Dynamic Business: June McCabe: Why growth in the Māori economy matters — what should 2040 look like?

Company director June McCabe.

Opinion

OPINION

For more than two decades I have been an advocate for accelerating Māori economic development to grow intergenerational opportunities with Māori. The concept of the Māori economy was borne out of work commissioned in 2003 to demonstrate the positive contribution of Māori to the wider New Zealand economy.

I was honoured then to be involved and again now in 2023 on behalf of the 78-strong National Iwi Chairs Forum — looking at the constraints of poor access to resources and capital at every stage of enterprise development — under the committee for Māori Access to Capital.

To comprehend the scale of the opportunity, we commissioned a baseline assessment of the Māori economy and its potential. It reveals that the Māori economy is only a third of what it could be.

Today, the Māori economy, with $23 billion of GDP and $91b of economic assets, is growing at 8 per cent per annum. But as much as we celebrate that above-average growth, it could be faster and achieve a much larger impact. The Māori economy is just 6 per cent of New Zealand GDP and 7 per cent of the economic assets. This compares to the current 17 per cent share of the New Zealand population and projected 20 per cent share of population in 2040. We could, and should, close this value gap.

Add to this gap the future values and wellbeing gaps that exist between Māori and non-Māori, and we start to see a significant difference between what is and what could be.

Through our work, we estimate value of the gaps at $47b of GDP per annum — $167b of economic assets and $5.3b of Māori incomes. The annual cost of lower wellbeing is estimated at $8b-$12b per annum. With current trends it will take 60-100 years to close the value gap.

New Zealand is clearly at a crossroads

We could continue to rely on incremental growth. Or we could seize the opportunity to invest and witness a transformational change for New Zealand properly.

Throughout the decades it has been obvious to me that collective ownership creates barriers or asymmetries on the demand side and supply side in our financial systems and capital markets. Banks need guarantees that can be liquidated.

Capital markets need shareholding and the rigour of public reporting.

On the demand side capability and capacity constraints prevail, and Māori governance structures are not well understood within these systems.

It’s not just capital. It’s well documented how difficult it is build and run small businesses (SMEs) in New Zealand. The level of compliance, the mental health strain and the financial vulnerability are hard for anyone, but especially for Māori in part due to limitations of using collective ownership of assets as security.

If we find a way to properly capitalise Māori business — from SMEs right through to enterprise level — we estimate an increase in GDP of $25b. This includes a spike in Māori self-employed of 70,000 — a 100 per cent increase on what we have now.

Just think about what that means: self-reliance, pride, income for families, training and employment.

Many could become employers and scale up to become enterprise scale.

There is already $123b in GDP from existing Māori enterprises.

Accelerating Māori access to capital could be firing up these, but it’s just too hard. We want to remove complexity and systemic constraints and deliver the resources directly to the Māori enterprises.

By 2040, Māori will occupy 20 per cent of the population up from 17 per cent now and will increase the workforce by 220,000. We are obligated to ensure rangitahi arrive entrepreneurial, educated and ready to lead.

If we continue with business-as-usual we will miss out the opportunity for economic growth, which we estimate to be $11b of revenue.

So, how can this be fixed?

The good news is that this problem is not unique. It fits within the definition of a capital market failure. Collaborative structural solutions can be found and co-investment is clearly an option. Our work is focused on system interventions and measuring these against the Māori economy baseline. What gets measured gets managed.

This is a pivotal time for New Zealand. In 17 years, by 2040, Māori will contribute 70 per cent of workforce growth and 80 per cent of self-employed growth, and it should be 18 per cent of NZ economic growth. The Māori economy matters to NZ.

As a nation, we are moving towards a “post-settlement” society. It’s exciting to see Māori using our assets, both human and material, to lead New Zealand sectors.

What’s more, with an intergenerational vision that extends hundreds of years and values such as kaitiakitanga and whanaungatanga at their core, Māori enterprises are modelling the regenerative practices that all organisations must follow to be resilient and sustainable.

I’m nervously excited about the next 17 years.

I feel like I’m standing on a burning platform of historical failures and witnessing a future where Māori are fulfilling our social and commercial potential. Critical decisions need to be made before then. We have a responsibility to and for future generations.

Where aspiration meets potential, where the levers for change and innovation are at the ready, and a New Zealand that commands an equal and equitable society for all.

• June McCabe is an independent company director.