Young Maori Leaders Conference Economic Resources

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					Young Maori Leaders Conference

    Economic Resources
            17 June 2003
       Guy Royal / Damian Stone

   Governance and management principles
   How these rules apply to Māori
   Common structures used by Māori
   Incorporation of tikanga
   Common issues
         Preliminary comments
   Structure vs Operations
   Shakeholderism vs shareholderism
   Accountability through structural detail
   Accountability through
    – alignment of incentives
    – adequate performance analysis
    – other contractual matters
   The ideal shareholder
      Separation of Governance
          and Management
   Clear division between personnel
   Clear division between responsibilities
   Governance
    – board or executive
    – external focus
    – overall strategic direction
   Management
    – internal focus
    – task oriented
       Rationale for Separation

   Decision making powers do not go
   Balance of power and authority
   Transparency
   Accountability
   Responsibility
          Applicability to Māori
   Best practice rationale applies to all
   Māori organisations
    – commercial focus
    – wealth creation
    – wider objectives - social
         Applicability to Māori
          Governance Levels
   At least four levels
   Members – owners
   Member representatives – represent
    members interests
   Directors – strategy orientated and
    monitor performance
   Managers – task and results orientated
        Applicability to Māori
       Rationale for Separation
   Assists management of assets
   Transparency and accountability
   Ease of monitoring
   Different governance levels have different
   Avoid potential conflicts in fulfilling
    different functions
   Skills managers
          Applicability to Māori
   Executive
    – set clear objectives for managers
    – monitor managers
    – report to members
   Managers
    – more specific strategies
    – report to member representatives
           Applicability to Māori
   Number of general options available
   Ultimately up to individual group
   Other criteria - Crown and TOKM
   General criteria
    –   member control
    –   legal capacity and powers certain
    –   separation of owners and managers
    –   separation of commercial and non-commercial
    –   consistent with tikanga
          TOKM Requirements

   Two categories
    – Mandate requirements
    – Structural requirements
   Summary of mandate requirements
   Summary of structural requirements
           TOKM Requirements

   Mandate requirements
    – Obligation to act for all iwi members, irrespective
      of where they reside
    – Membership open to whakapapa members
    – Right to request postal vote
    – Establish and maintain registers – “on-going
            TOKM Requirements

   Mandate requirements (cont.)
    – AGM
       •   annual plan
       •   annual report
       •   annual audited accounts
       •   performance of asset holding entity
       •   amendments
    – Certain amendments require 75% approval of
      voting members
    – Dispute resolution
           TOKM Requirements

   Structural requirements
    – Accountability
    – Annual plans
       • key strategies
       • financial returns
       • rationalisations
    – Separation of key functions/transparency
          TOKM Requirements

   Structural requirements (cont.)
    – Discrete legal entity to manage PRESA and
    – Iwi organisation to provide strategic governance,
      which should be included in iwi organisation
    – Elected reps. no more than 40% of directors of
      asset management body
    – Representative iwi organisation amend
      constitution of asset management body by 75%
          TOKM Requirements

   Structural requirements (cont.)
    – Separation between asset management and
      distribution of funds
    – Separation between asset management and
      daily fishing management
           Crown Requirements

