Limited Partnerships Bill

Tena koe; tena tatou katoa

Hei wawahi i a tatou korero i tenei po ka huri nga whakaaro ki Ngaruawahia, ki Turangawaewae ki nga mahi o te rangi whakahirahira ara, ki te potaetanga o te Kingi Hou a Kingi Tuheitia. E te Kingi, Tu mai, tu mai, tu mai.

I want to commence my talk tonight by turning to acknowledge the coronation of the King and I want to pay my respects.

Ko koe tenei, e whai nei i nga tapuwae o nga hunga ka ngaro i te po.

Ko tau he whakakotahi i te iwi, e te Kingi, Tu mai, tu mai, tu mai.

Tuheitia, a King you follow in the footsteps of our illustrious ancestors. Yours is to unite the people.

The Limited Partnerships Bill.

I did wonder at first, Madam Speaker, with the nature of this title, whether we were talking about something very dear to my heart – Te Tiriti o Waitangi.

I think about the numerous parliamentary petitions, court cases, Tribunal findings; pilgrimages to Buckingham Palace; Court of Appeal hearings; and private members Bills that have emerged, which remind us that the Treaty partnership is indeed a limited one.

For sure Madam Speaker, fore shore.

You see a Treaty partnership which honoured the commitment of its signatories, would have resulted in tangata whenua being self-determining in all that we do. My vision of an unlimited Treaty partnership would be seen in Maori having an economic base which is not restricted by the stranglehold of government dependency, but which enables us to manage our own resources in our own way.

I do have confidence, however, that the contribution Maori are making to the nation is demonstrated by a growing and flourishing Maori economy.

An economy which is generated out of our expanding asset base in fisheries, forestry and land-based businesses.

An economy in which over sixteen thousand Māori are in business.

An economy created by Maori, which the Global Entrepreneurship Monitor has confirmed are the world's third most entrepreneurial people as Mr Tanczos alluded to earlier.

And yet, Mr Speaker, it is an economy, I am told in which the Māori untapped employment potential is around $45 billion dollars.

An economy, in which Māori businesses are threatened by a lack of business expertise, financial skills and experience in acquiring capital - and particularly sustainable capital.

And that, Mr Speaker, is our key interest in this Bill.

We know that Maori business has become a major contributor to the New Zealand economy - and that everyone prospers from improvements which could assist Māori businesses to succeed.

As the saying does, what’s good for Māori is good for Aotearoa.

Limited Partnerships Model – will it be good for us?

This legislation sets up a new business structure - limited partnerships - which sets up an internationally recognised legal and tax structure through which venture capitalists can invest, meaning we can attract more foreign venture capital investment.



Much like a company, limited partners will provide investors with limited liability. The legislation sets it out so that limited partners are only liable for the debts and liabilities of the partnership to the extent of their contribution to that partnership.



Mr Speaker, another key aspect lies in the taxation structure, known as 'flow through tax status’, where the partnership itself is not taxed, but where each limited partner is taxed individually at their personal marginal rate in proportion to their share of the partnership's income.



So how can this be good for Māori?

It’s all to do with maintaining the momentum.

What we know is that Maori and non-Maori have a similar proportion of start-up. But where the difference is felt is in the ‘staying power’ of new businesses where currently non-Maori firms have it all over Māori as Mr Tanczos spoke about earlier.

While Maori are great at starting up businesses, only 37% of Maori entrepreneurial start-ups survive three-and-a-half years, compared to 62% in the general population.

If Aotearoa was to adopt a limited partnership structure consistent with international norms, businesses would be more able to access some of the 20-29 billion dollars that a recent survey predicts will be invested by venture capitalists in the United States in 2007.

Now some of our people would say, why on earth should Aotearoa open up opportunities for wealthy international investors to come in to our shores with their fat cheque books in their pockets?



