Maori Fisheries Bill

Part 4 largely deals with issues to do with restrictions on the sale of and swap of quota. This is a vexed issue, as the Hon Richard Prebble put to the Committee in the debate on Part 3. Members will recall his arguments regarding the freedom of Māori to buy and sell quota outside the Māori pool. As the legislation stands currently, there are limitations on Māori in that they can sell quota obtained through this inheritance, if one likes—under the 1992 deed of settlement—only to other iwi groups, to Te Ohu Kai Moana Trustee Ltd, or to other Māori. That raises the question of how that affects the value of the quota itself, in the sense that there is a ring-fenced market for purchase of the quota. Also, the capital items involved in the settlement, such as trucks, fishing-boats, and all those other assets, have to be sold within the Māori pool, and their value is also in question. In terms of limitations on realising the value of fishing operations and assets, the rule that capital items, quota, or shares are to be sold within iwi only, and the right of first refusal process that requires an iwi to sell quota species separately rather than as a bundle of quota, certainly do affect the value of those capital items.

However, although the restriction on the sale of shares and quota has the potential to affect their value, and we in the National Party certainly acknowledge that—and Māori who came to the select committee acknowledged time and time again that it would affect their value—Māori also told us again and again, individually, in whānau groups, in hapū groups, and in iwi groups, that the effect on value is a consequence accepted by them and supported by them, because of the understanding that Māori through the generations must benefit from the settlement. In fact, that is a fundamental principle in the allocation model. So Māori came to us and said that they accepted they might take some hit on the value of their quota or their capital items, if they were able to trade only within Māoridom. They accepted that provision being in the legislation, because they understood that Māori through the generations must retain ownership and be the beneficiaries of this asset. That is the argument they put to us. Although we asked them again and again whether they realised what the consequences of that would be, they kept coming back and saying that they did, that it was their decision, and that that was what they wanted us to pass in the House with regard to their asset.

So of course it is quite a vexed question. The appeal by the Hon Richard Prebble in the Chamber earlier this afternoon in relation to this issue was well-thought-out. It has merit and cannot be ignored. It is simply that Māori accept the consequence of their decision, and still want to box on with these clauses.

Amendments were made to Part 4, particularly to clause 127. Members will see that clauses 127A to 127C have been added. They ensure that iwi can still maximise the price they receive through sales being offered within the Māori pool. Through those amendments, they will now be able to sell the quota either in individual parcels or as collective stock. The original bill, as tabled, contained restrictions on Māori splitting up the quota and selling them as individual stock, or doing the reverse and selling a bundle of quota. We have no idea what the reason for that rule was. Perhaps it was just an oversight. However, now Māori can actually split the quota into individual stock, or sell quota as a bundle if they wish. Another addition to Part 4 is clause 132A, which also allows Māori to pool small parcels of quota for sale.

Part 4 deals with restrictions on iwi in relation to their assets—their quota. The many restrictions on iwi in the way that they manage their assets were signalled earlier. It is a worry. It is a vexed area, obviously. The major submission made by Te Ohu Kai Moana—the Treaty of Waitangi Fisheries Commission—to the Fisheries and Other Sea-related Legislation Committee was that somehow an allocation model had to be found that would recognise that the settlement was an intergenerational one—that its benefits must flow through to coming generations. I as a Māori understand—but not just me; all of us can understand—the importance of such a concept. None the less, it does seem that we are saying to Māori that we recognise their claim to the fisheries, we recognise that the Treaty of Waitangi refers to fisheries, and we recognise that in 1992 the fisheries settlement was proceeded with, but now, in the 21st century, we are saying how it is to be allocated, and there will be restrictions on the way that Māori can deal with it, restrictions relating particularly to the sale of quota.

So a dilemma lies in there for the Committee—there is no doubt about that. Mind you, I often thought, and I am sure my colleagues and other colleagues on the select committee would agree with me, that the Treaty of Waitangi Fisheries Commission used that excuse far too many times. Its argument was that the select committee could not make any changes, because the settlement was a complete package, and if one part of it was altered, then the whole thing would be dismantled. Ultimately, the select committee did not accept that argument, but I think it underpins this issue of an intergenerational settlement. Therefore, the need to put some restrictions on how iwi can deal with their quota is a real issue. It was an issue for the select committee, and it remains an issue now.

