Why tribal tax breaks?
Publicly, the newly wealthy tribal corporations are lauded for contributing to the economy, but these entities pay little tax because they trade as charities.
Before 2003, charity law expressly prohibited charitable status to organisations where membership was exclusive to people with certain blood ties.
However, amendments to the Charities Act [s5(2)] meant that from April 1, 2003, any organisation that administers a marae situated on a Maori reservation may qualify for an income tax exemption as a charity, as long as it uses it’s funds to administer and maintain the marae’s physical structure and land, or for charitable purposes.
Treaty settlements are not taxed. Settlement assets go to the post-settlement governance entity which may claim charitable status, exempting their business from income tax.
Tax (when payable) on Maori authority dividends is deducted at a rate of 17.5 percent rather than the normal dividend rate of 33 percent.
For example, South Island tribe Ngai Tahu announced a net worth of $1.147 billion in its 2014 report. Their tax free income (ignoring the Australian subsidiary income) is $157 million. (1)
The tribe paid no tax on its New Zealand business operations, and distributed $6.5 million to runanga. No tax is attached to these distributions, as would be on dividends distributed to shareholders in non-charitable trading companies, which is at 33 percent.
The report also showed that some 44 directors and key management personnel have received over $5 million in short-term compensation and benefits. The number of employees being paid over $100,000 has increased to 92. Collectively they earn in the region of $20 million, with the top income earner receiving between $820,000 and $829,000. (2)
This tax-exemption gives a substantial competitive advantage.
For instance, Ngai Tahu and Waikato-Tainui jointly own bus company Go-Bus. The tax advantage arguably enabled Go Bus to undercut other bus companies in bidding successfully for contracts in Hawke’s Bay and Auckland.
The seriously flawed way in which we tax the business activities of charities in New Zealand, including those other than tribal charities, leads to those who have received assets under the Treaty settlement process running very substantial businesses without paying tax.
This leads to those iwi-based businesses having a very substantial advantage over other businesses.
Former National Party leader Don Brash suggested one way to make the tax treatment of tribal businesses more equitable would be “to make the payment to the shareholding charity a deductible payment and then have them pay tax as any other company would, on what is left.” (3)
- Ngai Tahu Annual Report 2014.
- Manipulating charities, Dr Muriel Newman. NZCPR, October 19, 2014.
- Super-rich tribes pay no tax, Waikato Times, June 11, 2011.
Treaty did not establish any “principles”
Hobson’s Pledge is clear that the Treaty of Waitangi did not establish any “principles” and all references to such “principles” should be removed from legislation.
Although the “principles” of the Treaty of Waitangi were referred to in the Treaty of Waitangi Act 1975, no one knew what they actually were – that was until the Appeal Court president, Justice Robin Cooke, created a summary for the 1987 New Zealand Maori Council v Attorney General decision. Cooke’s six principles were:
- ‘[T]he Queen was to govern and the Maori were to be her subjects; in return their Chieftainship and possessions were to be protected, but . . . sales of the land to the Crown could be negotiated.’
- Because there was some inevitable potential conflict between those principles, both parties had a duty ‘to act reasonably and with the utmost good faith’ towards one another.
- The principles of the treaty do not authorise unreasonable restrictions on the right of a duly elected government to follow its chosen policy.
- The Crown assumed a duty of protection towards Maori: ‘the duty is not passive but extends to active protection of Maori people in the use of their lands and waters to the fullest extent practicable.’
- The Crown has a duty to remedy past breaches: ‘the Crown should grant at least some form of redress, unless there are good grounds justifying a reasonable Treaty partner in withholding it – which would only be in very special circumstances, if ever.’
- The Crown had an obligation to consult with Maori in the exercise of kawanatanga. Justice Cooke was guarded, however, as to the practical extent of that obligation.
The Labour Government created its own set of Treaty principles. Justice Minister Geoffrey Palmer had a Treaty unit set up within the Justice Department create a 15-page booklet titled The Principles for Crown Action on the Treaty of Waitangi that was adopted by Cabinet and published on July 4, 1989.
More principles were to appear. They included:
- NZ Maori Council to Court of Appeal 1987 – 10 principles
- Crown to Court of Appeal 1987 – 5 principles
- Waitangi Tribunal 1983-1988 – 12 principles
Tribunal must go
Hobson’s Pledge says that there is no longer any need for the Waitangi Tribunal. There are at least seven reasons why the Waitangi Tribunal should be abolished.