We will be looking to the advice of these critics, to guide us as to the risks of overseas investors coming here to invest in return for shares, equity, a measure of control - even the possibility of removing the centre of control from outside of our shores, and away from the business owners themselves.



Mr Speaker, last year, Richard Jones, Chief Executive of Poutama Trust, discussed the potential for venture capital funding to help grow Maori businesses. While he noted that many Maori businesses are in need of capital, he warned that most Maori businesses would be too small to even get a look in.



He also warned that such capital comes at a price, stating that

"they will want to have a stake in the business, as well as some control even to the point of running it, so investment of this nature is not for the faint hearted”.



But we are keen to hear from others involved in Maori Business – fainthearted or not - and the investment industry, to learn whether there are opportunities that limited partnerships, and the access to venture capital investment it facilitates, may provide. As they say, where’s there’s a will, there’s a way, and if there’s one thing that Maori businesses show us, it is in that will to succeed.

The challenge we have always faced in any business ventures we were involved in was the ability to gain long-term sustainable investment - on our terms - which would provide the genuine capital to support our ideas.

Sure Te Puni Kokiri funding is limited to engagement funding - facilitating networks - but it was always insufficient to support the range of business ventures we were keen to explore.

The challenge for Māori Business operators is two - fold.

One must firstly attract investment by presenting a proposal which has sufficient credibility to convince genuine investors that the project will be sustainable and yield long-term results.

And the second factor, Mr Speaker, is that Māori business operators must have done the due diligence in the first place, to guarantee that risks have been analysed, to know the market, and the capacity of the investor to support their project in the long term.

Mr Speaker, one of the ironies of the Māori business sector in Aotearoa is that while Maori businesses are present right across the export and domestic spectrum there are serious shortfalls in their capacity to attract and achieve sustainable funding.

Māori businesses have told us in fact that in reality, there is often more likelihood of wealthy international investors being interested in their projects than our own local sources of funding.

The million dollar question of course, Mr Speaker, is to work out the basis for the allegation that New Zealand funders have a prejudice against Māori businesses in the first place.

What is the nature of the institutional racism that prevents domestic investors from investing in Māori business entrepreneurs in a way which will achieve long term, meaningful success?

Mr Speaker, I remind the House, of the urgent and pressing reality of our demographics.

By 2050, it is estimated half New Zealand's population will be brown. That means that with the right investment today, Maori and Pasifika businesses will play an integral role in the economic sustainability and strength of New Zealand's future.

While answers must be demanded as to why Māori businesses are not attracting local investment, we, the Māori Party, will support any initiative that can open doors for securing positive investment.

And so, Mr Speaker, we look to the new Limited Partnership business structure as ways of supporting Maori business start-up and expansion, and particularly to the high-tech developments favoured by venture capitalists – tele-communications, bio-technology, information technology and software developments.

Our people have a proven track-record for technological innovation and we need to be given every opportunity to develop our resources on our own terms and consistent with our tikanga.

Mr Speaker, what we will be looking for, however, is sufficient security in the legislation to safeguard investment. The last thing we want to see with this legislation, is that it opens up Aotearoa to rogue investors and a further plundering of our natural resources and Maori will do everything in our power to prevent it.



Mr Speaker, over recent weeks the nation has been grappling with social issues that critics and commentators have been ever so quick to label the Māori problem. But I wonder why it is that when outfits like Bridgecorp fail and many mums and dads lose their savings no ethnic group is identified with that failure –why is that I wonder?

As with those issues - the challenge I would put to the House, is to ask why is it that with the wealth of people development, innovation, technological strength and productivity demonstrated in Māori businesses, they are not receiving the investment funding that they should.

The demand for strategic investment in Māori small-medium size enterprises is heavy at start up, early stage development, expansion and on-going viability stages of business.

We celebrate our successes - our international reputation as formidable entrepreneurs - and we will look forward to the select committee stage to see if and how Māori businesses stand to prosper from the Limited Partnerships Bill.