Under-fire Reserve Bank backs changes to boost Māori economy

By Deborah LaHatte

A controversial new Reserve Bank (Te Pūtea Matua) research report has found key areas where changes could improve Māori entities’ access to capital, starting with improving the ability to use whenua Māori as loan collateral and making banks rethink the risks in lending to Māori.

The Improving Māori Access to Capital report proposes some solutions, with the aim of boosting the Maōri economy. The bank is now seeking public comment on the ideas over the next six weeks.

But the very existence of the report has come under fire from several former Reserve Bank governors and commentators who argue that the bank should be concentrating on getting inflation under control and not straying into ethnic areas.

Launching the report yesterday Reserve Bank governor Adrian Orr (Cook Islands Māori) defended the bank’s work in this area saying the report was “a key step in unlocking the potential of the New Zealand economy”.

 “There are compelling reasons to design a comprehensive pathway towards a better financial system for all New Zealanders. Putting greater focus on these issues may encourage everyone involved to strive for better outcomes with no one worse off,” Orr said.

‘Unrewarded risk and cost’

The governor claimed the unique nature of some Māori economic activity put tangata whenua at risk of missing the full benefits of the financial system and carrying unrewarded risk and cost.

“Negative outcomes could include rising exclusion, inequality and the degradation of general wellbeing while we’re also missing out on the positive aspects of growing Māori business for the good of all.”

A multi-agency steering group has been overseeing this work co-sponsored by The Treasury Te Tai Ōhanga Secretary Dr Caralee McLiesh alongside the Reserve Bank. Contributing agencies included Te Puni Kōkiri and the Ministry for Business, the Ministry for Primary Industries, New Zealand Trade and Enterprise, Te Tumu Paeroa, the Ministry of Foreign Affairs and Trade and the Ministry of Housing and Urban Development.

The Reserve Bank aimed to use its position at the heart of the financial system to draw together the research and insights on hand to create potential solutions, Orr said.

“It’s then up to all of us - the private sector, iwi Māori, business and communities and a broad range of government organisations - to feed into this work and explore the best options to improve access to capital for Māori. When we can do that, Māori business will thrive and that is good for everyone.”

Feedback must be received by 5pm on September 20 to MaoriAccess2Capital@rbnz.govt.nz.

The Reserve Bank will also host a series of online webinars in August and September, where participants can ask questions and provide verbal feedback. Interested people should email MaoriAccess2Capital@rbnz.govt.nz and the bank will reply. It will also share webinar information on its website and across its social channels.

Table: Reserve Bank