- A permanent, for-Maori-only complaint body creates a race fault line. This conflicts with an underlying simple principle that in a democracy like New Zealand all citizens must be treated the same under the law.
- The tribunal rewrites history. This re-written history that deplores wicked white colonisers for all manner of alleged crimes is posted on the Waitangi Tribunal website and is used as an indoctrination tool to convince us that “Maori” are owed an immense debt that can never be repaid.
- The tribunal is biased. By the early 1990s, the tribunal became advocates for claimants rather than independent assessors on the claims put before them. For instance, try to recall any instance in which the tribunal decided in favour of the Crown.
- Tribunal recommendations have undermined private property rights. The Treaty of Waitangi Act was amended in 1993. Amendment (4A) says “the tribunal shall not recommend … (a) the return to Maori ownership of any private land; or (b) the acquisition by the Crown of any private land.” Nevertheless, demands for the right to claim against private land persist.
- The tribunal was promoted as an avenue for Maori to air grievances rather than resorting to protest action. But protest has increased. Waitangi Day protests became an annual event. The size of protests have increased. The 1975 land march brought 5000 protestors to the steps of parliament, yet the 2004 foreshore and seabed hikoi brought 15,000 protestors.
- The tribunal has created a “gravy train”. The government employs more than 120 to operate the Waitangi Tribunal and Office of Treaty Settlements. Hearings are awash with lawyers, most on legal aid, which provided $79 million from 2006 to 2012. The 2008 “Treelords” settlement racked up $60 million in fees and expenses in the deal which transferred ownership of central North Island forests to eight tribes. The top-earning “treaty negotiator” pocketed $1.5 million for work on 20 settlements.
- The tribunal is used to extract benefits for tribal interests. Tribal opportunists will take a claim to the tribunal knowing they will get a favourable report. Next step is the High Court, the Appeal Court, and then the Supreme Court. Claimants will repeat their outrageous claim until it is seen as fact. The claim does not have to succeed. At any point the government could grant a concession to make the claim go away.
Dr Michael Bassett, himself a member of the Fourth Labour Government, one of New Zealand’s foremost historians, and a former member of the Waitangi Tribunal, noted in 2004 that: “It is surely time to re-examine the tribunal’s usefulness. The captivity of crusading historians and those who have built careers out of sowing, then farming, grievances, the current body has passed its sell-by date. There is enough evidence to settle all outstanding historical grievances quickly. That process should be completed. What the future relevance of the treaty might then be requires further public debate. That issue involves all of us, not just the Waitangi industry’s vested interests.” (1)
A Consumerlink email survey in 2012 showed that of the 1031 people who responded, 68 percent favoured abolition of the Waitangi Tribunal.
The Waitangi Tribunal could be abolished by repealing Sections 4 – 8 of the Treaty of Waitangi Act 1975. Any final historic settlements that are still in the pipeline could be negotiated directly with the Crown, which is often what is happening anyway.
- Time to ditch the tribunal, Dominion, September 14, 2004.
The Treaty of Waitangi and us
The first four core beliefs set out on our Homepage of this website are to do with the Treaty of Waitangi. Our beliefs are that:
- All New Zealanders should have the same rights, irrespective of when they or their ancestors arrived in New Zealand.
- The Treaty of Waitangi is not in any meaningful sense New Zealand’s constitution.
- The Treaty did, however, establish three important points, namely that: a. in signing the treaty, chiefs ceded sovereignty to the Crown; b. that in turn the Crown would protect the property rights of all New Zealanders; and c. that “tangata maori” would enjoy the rights and privileges of British subjects.
- The Treaty of Waitangi did not create a “partnership” between Maori and the Crown.
This article gives a brief background to clarify the complicated issues surrounding the Treaty of Waitangi. We reproduce its three key texts, and show that all the Treaty actually says is that the Queen is sovereign and Maori are her subjects, with the rights of subjects, including the right to possess property.
A total of 512 chiefs, including 13 women, signed the nine copies of the Treaty at 34 locations around New Zealand between 6 February and 17 June 1840. The documents signed were written in the Maori language.
At the time, New Zealand was still part of New South Wales. It wasn’t until November 16, 1840, when the Letters Patent (commonly known as the Charter of 1840) was signed by the Queen, that New Zealand became an independent British colony.
