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Māori economy
Māori economy

OPINIONĀteaApril 8, 2020

The effects of the Covid-19 recession will hit Māori hardest

Māori economy
Māori economy

Māori will likely make up the worst unemployment figures in the forthcoming economic recession. Things can’t go back to the way they were, writes Joshua Hitchcock.

Our world has changed. While it is too early to know with any certainty what the full impact of this crisis will be on Māori, what we can surmise is that the near total shutdown of our economy will have a deep and devastating impact on our Māori communities. The $50 billion Māori economy is now worth $40 billion. Māori unemployment will rise drastically. Iwi organisations and land trusts that are heavily invested in tourism, forestry and international equities are facing massive reductions in their balance sheets. This will have flow on effects to their distributions back to iwi members and shareholders, reducing the impact of the social programmes that many have implemented over the years to support the realisation of Māori aspirations.

And the impact is far greater than can be stated in dollar terms or unemployment statistics. The impact on our whānau and hapū from isolation is immense and a return to the normal “economic” life after lockdown is only going to exacerbate that impact. That is why, when we come out of lockdown, we should not go back to business as usual. When we emerge from lockdown we need to do so in a way that reflects the importance of those who carried us through these weeks and months, many of them struggling to survive on minimum wage, and that reflects the need to be kind and compassionate to those whose inequities were laid bare for all to see during this time.

The Māori economy in 2018. Image: Taonga Link NZ

As much as our world has changed, our collective view of the economy has also changed. Governments around the world have abandoned austerity and “small government” in favour of the largest peacetime economic stimulus and welfare response ever seen. Thirty years of neo-classical economics swept away around the world to deal with the impending economic catastrophe. Suddenly, when it became apparent that middle class, Pākeha New Zealand was going to experience the same conditions that Māori have been experiencing for over 140 years, the government opened the cheque book. In its first week, more money was paid out in wage subsidies than the entirety of the 25 years of the Treaty Settlements programme. Billions of dollars spent to ensure that the unemployment rate for Pākehā does not increase as a result of this crisis to the same rate that Māori have been experiencing for the past 30 years.

Ensuring the incomes of New Zealanders during this time was the absolute right thing to do. If only Māori had experienced the same level of āwhina from our government over the past 30 years then maybe many of the inequalities experienced by Māori, inequalities which are now being exacerbated by this crisis, could have been eliminated. Māori unemployment for example, already at crisis levels prior to the lockdown, will increase and increase at a rate far more severe than that of the rest of New Zealand. During the last recession as the Pākehā unemployment rate rose from 2.4% to 5% between 2008 and 2012 the Māori unemployment rate went from 7.4% to 14.6%. It was a catastrophe for our Māori communities. Economists have predicted a New Zealand unemployment rate of anywhere between 10% and 30% as a result of this lockdown. If even the conservative estimate is true, Māori unemployment will spike as high as 25%.

The response from Māori has been an exercise of tino rangatiratanga. Across the motu, iwi have come together to provide care packages for kaumātua, to advocate for increased health support for their communities, and to set up road blocks to keep the virus out. Ngāti Kahungunu are providing fresh fish packages to kaumātua and vulnerable families through its customary fishing regime; Ngāti Ruanui have prepared food packages for their vulnerable families; Te Whānau ā Apanui, Ngāti Manawa, and communities in Te Tai Tokerau and Te Tairāwhiti have all implemented road blocks and aukati to protect their whenua and communities from the virus. It has been a response grounded in tikanga. In our obligations to provide for our communities and ensure that they are safe and secure. In many cases, iwi have responded faster and with more intent that the government has in order to secure their people and prevent the spread of this disease into our most vulnerable communities. To suggest that Māori do not require additional funding to respond to this crisis and that we would not be disproportionately impacted should Covid-19 spread into our communities, as has been suggested by some media commentators, is inhumane and ignorant of the history of infectious disease in this country.

An influenza medicine depot in Christchurch. Taken by an unknown photographer, December 4th 1918. (Image: Alexander Turnbull Library)

Our collective social response has been strong. Māori now require an equally strong economic response from both iwi and the government. We need to reimagine not just how we organise our economy, but also how we organise our iwi organisations. The longer the rest of the world is in lockdown, the worse the economic effects are going to be for Māori. A large number of Māori entities are heavily invested in four areas of the economy that have taken massive hits this year: tourism, seafood, forestry, and international share markets. Three of these mainstays of Māori economic wealth employ a large number of Māori. And as the job losses mount, millions upon millions around the world, week by week, it is becoming increasingly clear that we cannot simply just restart the economy after we emerge from lockdown. We are going to have to almost completely rebuild it.

Too many Māori organisations are going to be hurting due to a lack of diversification in their balance sheets. Sometime in the past 25 years we decided that Māori should be property developers, investment managers, and commodity traders. Too few have invested in high value or value add food production. Far too few have invested in industries that employ Māori. Our iwi should be the major employer of Māori throughout Aotearoa. We should be the major food producers. We should be the major investors in new, innovative technology. Our ancestors were entrepreneurs, they were traders, and most importantly they ensured that everyone within their communities was an active and supported member of that community. We built flour mills and owned trading ships. We cultivated food and flax to feed a nation and to support an empire. Our traditions and our tikanga show us the path forward.

Our economic system is called capitalism for a reason. It prioritises the interests of capital above all else. Māori operated for a thousand years according to tikanga – doing what was considered the correct thing for the community. It was a predominately local but still interconnected economic model. Communities functioned when everyone had a role and everyone was cared for. Trade occurred around actual resources to meet the needs of communities. Today’s economic system of micro trades, futures, derivatives, and currency speculation are a long way removed from the tangible goods that a community requires in order to survive and to thrive. Our economy, any economy, is a function of capital and labour. A strong, functioning economy requires both to strive. Yet for far too long we have prioritised the interests of the capital class at the expense of labour. The accumulation of wealth is revered and rewarded by our capitalist power structures ignoring the simple fact that such accumulation can only occur through the exploitation of labour.

Take, for example, the wage subsidy scheme. A wage subsidy serves the interest of the capitalist class. It provides them breathing room to carry on exploiting labour once the lockdown is over. A universal basic income, on the other hand, protects labour. It puts the power in the hands of the 99%. It ensures that economic agency belongs to people and not the businesses that employ them and the owners that profit from that labour. While the billionaire class hide out in their custom built bunkers around New Zealand, the essential workers – those on minimum wage who many in the business community did not want to give a pay rise to on April 1 – go to work. When we come out of lockdown we cannot forget this. We cannot go back to business as usual. The United States responded to the Great Depression with A New Deal, post-war Europe received the Marshall Plan. Times of economic crisis highlight inequalities that were previously ignored and present an opportunity to redress these inequalities.

The human toll of Covid-19 is already beyond what we can comprehend and is devastating communities around the world. Let’s not compound this by restoring a broken economic model that will add further pain to already hurting communities.

Joshua Hitchcock (Te Ātiawa) is a business advisor, accountant, and writer on Māori law, policy and economic development.

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