A scandal of wasted opportunity

Posted on June 13, 2011
By Dr Muriel Newman

The 70 job losses announced last week by KiwiRail in Dunedin and Wellington, and the 41 from Yarrows bakery in South Taranaki are reminders of how difficult business conditions are in New Zealand at the present time. Herald reporter Simon Collins spelt it out in a story on Saturday that outlined the problems faced in Northland – the region with the country’s highest rate of unemployment. At 9.8 percent at the end of the March quarter, Northland’s unemployment rate is almost 2 percentage points above the next-highest regions of Auckland and Gisborne/Hawkes Bay. With unemployment amongst young people aged 18 to 24 running at 29 percent and amongst Maori at 48 percent, more than half of all young Maori in Northland are on welfare.¹

Haami Pipiri, the leader of the Northland iwi Te Rarawa, claimed that the shocking rate of unemployment amongst Maori youth indicated that Maori have been “marginalised”. He said, “The feature of that experience has been the development of our economy in this region without us”.

What he failed to mention is the vast amounts of Treaty-related money that has gone into the region. The Crown Forestry Rental Trust alone has pumped over $20 million into Northland over the years to help iwi prepare their Treaty of Waitangi claims. A further $13 million has been provided to Northland claimants over the last three years. In addition, tribes have received a share of the millions of dollars in funding provided by the Office of Treaty Settlements and the legal aid system each year.

Documents from the Crown Forestry Rental Trust show that Te Rarawa received over $1.2 million during the last three years to help prepare their Treaty claim.² Their settlement will be worth $20 million in taxpayer funds and assets. As well as cash, they will receive forests, a local Court House and Police Station, 10 local schools, and two Landcorp farms (along with a number of other deals that include changing the names of Northland towns, harbours and beaches).³

In addition to land claims, the Treaty of Waitangi fisheries settlement gave Maori 37 percent of the country’s total fishing quota, which is currently worth $4 billion. Iwi allocations were based on their population and share of the coastline. The eight iwi in Taitokerau in the North received almost $30 million in cash and shares, with Te Rarawa gaining a $7 million asset base. In 2005, Northland-based Ngapuhi alone received the equivalent of $67 million for its fisheries settlement.⁴

What all of this means is that talk of Maori marginalisation is self-serving nonsense. A recent government report estimated the total value of Maori corporate assets at a whopping $37 billion.⁵ Thanks to the generosity of New Zealand taxpayers, the Maori aristocracy has become very rich, and is getting richer. Maori leaders could use their vast resources to lift the performance and aspirations of their people. They choose not to.

The sad fact is that while most New Zealanders believe that the proceeds of public assets transferred to corporate Maori through the Treaty settlement process are being used to look after the whole iwi, this is not the case. Long ago iwi leaders realised that race-based claims of disadvantage could work in their favour – not only did they attract substantial government funding, but they also guaranteed the on-going fawning and pandering of politicians seeking to outdo each other by providing never-ending benefits to Maori organisations that were already awash with money. In fact in 2006 the Labour government even went so far as to change the law to allow the commercial arm of Maori tribes to be granted charitable exemptions so they don’t have to pay income tax on their business profits! This is in addition to the long-standing special tax status of Maori authorities which sees them paying a lower rate of 19.5 percent than all other businesses, which must pay 28 percent.

The elitism of iwi leaders is reflected in what is going on with their fisheries settlement. While iwi own almost 40 percent of New Zealand’s entire quota, instead of providing employment opportunities on fishing boats and in processing plants for thousands of unemployed Maori, most of the 57 iwi who jointly own the quota use foreign crewed fishing vessels and fish processing factories in China. The ageing fishing boats are manned by crew who are forced to work under sweat-shop conditions earning as little as $65 a week. According to industry sources, the catch is then shipped to China where it is processed using Chinese labour, labelled as produced in New Zealand and sold in our supermarkets – as if it had never left our shores.

The dreadful conditions on these fishing boats came into focus last year when the 38-year-old FCV Oyang 70 sank in August with the loss of 6 lives. That was followed by the sinking of the 31-year-old No 1 Insung in December, with the death of 22 crew. In an exposé in the Sunday Star Times last month, Michael Field outlined how Ngapuhi has a 50/50 joint venture company Northland Deepwater JV Ltd (with an Auckland firm DSM Ltd), which has lobbied to be able to keep using aging foreign vessels. Hawkes Bay’s Ngati Kahungunu now deals through Northland Deepwater, while Tainui and Ngati Porou also use foreign vessels. Under their treaty settlements Maori formed the pan-tribal Aotearoa Fisheries Limited, which has a 50 percent shareholding in Sealord Fisheries, which also uses foreign vessels. The rest of the shares are held by Nissui, a major shareholder in Japan’s Antarctic whaling fleet.⁶

When asked about the foreign vessel scandal, the Minister of Maori Affairs, Pita Sharples said that he was concerned that 60,000 young New Zealanders were out of work, but that he understood the reason iwi weren’t catching their own quota was that “many Maori find it hard to be out for long periods of time away from their whanau”!