I suppose that, ultimately, what members need to guard against—and I listened closely to the Hon Richard Prebble’s comments on this issue; I certainly appreciate the underlying thrust of his contribution to the Committee this afternoon—is the risk that, long term, we are accused of not making sure the asset was maintained. Fisheries are named in the treaty as the property of Māori, and a fisheries settlement was reached in 1992 that recognised that Māori had a property right to fisheries. It recognised that the Crown had to reach an agreement, which it did, to ensure that Māori became stakeholders in what might be called the current property in terms of fish—which is quota, basically—and, of course, the income that flows from it. Although nobody in this Chamber wants to see assets lost or frittered away—and nobody need take from that that I do not have any confidence in the ability of Māori to manage their assets—in the long term there is a risk that a future generation might come back to Parliament and say that, yes, we settled the fisheries issue and allocated quota to Māori, but we did not, essentially, take proper steps to make sure that that asset was maintained and sustained, and, some generations later, some of it has been lost. It provides a quandary for parliamentarians.

It has been a privilege to come down to the Chamber without having done, in a sense, all the homework, and without having been through the select committee hearings, and hear what the previous National Party speakers have talked about. They have said that Māori came before the Fisheries and Other Sea-related Legislation Committee and said that they realised the consequences—I think those were the words used—of this measure, that they realised that it would effect a discount of the value of their assets, but they wanted it because they want these assets to be available to benefit future generations. I say that it has been a privilege to come down here and hear that, because I myself would find it quite difficult to withstand that kind of argument. As a commercial lawyer I often saw families where the founder, the entrepreneur, the person who had built the family fortune, was desperately keen to make sure that the asset endured. Those people tried to create structures that would ensure it would not get taken by the next generation, who were often less worthy, and frittered away. They tried to make it into the equivalent of a seat for the family—something that would make sure the family did not sink back into obscurity and normalcy. So I can understand the submissions and the sentiment.

But I do not believe that that excuses this Parliament for not addressing the fact that this measure is also deeply in conflict with the Treaty of Waitangi; neither does it excuse this Parliament from at least recording that we have not permitted earlier generations the excuse of sincerity and good intentions. We have rounded on earlier generations who made similar compromises—sometimes highly paternalistic compromises, but we recognise that they were compromises—and have treated them as though they had some kind of evil intent. A very simple example—and I think there is a parallel in this bill—is our rounding on those generations who insisted on Māori speaking English at school. The leaders, both Māori and Pākehā, of those generations could see no way for Māori to advance if they were not part of the world, but we now treat that as evidence of some kind of bad intent.

I believe that future generations will look at what we are passing in this part and draw the same conclusion. And they may be motivated by greed, because they will come back and say that Māori did not benefit from the locking up of the asset. A few Māori will have benefited from the locking up of it—those who pull the levers in iwi organisations—but what happens to groups such as Ngāi Tahu who believe that the overall entity is heading in very much the wrong direction, that the majority, who will be the only buyers, are wrongheaded, and that they cannot extract the genuine value? In effect, it is a squeeze-out, and they are squeezed out at less than true value. Ultimately, when the assets have been devalued and it is quite patently clear that those who end up in control are incompetent, they will pass to someone else at a gross undervalue. That pattern is repeated time and time again in family companies and in listed companies. It is the pattern of commerce where assets pass out of the hands of those who are less competent into the hands of those who are smarter.

