I've had an interesting time this past week attending Whakapiki i te putea – the Raising Māori Investment Capability Conference - which was held at the University of Waikato's Tauranga campus.
The conference normally happens every time there is a change of government because at that time there is normally a change in economic direction - and being aligned with that change is naturally very important.
Another driver for the conference, which is aimed at Māori entities including land trusts, incorporations and Treaty settlement organisations, is the "churn" of personnel within those organisations. Trustees for example, come and go and newbies are not necessarily familiar with the finance and investment world. This is important for the following reason.
Late last year the Governor of the Reserve Bank, Adrian Orr, visited Tauranga and told a reasonably large audience that as far as he could see, bank interest rates were going down and would continue to do so unless there was a major intervention from the government. He predicted that if nothing changed, those interest rates would move into negative territory. This news came as a major wake up call for many Māori organisations right down to whanau trusts and even marae committees who hold funds in trusts on behalf of their constituent members.
That's because the default investment strategy for most of these organisations is the safety of bank term deposits. But when you end up having to pay the bank to "look after" your money it's not such a great strategy. Other options need to be found and the purpose of the conference was to look at what some of those other options might be.
To help those considerations, there were a range of speakers exploring a wide selection of options. But what I personally found most encouraging were the strategies followed by two of the iwi powerhouses, Tainui Group Holdings and Ngāi Tahu Holdings. Both are now worth more than $1 billion and growing rapidly.
Sure they follow fairly standard portfolio management practices with diversified holdings including bank deposits, but the immediate point that caught my eye was the investment in land and property. Some 56 per cent of the Ngāi Tahu investment portfolio is in property, with major residential developments in Queenstown, Christchurch and in recent times, Auckland.
According to newly appointed CEO Mike Pohio, (formerly CEO at Tainui) the other investment venture for Ngāi Tahu Holdings is in tourism where the subsidiary Ngāi Tahu Tourism hosts over 1 million visitors per year to their various attractions around the country. Among recent acquisitions, outside their South Island base, are Rainbow Springs, the Agrodome in Rotorua and Hukafalls Jet on the Waikato River just north of Taupō.
Tainui Group Holdings is likewise focused on creating a balanced investment portfolio through building strong partnerships with other experienced investors, including iwi and other Māori organisations. Building on their strong property and land base, Tainui invest in a wide range of enterprises, particularly where the results include job opportunities for iwi members; shares, primary industries and in businesses showing high performance or strong potential.
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As with Ngāi Tahu, Tainui's investment goal is not profit for its own sake, but rather to see generations of Waikato-Tainui people prosper through the activities that Tainui Group Holdings are involved in. The most recent example is the 30-year partnership established last year between Tainui and the Port of Tauranga, with the Tainui contribution being the creation of an inland port at their 480-ha Ruakura Estate site on the outskirts of Hamilton. The new inland port rail-hub will utilise existing rail links joining Auckland, Hamilton and Tauranga in a "golden" triangle.
The port's other partner, Kiwirail, currently operates up to 86 trains per week with capacity to take even more. The link already carries more than half of all the country's rail freight.
The upside to the new partnership for Tauranga residents and Tauranga commuter traffic is a decrease in the number of heavy trucks on SH2 and SH29. That is further helped by the strong surge in transhipment of container traffic at the port, for example, ship-to-ship transfers of containers sourced from other ports around the country. The dramatic increase in transhipment traffic was a development commented on by the Port of Tauranga CEO Mark Cairns who also spoke at the conference.
Most importantly for Tainui is the estimated 300-plus new jobs that the inland port will create, with more forecast as the facility expands. Other Tainui investments with job creation attached are their hotel partnerships in Hamilton (Novotel, Quest, Ibis and VR) and the Tainui Novotel at Auckland Airport and the luxury Te Arikinui Pullman hotel currently under construction. Building the new hotel has already created 300 jobs and when completed it will carry 200 staff. That has benefits for not just iwi members but also the wider community.
I was most interested in these social investment strategies of the two iwi organisations. They both have firm social aspirational outcomes for improving health, welfare, education and employment prospects of their iwi members. Tainui, for example, has a strong grants system in place for education and health assistance for their elderly, which has been operating for some time. I understand that income generated from the investment programme will be focused on expanding these services with affordable housing one target.
There is clearly a recognition by the two iwi that a working partnership makes a heck of a lot of sense and they are already up and running with some joint initiatives. Some conference attendees wondered if this was the start of a grand iwi coalition that would see others joining in the not too distant future. I think that is definitely on the cards and look forward to further developments as other Treaty settlements come online.
Watch this space.