The only signing at which an English text was incorporated was at Waikato Heads mission station on 11 April 1840. Five chiefs signed an A4-sized printed Maori text which was attached to an English text written on a large sheet of paper, and this large sheet was signed by a further 39 chiefs.
The larger piece of paper that had a Treaty text in English on it with a wobbly signature by Governor William Hobson, appears to have been used solely to collect the 39 chiefly signatures. These two texts were separated at some time and the English text was taken to be the official English text.
Problems associated with understanding the Treaty are 1. Differences between the official English text and Te Tiriti, and 2. The translation of the words “sovereignty” and “ownership”.
- Differences between the official English text and Te Tiriti, involving the inclusion in article 2 of the untranslatable word “pre-emption” as well as the words “lands and estates forests fisheries”, indicate that Te Tiriti was not translated from the official English text. These differences also mean that the official English text was not translated from Te Tiriti. This means there is an original draft in English that is not being used by the treaty industry, for whatever reason.
- The Treaty was drafted in English and translated into Maori. The word “sovereignty” in article 1 of the original Treaty draft was translated into “kawanatanga” in Te Tiriti, and the word “ownership” in article 2 was translated as “rangatiratanga”.
At 568 words, the official English text is much wordier than the 480-word Te Tiriti. The differences between the two texts led scholars to conclude that the final draft of the treaty in English had gone missing.
The apparent differences between the English and Maori texts and the use of the words “kawanatanga” and “rangatiratanga” remained uncontroversial until 1983, when the Waitangi Tribunal looked into claims by Te Atiawa about the discharge of untreated sewage at Motunui in Taranaki. The Motunui report rediscovered the Maori language text of the Treaty.
A new back-translation of Te Tiriti by Waitangi Tribunal member and Ngati Whatua claimant Sir Hugh Kawharu redefined “kawanatanga” as “government” and “rangatiratanga” as “chiefly authority”
This created a Treaty that claimants say gave the Governor limited authority to govern British settlers only while chiefs could carry on being chiefs, retaining the right to govern themselves.
A further development occurred in 1989 with the discovery by the Littlewood family of a handwritten 386-word document in an envelope marked “Treaty of Waitangi”. Analysis confirmed that:
- The paper was manufactured prior to the treaty signing, having a W. Tucker 1833 watermark on it.
- The handwriting was confirmed by National Archives treaty researcher Dr Phil Parkinson in 2000 as being that of British Resident James Busby.
- In an official appraisal in 2006, historian Donald Loveridge said that the Littlewood text was either a back translation of the Maori text of the treaty or it was a copy of the missing final draft.
There is just one word that differentiates the Busby February 4 1840 Littlewood text from Te Tiriti and that is the inclusion of the word “maori” yes, lower case “m”, in article 3 to clarify that the ordinary people of New Zealand would be protected by the Queen and be granted the rights and privileges of British subjects.
In 1840, the word “maori” meant “ordinary”. It was only after 1850 did “Maori” refer to a distinctive group of people.
It is helpful to publish the English and Maori texts in sequence for comparison, starting with the Busby February 4, 1840, draft, followed by Te Tiriti and the so-called “official English text”, both of which are appended to legislation.
Busby’s 4 February 1840 draft (the Littlewood treaty)
Her Majesty Victoria, Queen of England in her gracious consideration for the chiefs and people of New Zealand, and her desire to preserve them their land and to maintain peace and order amongst them, has been pleased to appoint an officer to treat with them for the cession of the Sovreignty [sic] of their country and of the islands adjacent to the Queen. Seeing that already many of Her Majesty’s subjects have already settled in the country and are constantly arriving: And that it is desirable for their protection as well as the protection of the natives to establish a government amongst them.
Her Majesty has accordingly been pleased to appoint me William Hobson a captain in the Royal Navy to be Governor of such parts of New Zealand as may now or hereafter be ceded to Her Majesty and proposes to the chiefs of the Confederation of United Tribes of New Zealand and the other chiefs to agree to the following articles.-
The chiefs of the Confederation of the United Tribes and the other chiefs who have not joined the confederation, cede to the Queen of England for ever the entire Sovreignty [sic] of their country.
The Queen of England confirms and guarantees to the chiefs and the tribes and to all the people of New Zealand, the possession of their lands, dwellings and all their property. But the chiefs of the Confederation of United Tribes and the other chiefs grant to the Queen, the exclusive rights of purchasing such lands as the proprietors thereof may be disposed to sell at such prices as may be agreed upon between them and the person appointed by the Queen to purchase from them.