The problem with this bill is that it will ensure that it happens at not the proper market value, which at least is a protection for those exiting, but at a value that is discounted because the control is locked up. This Parliament should know what it is doing. It will be the next generations that will come back and say: “Those fools should have realised they were breaching the Treaty of Waitangi. They were putting in a transfer restriction that article 2 clearly did not contemplate. How could they have done it?”. I believe that it is the sort of thing ACT is here for—that is, to point out that the emperor has no clothes. The member for Whangarei tells me that this restriction extends even to trucks and boats, that even those physical assets cannot be sold on a genuine open market—that one has to find some other Māori who wants to go fishing. I ask what will happen when the inside money says that fishing has become technologically overtaken by fish farming. This kind of hunting, which quota is all about, might be replaced by fish farming before we know where we are, yet Māoridom are expecting that this benefit will go down through the generations.

I thank the ACT member Stephen Franks for his interesting comments on Part 4. It seems to be an intriguing situation that such a significant restriction is placed on the trading of quota. My colleague Phil Heatley has pointed out to me is that this is a development that Māori petitioners came to the Fisheries and Sea-related Legislation Committee and asked for. It seems to me that that issue is worthy of the consideration of the Committee. It is the asset of Māori, and no one else is claiming it is his or her asset. It is the asset of Māori New Zealanders. They came to the select committee and said they wanted to make sure that the asset exists in perpetuity for their people, and therefore they wanted restrictions to be imposed on them that meant they could trade quota only within iwi. Stephen Franks raised some very good points about the commercial sense of that, but at the end of the day if the asset is acknowledged as belonging to Māori, and Māori collectively came to the select committee and ask for that, then it is incumbent on this Parliament to allow that to happen.

I would like the Minister to take a call to tell us what proportion of quota is tradable on the open market, and what proportion of quota is being locked up via that request from Māori.

💬 Darren Hughes: This member has never sounded so good.

I thank the member Darren Hughes for commenting on my voice. He, too, may one day be struck with the dreaded lurgy.

💬 Phil Heatley: When his voice breaks he will be like that.

I think I will move on. My understanding of Part 4 is that quota that was originally part of the 1992 settlement, which I spoke about in an earlier contribution, is quota that will be locked, and the restricted trading right will apply to that portion of quota. But, as we all know, since the 1992 settlement there has been considerable acquisition of quota by the Treaty of Waitangi Fisheries Commission. It is my understanding that that quota, since it has been acquired on an open market, can equally be traded on an open market. The question I would like the Minister to help the Committee with today is this: what proportion of the quota involved in this particular deal is restricted quota, and what quota is open-market quota? It is a simply question, so I hope the Minister can help us with regard to that.

I conclude by repeating the points that I made earlier. At the end of the day Māori collectively came to the select committee, and said that they wanted to have this restriction imposed on them. It is for admirable reasons, I may add, which will ensure that quota is available for generation after generation. I accept that, but it seems that a very significant restriction is being placed on the value of the asset. I call on the Minister to answer those points for me.

In speaking to Part 4, I would like to draw members’ attention to clause 120, “Interpretation”. It states: “… bundle of assets means a bundle that contains 1 or more stocks of settlement quota and may contain other assets, including non-quota settlement assets and non-settlement assets.” Essentially, I assume that we are looking at any asset that is contained within a Māori entity as defined under this bill, and I think that raises some concerns, which have been alluded to by Stephen Franks. The fact is that one cannot sell the assets. If there are assets in items such as trucks or boats, one would really have to express some concern that one could sell a truck or a boat only to another Māori person or entity as defined in this bill. That is patently nuts. Perhaps the Minister could take a call on that. Two issues have now been put on the table for the Minister, and he is yet to take a call on either of them. One is the area around assets, and assets that are not necessarily quota and not necessarily settlement assets. Perhaps the Minister would like to clarify just what is meant with regard to non-settlement assets and those assets being able to be traded only within the areas defined within this bill.

The other question that the Minister has yet to comment on is the issue around the 19.5c in the dollar tax exemption for Māori organisations as identified in the taxation legislation. The Minister may like to comment on how Te Ohu Kai Moana Trustee Ltd fits in terms of that, because it is exempt from all other provisions of income tax, goods and services tax, gift duty, and any other taxes, levies, or impositions of the inland revenue Act with regard to the initial transfer of settlement assets. I would like to know from the Minister what the situation is from that point onwards for the other trustees or Māori organisations identified within this bill. If the Minister would like to comment on that, it would be most helpful. It certainly is not clear from the bill what the taxation provisions are for all the trusts and “trustee limiteds” that are identified within the bill.

