The Reserve Bank’s Difficult Relationship with the Maori Economy
NOTICE: I was delighted to read a speech by Christian Hawkesby, Assistant Governor of the Reserve Bank, on the topic of Maori values. He stated:
“For generations, Maori economic relations have been guided by fundamental principles like manaakitanga (respect and generosity), kaitiakitanga (guardianship), and whanaungatanga (relationships).”
It was not clear from the speech whether the bank is going to embrace these values or if it is just defending them to its audience, the Institute of Directors, but whether the bank intends to embrace them, well, our central bank. a little hard mahi in front of her.
Let’s start with kaitiakitanga (guardianship). Under the current governor, the value of our currency has been degraded by a massive printing program which is recklessly unsustainable. The main mission of our central bank is price stability, and if we include the prices of assets and stocks in the basket of goods being measured, well, it has been a catastrophic failure.
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Adrian Orr has not been an effective keeper of the most valuable taonga under its control, our currency. It’s like he found a way to mass produce pounamu and distributed it to his favorite constituency – the banks and the treasury.
If you have limited savings, they are probably held in cash. Orr’s money printing eroded the economic security of these individuals and enriched those already well off.
It has been great for those who are connected so I guess he can say that he honors the value of whanaungatanga (relationships) but I don’t think that’s what Hawkesby intended to convey.
In his speech entitled: The future is Maori, the deputy governor spoke of the importance of the Maori economy and the need for the bank: “As kaitiaki (guardians) of the financial system, we have a responsibility to ensure that Maori have fair access and equal to the financial services they need – something our system has not always provided.
He is right. And much of the fault lies with his institution.
In recent years, house prices have accelerated and are no longer affordable for the average worker, and it’s no secret that Maori are overrepresented in the low-wage economy. The problem of housing affordability has been compounded by the loan to value ratio (LVR) imposed by the central bank, which means that those who are able to borrow their parents’ deposit remain in the housing market, while those who do not have access to family capital are locked out.
Let us be brutally frank. This policy has made it easier for children of White and Asian parents, compared to those of Maori and Pacific families, to remain in search of housing. The policy was not designed to punish many Maori seeking homes, but it did.
As house prices went up, rents eventually went up. Again, with Maori households being more likely to rent than their non-Maori neighbors, this policy had the effect of transferring money from brown wallets to whites.
Fortunately, the sharp rise in asset prices – both stocks and housing – has made asset holders richer, exacerbating our inequality problem.
It just keeps getting better.
The Reserve Bank oversees the imposition of the anti-money laundering legislation regime for banks. This oppressive legislation, designed to stop drug criminals and people who want to evade taxes, has the unintended consequence of making it difficult for those operating on the fringes of society, such as those fresh out of prison, to open bank accounts.
For Maori entrepreneurs looking to get into finance, well, good luck. Our financial infrastructure is strictly regulated; which has the effect of locking already existing banks and financial institutions.
A bank report on the interface between the financial sector and the Maori economy did not even ask why no real financial institution run by iwi had evolved, but simply noted:
“The Māori financial services, institutions and arrangements presented in this document have all been developed in collaboration with regulated entities, such as licensed insurers or registered banks. “
The answer is that prudential requirements and professional licensing regulations effectively make it impossible for a truly sovereign financial institution to emerge. But the Reserve Bank didn’t even think about asking the question.
He said a recent survey found that financing and accessing capital were two of the biggest challenges facing Maori businesses. Yet at no point did he even consider that the main obstacle to solving this problem was the strict financial regime his organization imposes on anyone trying to compete with the existing banking and finance oligopoly.
For Hawkesby and his ilk, the solution is paternalism: “We have discovered a wide range of innovative solutions to increase financial inclusions, literacy and security for Maori.”
Our current monetary regulatory regime aims to protect the vested interests of those who hold capital to the exclusion of those who seek to acquire it. This applies to people who want to buy a house, get capital for a business, or in some cases even open a bank account.
It harms the poor and cuts off the rich. For historical reasons, the Maori are overrepresented in our weak economic demographics. The Reserve Bank does nothing to improve their lot and, in many ways, makes their lives more difficult.
The Maori economy developed despite the Reserve Bank, not because of it. I am not inclined to preach the evils of institutional racism, but if I were one of the main institutions I would name, it is our central bank.
Pretending to stand up for our indigenous cultural values and language shouldn’t mask how the central bank has let down the community it now claims to pay homage to.
* Damien Grant is a regular columnist for Stuff and owner of an Auckland based business. He writes from a libertarian perspective and is a member of the Taxpayers Union but not of a political party.