In return for the cession of their Sovreignty [sic] to the Queen, the people of New Zealand shall be protected by the Queen of England and the rights and privileges of British subjects will be granted to them.
Signed, William Hobson
Consul and Lieut. Governor.
Now we the chiefs of the Confederation of United Tribes of New Zealand assembled at Waitangi, and we the other tribes of New Zealand, having understood the meaning of these articles, accept them and agree to them all. In witness whereof our names or marks are affixed. Done at Waitangi on the 4th of February, 1840.
Te Tiriti o Waitangi Maori language translation
KO WIKITORIA te Kuini o Ingarani i tana mahara atawai ki nga Rangatira me nga Hapu o Nu Tirani i tana hiahia hoki kia tohungia ki a ratou o ratou rangatiratanga me to ratou wenua, a kia mau tonu hoki te Rongo ki a ratou me te Atanoho hoki kua wakaaro ia he mea tika kia tukua mai tetahi Rangatira – hei kai wakarite ki nga Tangata maori o Nu Tirani – kia wakaaetia e nga Rangatira maori te Kawanatanga o te Kuini ki nga wahikatoa o te wenua nei me nga motu – na te mea hoki he tokomaha ke nga tangata o tona Iwi Kua noho ki tenei wenua, a e haere mai nei.
Na ko te Kuini e hiahia ana kia wakaritea te Kawanatanga kia kaua ai nga kino e puta mai ki te tangata Maori ki te Pakeha e noho ture kore ana. Na kua pai te Kuini kia tukua a hau a Wiremu Hopihona he Kapitana i te Roiara Nawi hei Kawana mo nga wahi katoa o Nu Tirani e tukua aianei amua atu ki te Kuini, e mea atu ana ia ki nga Rangatira o te wakaminenga o nga hapu o Nu Tirani me era Rangatira atu enei ture ka korerotia nei.
Ko te tuatahi
Ko nga Rangatira o te wakaminenga me nga Rangatira katoa hoki ki hai i uru ki taua wakaminenga ka tuku rawa atu ki te Kuini o Ingarani ake tonu atu – te Kawanatanga katoa o o ratou wenua.
Ko te tuarua
Ko te Kuini o Ingarani ka wakarite ka wakaae ki nga Rangitira ki nga hapu – ki nga tangata katoa o Nu Tirani te tino rangatiratanga o o ratou wenua o ratou kainga me o ratou taonga katoa. Otiia ko nga Rangatira o te wakaminenga me nga Rangatira katoa atu ka tuku ki te Kuini te hokonga o era wahi wenua e pai ai te tangata nona te Wenua – ki te ritenga o te utu e wakaritea ai e ratou ko te kai hoko e meatia nei e te Kuini hei kai hoko mona.
Ko te tuatoru
Hei wakaritenga mai hoki tenei mo te wakaaetanga ki te Kawanatanga o te Kuini – Ka tiakina e te Kuini o Ingarani nga tangata maori katoa o Nu Tirani ka tukua ki a ratou nga tikanga katoa rite tahi ki ana mea ki nga tangata o Ingarani.
(signed) William Hobson, Consul and Lieutenant-Governor.
Na ko matou ko nga Rangatira o te Wakaminenga o nga hapu o Nu Tirani ka huihui nei ki Waitangi ko matou hoki ko nga Rangatira o Nu Tirani ka kite nei i te ritenga o enei kupu, ka tangohia ka wakaaetia katoatia e matou, koia ka tohungia ai o matou ingoa o matou tohu.
Ka meatia tenei ki Waitangi i te ono o nga ra o Pepueri i te tau kotahi mano, e waru rau e wa te kau o to tatou Ariki.
The single variation between the Littlewood and Maori texts is the addition of the word “maori” in article 3, to clarify that the ordinary people of New Zealand, not just the chiefs, would be protected and be granted the rights and privileges of British subjects.
The “official” English text
HER MAJESTY VICTORIA Queen of the United Kingdom of Great Britain and Ireland regarding with Her Royal Favour the Native Chiefs and Tribes of New Zealand and anxious to protect their just Rights and Property and to secure to them the enjoyment of Peace and Good Order has deemed it necessary in consequence of the great number of Her Majesty’s Subjects who have already settled in New Zealand and the rapid extension of Emigration both from Europe and Australia which is still in progress to constitute and appoint a functionary properly authorized to treat with the Aborigines of New Zealand for the recognition of Her Majesty’s Sovereign authority over the whole or any part of those islands – Her Majesty therefore being desirous to establish a settled form of Civil Government with a view to avert the evil consequences which must result from the absence of the necessary Laws and Institutions alike to the native population and to Her subjects has been graciously pleased to empower and to authorize me William Hobson a Captain in Her Majesty’s Royal Navy Consul and Lieutenant Governor of such parts of New Zealand as may be or hereafter shall be ceded to her Majesty to invite the confederated and independent Chiefs of New Zealand to concur in the following Articles and Conditions.
