The Māori economy continues to grow, while employment drops and home ownership remains a distant dream for many. Business advisor Joshua Hitchcock explains the disconnect.

The Māori economy is now worth almost $70 billion. That was the headline figure of Te Ōhanga Māori 2018-The Māori Economy Report 2018 recently released by BERL (Business and Economic Research Limited) and the Reserve Bank. On the surface it’s a large number and represents a significant increase from the estimated $50bn in 2013.

But dig beneath the headlines and the reality of the inequalities in our economic system are laid bare in a report that should be a wake up call to policy makers. The Māori economy is growing, becoming more diverse, and becoming more integrated with the overall New Zealand economy. Yet, systemic issues remain. Māori unemployment remains stubbornly high, the proportion of GDP attributable to Māori enterprise is well below equitable levels, and deep inequalities in household net savings and home ownership rates are making it harder for whānau to make ends meet. The economic impacts of Covid-19 on the New Zealand economy is adding to these challenges, with recent data suggesting that the negative effects of 2020’s crisis is being felt by Māori and other minority communities more than it is by Pākehā communities in New Zealand.

There are plenty of positives to take from this updated view of the Māori economy. First, as the report notes, Māori are, and will continue to be, a rising proportion of the New Zealand workforce. There are more Māori employed, more high skilled Māori employed, and large numbers of skilled Māori moving into entrepreneurship and SME ownership – with the number of self-employed Māori increasing by 25% between 2013 and 2018. These 18,600 self-employed Māori collectively contribute $8.6bn of wealth towards the Māori economy. Second, the report notes the encouraging trend of diversification in the Māori economy. Gone are the days of over-reliance on the primary sector. Increasing diversification, primarily into commercial real estate, food production, transport and construction is serving to reduce risk within, and increase the resilience of, the overall Māori economy.

BERL makes a strong case in their report for a more holistic view of the economy to be adopted – one that incorporates the notion of people, planet, and profit. The report highlights the large non-financial contribution that Māori make to New Zealand society through community engagement, whānau care, unpaid voluntary work, and the greater role that Māori organisations are taking in the provision of social care towards members of their communities. And so, while the first half of this snapshot of the Māori economy tells the story of an economy that is growing, that is increasingly sophisticated, and that is primarily being driven by Māori-owned businesses and self-employed Māori, the second half highlights the multiple systemic failings in our economic system that continue to entrench the inequality between Māori and Pākehā.

In terms of GDP, Māori, who make up 17% of our population, earn only 8.6% of our nation’s income. The effect of this is to leave Māori, collectively, $21bn out of pocket each year. With lower incomes comes lower savings and this aspect of the report highlighted one of the most glaring inequalities in the New Zealand economy: New Zealand has a massive household savings problem. Collectively, we have net savings of negative $14.8bn – a massive $9bn of this, a full 60% of the total, is attributable to Māori households. This is a problem generations in the making. It is the result of the loss of the productive land base of Māori following colonisation, the persistently high Māori unemployment rate, and the low incomes earned by Māori due to a system that forced us into low-wage labour intensive jobs for over a century.

Home ownership, a hot topic in recent months, continues to be little more than a dream for the majority of Māori. Only 47.5% of Māori households own their own home, compared to an overall rate of 64.5% across New Zealand. The situation is particularly dire in Tāmaki Makaurau, home to the largest Māori population in New Zealand and where only 42% of Māori households own their own homes. The effect of the majority of Māori households renting is to further entrench the transfer of wealth from Māori to Pākehā. If there is one overarching theme of New Zealand’s economy since 1840 it is that the entire system has been designed to take wealth from Māori for the benefit and enrichment of Pākehā.

It will be several years for the full impact of the economic crisis that arose due to Covid-19 to be recognised, in New Zealand and globally. Yet the data being released does not show encouraging signs for Māori, nor for other minority communities in New Zealand. Unemployment figures released this week by Stats NZ show that while the overall unemployment rate has fallen to 4.9% it has increased for Māori (9%), Pasifika (9.6%) and Asian (5.2%) communities in New Zealand. The Pākehā unemployment rate is the main beneficiary, falling from 4.3% to 3.7%. This is what economists refers to as a K-shaped recovery – a recovery where the economy is essentially split into two and one part recovers and the other stagnates or declines. The Covid Response and Recovery Fund, while desperately needed, also allocated $50bn to further entrench an already unequal and unfair economic system.

We need a more equal and a more just economic system. One that works for Māori just as it works for Pākeha. One that works for those at the bottom as much as it works for those creaming if from the top. One that stops the vast transfer of wealth from poor households to wealthy capitalists. Because, as it turns out, hard work is not what makes someone wealthy. A system rigged in your favour does.