There is no doubt at all that the abolition of the youth wage (which paid 16 and 17 year old workers 80 percent of the adult minimum wage) by the Labour Government in 2007 has made New Zealand’s youth unemployment problem much worse. I asked this week’s NZCPR Guest Commentator Alasdair Thompson, the Chief Executive of the Employers and Manufacturers Association, to share his view of the impact of that law change. In his article Young people need youth rates of pay, he states:

“Six years ago when the Labour government was planning to abolish minimum pay rates for youth, our organisation, the Employers and Manufacturers Association (EMA), said the move was certain to hurt the very people it was intended to help. So it has proved.

“In 2005 EMA said if the Bill introduced to Parliament on February 22nd became law, the unemployment rate then at 12 per cent for 15 to 19 year olds, was very likely to rise. Regrettably our prediction was way off beam. Youth rates of unemployment have more than doubled to 27.5 per cent of those unemployed.

“They are still rising; over the past year the youth unemployment rate went up 2.3 per cent from 25.2 per cent in 2010, at a time when unemployment overall declined slightly. This rate of unemployment for young people represents a terrible risk for the future of all of us. Its coming at a time of life for these young people when they need to establish regular work habits and learn the basic skills needed to hold down a job with prospects.

“When young people leave school they find it hard enough to get started; earning a minimum youth rate often got a teenager’s career underway. Besides, for an employer with a choice between an experienced worker and an inexperienced worker it makes sense for them to take on the experienced worker every time.”

New Zealand’s high rate of teenage unemployment is a national disgrace. It has been estimated that Labour’s abolition of the youth wage could have cost over 9,000 jobs. As a result, many young people are now condemned to live on benefits for the equivalent of $4.70 an hour, when they could have earning a living for $10.40 an hour. For a young person, getting their foot onto the bottom rung of the employment ladder is a crucial first step, as that entry-level job gives them the skills and workplace experience to enable them to get a better job at a higher rate of pay.

The tragedy is that many unemployed young people have been doubly penalised by government policy: first they are forced to attend schools where they are educated so poorly that they leave without the skills necessary to get a good job, and then secondly, they are prevented from working for an employer who would be prepared to provide them with on-the-job training – in return for paying lower wages.

When considering the issue of minimum wages, it is important to remember that essentially wages are the payment workers receive for the productive services that they provide to others. As workers become more experienced and efficient, their services increase in value, driving up their wages. It is this increased output that helps to lift living standards.

However, when wages are increased by government decree – such as the major rise in the minimum wage from $13 to $15 an hour promised by the Labour Party if they win the election – productive output will decline as jobs are lost and consumer demand falls. That means in spite of all of the promises, raising the minimum wage will not lift overall living standards. While employees on the minimum wage would obviously gain a pay rise, the Department of Labour has estimated that around 6,000 workers would lose their jobs as employers who can no longer afford to hire them at the higher rates of pay, are forced to let them go. To make matters worse, unemployed workers would find it even harder to get a job, and consumers would be forced to pay more for goods and services as businesses raise their prices to cover the additional cost of labour. Rather than being the panacea claimed by unions and some politicians, because they do not increase productive output, minimum wage increases have a detrimental impact on the economy as a whole.

At a time when so many New Zealanders are in desperate need of jobs, the revelation that the elite of Maoridom are prepared to leave Maori on benefits and their families at risk, by sending New Zealand fish to be processed in China, comes as a shock. After years of providing on-going funding and tax privileges to iwi corporations, the New Zealand public had been fooled into thinking that they would look after their whole iwi. However we now find that instead of creating employment for their people in the fishing industry, thousands of foreign crew and many thousands of Chinese workers are doing the job that unemployed Maori could be doing. Corporate iwi should have to explain to the New Zealand public, why they prefer their young people to go to WINZ instead of going to work – why are they prepared to see young Maori sitting around smoking dope and growing cash crops, when they could be gainfully employed in a Maori fishing industry with meaningful jobs and the hope of a better future? This wasted opportunity is the real scandal.