Article the First
The Chiefs of the Confederation of the United Tribes of New Zealand and the separate and independent Chiefs who have not become members of the Confederation cede to Her Majesty the Queen of England absolutely and without reservation all the rights and powers of Sovereignty which the said Confederation or Individual Chiefs respectively exercise or possess, or may be supposed to exercise or to possess over their respective Territories as the sole Sovereigns thereof.
Article the Second
Her Majesty the Queen of England confirms and guarantees to the Chiefs and Tribes of New Zealand and to the respective families and individuals thereof the full exclusive and undisturbed possession of their Lands and Estates Forests Fisheries and other properties which they may collectively or individually possess so long as it is their wish and desire to retain the same in their possession; but the Chiefs of the United Tribes and the individual Chiefs yield to Her Majesty the exclusive right of Pre-emption over such lands as the proprietors thereof may be disposed to alienate at such prices as may be agreed upon between the respective Proprietors and persons appointed by Her Majesty to treat with them in that behalf.
Article the Third
In consideration thereof Her Majesty the Queen of England extends to the Natives of New Zealand Her royal protection and imparts to them all the Rights and Privileges of British Subjects.
Now therefore We the Chiefs of the Confederation of the United Tribes of New Zealand being assembled in Congress at Victoria in Waitangi and We the Separate and Independent Chiefs of New Zealand claiming authority over the Tribes and Territories which are specified after our respective names, having been made fully to understand the Provisions of the foregoing Treaty, accept and enter into the same in the full spirit and meaning thereof: in witness of which we have attached our signatures or marks at the places and the dates respectively specified.
Done at Waitangi this Sixth day of February in the year of Our Lord One thousand eight hundred and forty.
Governor Hobson’s secretary James Stuart Freeman sent this version to the New South Wales Governor Sir George Gipps on 8 February, and sent a further “certified copy” composite version, with three printed Maori copies, to Gipps on 21 February.
Sharp-eyed readers will note that, strictly speaking, the official English text was not “done at Waitangi this Sixth day of February”, as the postscript reads, because the only treaty signed that day was the Maori text.
Great Britain’s vast empire in the 19th century brought contact with “natives” in numerous regions around the world. Enlightened attitudes in London on the rights of such inhabitants led to the practice of arranging treaties of cession rather than simply taking over the country by force.
The Treaty of Waitangi in New Zealand resulted from a number of drafts in which a standard treaty format was adapted to suit the New Zealand situation.
The high-sounding “official English text” taken from the first schedule to the Treaty of Waitangi Act 1975 resembles the rough draft notes of Busby’s rejected 3 February draft, which omitted a reference in Article 2 to “all the people of New Zealand”.
Because the Treaty was drafted in English and translated into Maori, the meaning and intent of the Treaty is clearly apparent in the English source document.
This means that there is no need for the Waitangi Tribunal to interpret the treaty for us.
The treaty agreement is simple. Through article 1, the chiefs ceded sovereignty to the British Queen. Article 2 guaranteed to the chiefs, tribes and people of New Zealand that they owned what they owned and could sell what they owned to an agent of the Queen if they so wished. Article 3 confirmed that the ordinary people of New Zealand would be protected and would gain the rights of British subjects.
The scope of the Treaty is too narrow to be regarded as New Zealand’s constitution. A constitution is a body of established precedents according to which a state is acknowledged to be governed. The Treaty only concerns the cession of sovereignty and confirmation of the rights, as British subjects in the 19th century, which includes the right to possess property
And finally, the Treaty has no mention of any partnership between “Maori” and “the Crown”. None of the three texts has anything that could be construed to mean “partnership”.
 The “Littlewood Treaty”: An Appraisal of Texts and Interpretations, Dr. Donald M. Loveridge, Wellington, 2006. http://www.victoria.ac.nz/stout-centre/research-units/towru/Publications/Loveridge-Littlewood-1May2006.pdf