   20 questions
    –   development of entity
    –   representation of members
    –   accountability
    –   transparency
        Governance Structures
   Some structures – not all
   Brief discussion of advantages and
   Derive from Westminster system of law
   Square pegs, round holes
   Law Commission Report
        Governance Structures
         Common Law Trust
   Established under common law
   Flexibility in Trust Deed
   Unclear trustee duties
   Time consuming and costly
   Finite period – rule against perpetuities
        Governance Structures
         Ahu Whenua Trusts
   Established under TTWM Act 1993
   Avoid further fragmentation of Māori land
   Land vested in trustees and benefits
    range of people
   Arguably not fully representative of iwi
   Uncertainty of trustee’s duties and powers
   Replacement of trustees problematic
   Under scrutiny and control of Māori Land
        Governance Structures
         Māori Incorporations
   Established under TTWM Act 1993
   Not truly representative of iwi
   Uncertainty as to powers
   Under scrutiny and control of Māori Land
        Governance Structures
        Incorporated Societies
   Established under Incorporated Societies
    Act 1908
   Well known and understood
   Potentially not fully representative of iwi
   Pecuniary gain issue
   Membership
    – must register each beneficiary
    – contractual obligations
    – enforcement issues
   Porima v Te Kauhanganui o Waikato Inc
        Governance Structure
         Māori Trust Boards
   Established under Māori Trust Boards Act
   Legally uncertain
   Powers limited
   Accountable to Minister of Māori Affairs
    rather than beneficiaries
   Inconsistent with tino rangatiratanga
        Governance Structures
          Statutory Bodies
   Established by special legislation
   Allows for iwi control
   Clear, comprehensive and flexible
   Passing of legislation can be costly, time
    consuming and requires government
   e.g. Te Runanga o Ngāi Tahu Act 1996
         Governance Structure
   Established under Companies Act 1993
   Provides legal and commercial certainty
   Strong accountability (e.g. shareholder
   Constitution allows for flexible, iwi specific
   Financing and commercial powers
   Difficulties in identifying shareholders
         Governance Structures
           Law Commission
   Treaty of Waitangi Claims: Addressing
    the Post Settlement Phase (Aug 2002)
   Necessary for uniform model settlement
    entity to be created by statute
   Must meet needs of settlement group and
   Should clearly define responsibilities of
    those managing assets
            Governance Structures
              Law Commission
   Core obligations that should be included
    –   stewardship
    –   transparency
    –   accountability
    –   dispute resolution
    –   distribution rules in event of winding up
       Incorporation of Tikanga
   Structures traditionally derived from
    Westminster system of law – certainty

   Traditionally Māori governance structures
    today less certain (lore)

   Tikanga varies
       Incorporation of Tikanga
   Possible conflict between tikanga Māori
    and governance structure rules

   Tikanga can be incorporated into
    governance structures e.g. constitution /
    charter / Trust Deed

   The more flexible structures allow for
    greater incorporation of tikanga Māori
       Incorporation of Tikanga
   Recognition of Tino Rangatiratanga and
    – settlements allow for collective Māori ownership
      and management over tribal assets, land and
    – settlements allow an iwi to hold assets and
      administer them as kaitiaki
    – duty to protect assets for future generations
    – can be incorporated into modern structures
       Incorporation of Tikanga
   Recognition of Whanaungatanga
    – whakapapa based
    – membership and participation of all members of
      kin group in the settlement process and
      governance structure
    – whangai
       Incorporation of Tikanga
   Recognition of Mana
    – political power ascribed through whakapapa and
      acquired through accomplishment
    – executive to make decisions subject to wishes of
    – executive accountable to members
    – Kaumatua role
           Common Issues –
          Merging of Functions
   Issues may arise if:
    – member representatives taking active role in
    – directors become management
    – management become directors
   Difficult to isolate responsbility
   May not have appropriate skills
             Common Issues –
              Māori Specific
   Resource availability
   Difficult for people who have historically
    undertaken merged roles to separate
   Tikanga
    – varies
    – can be incorporated into constitution etc
    – difficult to reduce concepts to writing
               Common Issues –
               Decision Making
   How should decisions be made?
    –   unanimity vs majority?
    –   what majority?
    –   what voting process?
    –   hui vs postal vote?
    –   preferential voting rights?
    –   Kaumatua input
            Common Issues –
            Decision Making
   Who should make decisions?
    – members control over overall direction
    – impractical to have members make all decisions
    – what decision should they have input into?

   Separation of management and
    governance is important
   Structure will impact on successful
    management of assets
   Ultimately people who work within
    structure have greatest influence over
    whether group is successful in managing

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