Flavell Te UruroaHon TE URUROA FLAVELL (Minister for Māori Development): Tēnā koe Mr Chair. Kia ora tātou katoa. In light of tērā kōrero I thought it was appropriate to get up now and try to allay some of those issues. I probably may not but nevertheless I will have a go. Me pēnei pea te kī ki te tīmatanga kei te rongo ake i tō kōrero kei te rongo ake i te kōrero o tēnei o ngā tuāhine Marama Davidson. He kupu whakapāha anō hoki tāku ki a koutou mō te āhuatanga o tēnei whakatakoto kōrero. I pōhēhē nōku kua ea tērā āhuatanga ā ka mutu ēhara i te mea he kaupapa whakararuraru i te āhuatanga o ngā whakahaere ēngari me pēnā rawa ahau me tuku i taku kupu whakapāha ki a koutou katoa mō te āhuatanga o ngā whakahaere. Nō reira ka waiho tērā ki reira.[Let me express it like this: from the outset I hear what you are saying and what this one of the sisters Marama Davidson is also saying. I have an apology as well to you collectively about the manner in which this statement has been presented. I mistakenly thought that situation had been met and furthermore it is not as though it is a matter that poses problems in terms of proceedings but I really must do that and apologise to you all about procedures. So I leave that there.]I understand the issues that are raised and I offer my apology for the late tabling of the papers in my belief that it was taken care of. Certainly the second issue is that they are relatively minor but I hear the point and I hope to address that in this call if I can. The duty I do have however as a Minister is to respond to some of the issues that were raised in the second reading and indeed in the first reading and I want to do that first and in the second part come to the issues that the member for the Green Party Marama Davidson raised in particular about the ture whenua. The concerns have been raised in the discussion in respect of the purpose of the trust and the vision of the Wī Pere Trust and that the bill will have a negative impact on the trust and the beneficiaries. I tried to outline in my first call that the purpose and philosophy of the trust are unaffected by this bill. The core principles of the trust are reinforced to promote the benefit and the advancement of beneficiaries. The trust board must operate with the purpose of the trust to promote the benefit and advancement of beneficiaries. The trust board can exercise only prescribed functions and these are prescribed in new sections 10 to 16 of the bill—pages 8-11 if members want to follow that up. The bill basically positions the trust to operate more flexibly as they asked for into the future improving its governance and operational capability. The second concern that was raised was around the structure which will limit basically accountability to beneficiaries. Well there will be a new trust board structure for the trust and a constitution that emphasises a greater relationship of accountability of the trust board to the beneficiaries. The trust board's first constitution is set out in new schedule 1—on page 22 of the bill to help out. To support this new structure and the operational capability of the trust this bill removes ministerial—namely myself as Minister or rather the ministerial position—involvement with the trust. In respect of the land status and protections issues were raised about removing legislation that deems all land held or acquired by the trust to be Māori freehold land. New section 29 inserted by clause 9 of the bill—page 16 of the bill—provides that the land listed in the new schedule 2 is general land. The key change makes provision for general land that was converted to Māori freehold land on acquisition by the trust—and that is about 29 percent of the total land holdings—to revert back to general land status on commencement of the bill. So this change will provide again more flexibility for the trust and positions it to take hold of a wider variety of economic opportunities that might come its way. The new provisions do not change the requirement of the trust board to act in accordance with the trust's purpose and to undertake the prescribed function of the trust. That is really important. It is important to note too that the majority of the trust property—that is over two-thirds of it—will not be converted back to general land through the bill. So that is dealing with the issue about general land. I turn to issues about jurisdiction and that was raised I think by the member Meka Whaitiri's Supplementary Order Paper (SOP). Certainly concerns were raised about the risks of limiting the Māori Land Court jurisdiction and losing its protections. Specific concerns included cost implications for High Court filing and the loss of the Māori Land Court expertise. I can say that new section 5 inserted by clause 9 on page 6 of the bill provides that the trust board will be accountable to its beneficiaries under its constitution and will continue to be accountable under the Trustee Act 1956 and the amended Māori Purposes Act 1991. But for clarity the bill gives the High Court jurisdiction to determine any dispute relating to the administration and governance of the trust." So that is new section 5(2) if you like. Following on from that I need to say to the member Meka Whaitiri it is appropriate for the High Court to have jurisdiction over any dispute relating to administration and governance of the trust because the trust was not established under Te Ture Whenua Maori Act in 1993. That is important to say that it was set up under that regime. If I can just say that there were some concerns raised about the consultation—and I can say that from the information I have consultation started back in 2006 with more consultation in 2008 July 2013 and November 2013 and that a beneficiary-elected working party assisted the trust. So in a sense it is my belief that there has been full consultation with the trust. Finally the interface with Te Ture Whenua Māori Bill—it was queried as to why the bill and te ture whenua Māori reforms are separate. Collective land holdings in the proposed Te Ture Whenua Māori Bill and the approach to general land in the Māori Purposes Bill were contrasted. It was also stated that the bill should not be advanced prior to te ture whenua reforms. I need to say that the two bills have always been separate and deal with absolutely separate issues. The Māori Purposes Bill relates to a private trust with a particular track record on economic development and once the Māori Purposes Bill is enacted Te Ture Whenua Māori Bill will need to address consequential amendments. I will not go over the Māori Television one because I think that is just straight out and out. The fact is that there is going to be an entity that is going to stop and this is about dealing with that. In respect of Supplementary Order Paper 233 dealing with Te Rarawa again that was about dealing with an administrative detail that actually has not been dealt with and basically Te Rarawa has been disadvantaged because of that. That was about trying to fix that up. I want to turn to Te Ture Whenua Maori Act and the points raised by Marama Davidson. An amendment to Te Ture Whenua Maori Act 1993 is sought in SOP 232 to remove an inequitable financial reporting requirement for Māori incorporations and I will try to explain. The financial reporting requirements for Māori incorporations prescribed under Te Ture Whenua Maori Act 1993 were amended by the Financial Reporting (Amendments to Other Enactments) Act 2013. All Māori incorporations are now required to be audited to comply with generally accepted accounting practice and I understand the acronym is GAAP. This is a very high financial reporting standard for many incorporations which creates additional cost. It creates an inequity with companies as only large companies are required to comply with these standards under the Companies Act 1993. It also creates a significantly higher reporting burden for Māori incorporations compared with other Māori land entities. A legislative amendment is proposed to section 276A of Te Ture Whenua Maori Act 1993—the old Act—that will limit the GAAP of financial reporting requirements to large Māori incorporations. Under this approach—and here is the key—Māori incorporations that have a total revenue valued over $10 million in each of the 2 preceding financial years will continue to be required to meet the GAAP requirements and therefore they come under some financial burden. Māori incorporations that have less than a total revenue of $10 million in each of the 2 preceding financial years will be required to prepare financial statements that provide a full true and complete account of the transactions and financial position of the incorporation. So for those entities it will be up to the shareholders to determine whether an audit is required. The solution is urgently required because Māori incorporations are at risk of non-compliance for the financial years that ended in 2015 and 2016. Accountants and auditors are also at risk of not complying with their professional responsibilities and obligations as members of Chartered Accountants Australia and New Zealand. So this proposed Supplementary Order Paper is about dealing with the financial years beginning on and after these provisions come into force. It is about dealing with that. That is the background to it. That is how we got here and it is because those incorporations are going to be lumbered—and are lumbered right now unless we fix it up—with a larger financial burden. It is through no fault of their own. It was simply that it was overlooked in the past and this is an attempt to fix it."