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Professor Roger Bowden

The Iwi Tax is Upon Us

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The worrying thing about being an economist is that every decision becomes an economic decision. It causes paralytic seizures every time I step into a shop. Just ask the wife.

But just occasionally, it does give you a socially useful perspective. Forget carbon and the ETS, foreign ownership, or mining the conservation estate. The Government is slipping something under the radar with much more damaging long term economic and social fallout. The draft ‘Marine and Coastal Area (Takutai Moana) Bill’ has now been tabled for a first reading in Parliament.

The revised Act (FSII) is a stunning reversal of economic agency, which in this context means that an elected government is the implied agent of those who put it into power. To be sure, it always has to be flexible agency, one that can adapt to changing circumstances. But there has to be extended consultation if so.

In the present context, the Foreshore and Seabed Act 2010 will effectively have the status of a constitutional change for the country. The Bill satisfies two of the classical tests for an uncodified constitution such as New Zealand’s: it creates property rights, and it cannot be easily reversed.

For this reason alone, rushing it through to preserve a parliamentary majority is an agency breach at its most destructive. It’s a fair guess that a large number of National Party voters would be very unhappy if they realised the full implications of the Bill; and possibly already are, given the self selection bias in political polling. ‘Policy inconsistency’ is another polite name for an agency failure of this kind.

Much of the supporter stress would be emotional in character. For those of us who elected to come back to NZ after the big OE, full public ownership of the foreshore was a given, in welcome contrast to being shut out of beaches in the Greek islands, or asked to pay for access.

Under the proposed Act, ‘customary title’ abrogates public title, no matter how things are dressed up. Now somebody will eventually own significant tracts of the foreshore and seabed; and a minority group at that, with no specific Treaty claim to back it.

That is a body blow to the emotional pull to return for men and women of experience and ability. New Zealand’s economic development needs human capital. Our universities are already looking like academic remainder sales. Likewise, we need to repatriate scientists, professionals and entrepreneurs. There is a difference between creating wealth, on the one hand, and simply redistributing it, which is what FS II is all about. We will become a nation of talented expatriates.

Then there’s taxation, which comes in several flavours. Under the proposed Act and its veto provision, iwi and hapu owners will not have to develop sand mines, wave or tide turbines, drill offshore oil wells, or run whale watching concessions; they can simply levy a fee to allow others to do it. The polite economic name for that is a resource rent tax.

Likewise, the ancient concept of kaitiakitanga, dating as far back as 1991, now extends over the entire coastline, inter alia allowing banning of recreational fishing for cultural reasons. The required policing and co-management can be regarded as a form of professional capture, a form of taxation because it needs to be specially funded, over and above Doc or local authority votes. The iwi tax is here at last.

Just how all this has been accomplished with so little apparent public fuss is itself economics. The key is the moving frame of reference, a concept the behavioural economists pinched from the psychologists. If you want to make big changes, do it in smaller stages. As the disadvantaged party adjusts to the new benchmark, each further concession looks to be minor. That applies on all levels where the history of race based economic redistribution is concerned, the large and the small, long and short.

We’ve seen an instance of it even this year. The FS II was sold as ‘nobody owns’ – and free public access, though to do just what was unspecified. Then it’s changed to ‘somebody owns, but the rest of us can visit’; not necessarily for free, it seems. And inevitably, the qualifying rules for iwi and hapu customary title will be successively relaxed over time, locking up more of the coastline and possibly even the full 200 mile territorial interest. Maori are already flagging revisions of this kind, post the next election and the likely coalitional outcome.

Economists do write about grubby politics, with classics such as Anthony Down’s 1957 book An economic theory of democracy. But I’ll leave it to the reader to apply reality tests as to why FS II is being been rushed through so precipitately.

Likewise, there are no prizes for guessing why the official Labour opposition has been so oleaginously submissive. Was this the same party that created the FS I, the only socially stable outcome to the ongoing games of economic control for the nation’s last frontier? Come back, Helen, mea culpa. I’ll vote for you next time.