apesta).

The conference was sponsored by the Waitakere and Manukau City councils, Guedo, NZ Trade and Enterprise, Air NZ and Mercury.

The resulting Apesta agenda included comprehensive proposals for skills development, entrepreneurship, building communities, education, health, justice and cultural development.

It proposed two "headline interventions": a Pasifika performing and visual arts school to develop tourism and entertainment jobs, requiring $6-$7 million for the first three years, and a $1.5 million scheme to provide computers in suitable venues to help Pacific youth to form positive online networks.

One sentence, with a footnote referring to Saitala's 2007 proposal, added: "Additionally, the Pacific EDA's Pacific Skills Employment Programme can be harnessed."

Aiono, Pereira and Saitala took an early draft of the Apesta document to Bill English and two Treasury officials in a meeting in Auckland last September.

Aiono says he was surprised that English ignored the two "headline" ideas and picked up the "footnote" instead. In hindsight, he now believes English was right.

English, whose wife Dr Mary English is Samoan, says he was looking for the biggest benefit for unemployed Pacific youths, who were bearing the brunt of the recession.

"My interest in it began with the Pacific Chamber of Commerce because I do all the economic stuff," he says.

"There hadn't been a Pacific Chamber of Commerce, I'd never heard of it. So I went off to talk to them because having a business-oriented group in the Pacific community is unusual. They often miss out on the economic initiatives because they don't have a strong business presence.

"They are not interacting with the Government in the way that, for example, the Maori community is these days, and they don't have the paid advocates the other communities have, and because of my personal connection to the community I take an interest."

English would also have been aware of the political context. Pacific voters are a growing chunk of the electorate whose low economic status has made them overwhelmingly pro-Labour.

National opened the first chinks in Labour's grip on Pacific voters at the last election with high-profile endorsements from ex-All Blacks Michael Jones and Inga Tuigamala. Tuigamala's role as secretary of the Pacific Island Chamber of Commerce can only have reinforced English's attraction to the group.

Saitala says his skills programme was not discussed in detail at the meeting, but he, Pereira and Aiono put it to English afterwards as a concrete proposal.

"The actual proposal that was submitted to Government was only for $5.6 million over a five-year period. This means that the number of Pacific pre-trade courses to be conducted is reduced to about four only," he says.

"I reduced the budget so the proposal can have a better chance of being funded, and that the resulted outcomes can be quickly demonstrated."

English gave the proposal $4.8 million over four years in the Budget. The allocation includes $1 million a year to PEDA for "skills training and employment", $100,000 a year for the MPIA to monitor PEDA, and $100,000 a year for an "Auckland Pacific Development Taskforce".

Pereira says the taskforce is effectively a project steering committee and is likely to include other agencies such as the Pacific Business Trust. He hopes to finalise a contract with the ministry next week.

This, however, is by no means certain because the ministry is clearly unhappy at the way English did the deal behind its back.

A March 25 ministry briefing paper to its minister Georgina Te Heuheu, leaked to Radio NZ, apparently warned of the risks involved in contracting with a new and untested company.

Te Heuheu has said she never discussed the contract with JR Pereira, who has been PEDA's sole owner since Tino Pereira pulled out last December and Saitala resigned in January to head a new Commonwealth Pacific governance facility based in the Solomon Islands.

Saitala himself found it "very strange" that the ministry was not brought in after the proposal was submitted to English.

"It appears that the ministry has been totally undermined, for whatever reason, I don't know," he says.

But he says the ministry also spurned requests to sponsor the Apesta conference.

"MPIA Wellington was very supportive, MPIA Auckland was not," he says.

The Auckland-based Pacific Business Trust, which gets $1.2 million a year through the ministry for business training and support, was also notable by its absence among Apesta's sponsors. It accounts for a sizeable chunk of the ministry's tiny $7.5 million annual budget, and could have expected to be involved in any new initiative for Pacific business.

Aiono says the trust "needs to get its act together. They have been through three general managers in the last 18 months," he says.

Other community leaders have also been shut out of the loop. Porirua city councillor Tagaloa Taima Fagaloa resigned as head of Te Heuheu's Ministerial Advisory Council in protest at not being consulted. Porirua Deputy Mayor Litea Ah Hoi and community worker Wayne Poutoa - Pereira's cousin - have also criticised the deal.

Waitakere Pacific Board chairman Taha Fasi is "annoyed" that the money has gone to a new private company instead of to established community agencies.

Even Aiono concedes it is not a good look to give taxpayers' money to a private company and has talked to Pereira about setting up a charitable trust with broad community governance.

Regardless of the governance structure, if the contract goes ahead, Pereira is going to be under huge pressure to get results with what actually is a tiny amount of money - less than $890,000 a year after GST.

"The bulk of that money we won't see because we have other providers we are working with," Pereira says.

"I'm also going around meeting with some of the other institutions to partner with. I'm trying to ask some of the corporate firms, the big ones, because we are trying to upskill this particular sector of the workforce. We are hoping to leverage this with whoever can see our reasons for what we are trying to do."

THE PALM TABLE

(Pacific Island Chamber of Commerce executive):

* Ulu Aiono, Cogita software (chair)
* Inga Tuigamala, Tuigamala & Sons funerals (secretary)
* Alex (Alesana) Talopau, Breakthrough Accounting (treasurer)
* Esther Lau'ese, Waitakere Courts lay advocate
* Ronnie Matafeo, Matafeo Group quantity surveyors
* Bruce McCarthy, Quattro business consultants
* JR Pereira, Pacific Economic Development Agency
* Robert Perelini, ASPX computing consultants
* Peta Si'ulepa, Waitakere City Council economic development
* Essendon Tuitupou, Pacific Economic Development Agency