I would like to get back to the bundle of assets. Someone who has settlement quota can lease it, so an asset-holder can lease those assets outside the realm of the companies and trusts, etc. identified within this bill. People just cannot sell quota. I am certainly concerned that trading in non-settlement assets and non-quota settlement assets is also restricted within the parameters of this bill. Again, I would like to hear the Minister take a call to explain that part of the bill, what it means, and why it is that maybe someone could not sell a boat to anyone other than the people identified within this bill. If I wanted to buy a boat from John Tamihere, I could not do that. He would be stuck with that asset, so that would devalue the assets considerably.

💬 Stephen Franks: In his hands, definitely!

I laud Mr Franks’ humour. Some clarification is definitely needed, because that certainly constrains the commercial element of all the other aspects of this settlement bill. All the other aspects outside the quota are affected by the provisions of this bill, and it means a huge commercial constraint and a devaluing of the assets that are not identified as settlement quota assets. Could the Minister please take a call to give us an explanation of both that matter and the taxation regime for the trusts and “trustee limiteds” that are identified within this bill.

I move, That the question be now put.

Part 4 talks about the restrictions on iwi with regard to the quota. It is an important part of the bill. In the debate on the previous parts we identified the point, which I also made in the last speech, that in 1992 when we had the quota settlement, it was actually a property right. That was established back in 1992, and here we are 12 years later, with an opportunity now to use the quota and to be able to have it transferred out to iwi. The point made in the debate on the previous part by my colleague Dr Mapp was that there need to be very clear mandated restrictions on who can access the quota. The people concerned need to have business acumen, to be commercially viable, and to meet minimum standards. We believe those sorts of points are important, but unfortunately Dr Wayne Mapp’s Supplementary Order Paper was voted down.

Part 4 actually deals with the same sorts of things that Dr Mapp talked about, so I will look at the outline of that part. Clause 120AA, “Outline of this Part”, states it provides for: “(a) the registration under the Fisheries Act 1996 of a settlement quota interest against quota shares owned by asset-holding companies or subsidiaries of asset-holding companies; and (b) a general restriction on the transfer of settlement quota; and (c) the basis on which settlement quota may be disposed of; and (d) exceptions to the general constraint on disposal, including provisions for the exchange, of settlement quota; and (e) an option to purchase (right of first refusal), with a procedure for selling bundles of assets that include settlement quota.” So I think if we look at what is required there, we see there are some constraints.

One of the issues that my colleague the Hon Georgina te Heuheu mentioned was that it could well be, in years to come, that Māori come back and say that yes, they had quota and it was transferred to them, but there were not the provisions in place to maintain its sustainability in the long term. That is a real threat to what we see in this part, remembering that Māori have come and said that they want to be able to share, and have the transfer of, quota, but that they also want to ensure, for the benefit of future generations, that there is actually sustainable management in place, in order to maintain the species and to maintain access to the asset that is there by right. That right was determined in the 1992 settlement, but we have to be very careful that the resource—the asset—is not depleted. As we have gone through this debate this afternoon, we have seen that the process can leave itself open to abuse.

We have some concerns about the bill, but we are happy to support it through its passage today. I would like the Minister in the chair, David Benson-Pope, to take a call. A number of concerns have been expressed, and I would certainly be interested to know what his view is. As we are supporting the bill it is not something that is a major issue, but the Minister has an opportunity to set members’ minds at rest on those things, and we believe that is important.

To summarise, Part 4 is about the limitations on realising the value of the fishing operations through the sale of capital items, quotas, or shares of iwi or Te Ohu Kai Moana Trustee Ltd, and the right of first refusal process that requires an iwi to sell each quota species separately, rather than as a bundle of quota. It was included in the capital asset; that is how it was introduced. There were some changes made—they are now reflected in the bill—and we support them.

I move, That the question be now put.