Ahuwhenua trusts and Māori incorporations
The two key structures which have been developed to manage Māori interests in land are ahuwhenua trusts and Māori incorporations. In 2008 the 129 Māori incorporations and 5,201 ahuwhenua trusts together administered around two-thirds of Māori land.
Ahuwhenua trusts are popular because landowners retain their interests as owners. In incorporations, owners become shareholders who receive dividends. Recent legislation allows ahuwhenua trusts to conduct themselves in a more commercial manner if owners wish, and to amend the trust order accordingly.
Most Māori land is administered by trustees or management committees, unlike the broader New Zealand agricultural sector, which is dominated by owner-operator family farms. Much Māori agricultural production is carried out by corporate farmers – landowners do not work on farms but employ others to run them.
Māori agriculture has unique problems relating to ownership, governance and access to capital.
The majority of Māori landowners are absentee owners. The physical separation of the owners from their ancestral lands has major consequences for the organisations that administer and control the lands.
Most Māori landowners will never occupy the land they collectively own, nor obtain a livelihood from it. But ownership of Māori land plays a major role in cultural identity. Land provides owners with their tūrangawaewae (their place to stand, or sense of belonging). Because such land is precious, owners are often conservative and risk-averse, particularly when there is a chance that land might be lost. Landowners believe that organisations should place as much importance on their social and cultural objectives as on maintaining commercial viability.
Governance and decision making
Appointments to boards or committees are primarily from within the landowning groups. Owners elect representatives democratically, and the final makeup of committees often reflects the interests of families keen to maintain control of the organisation. If members lack experience in governance and management, the success of trusts and incorporations may be compromised.
Access to capital
Organisations often struggle to obtain access to capital to develop their landholdings. A conservative, debt-averse approach is often driven by owners’ demands. Because of the complexity of multiple land ownership, lenders are often unwilling to lend with Māori land as security. Managers who do not have extensive business experience are less likely to obtain finance to develop land.
Recently, the Māori Land Court has more actively promoted the use of the company structure, under the Companies Act 1993, as a way to separate land ownership from business activities. A company structure can allow the separation of commercial objectives from social and cultural ones, and provide a mechanism for internal checks on performance. The commercial goals of a company can be clearly laid down and management can be assessed. Electing a board of directors – none of whom need to be owners and who are chosen primarily for their commercial ability – improves lines of accountability.