Patrick Nicholas

Tu Tangata, Issue 31, 1 August 1986, Page 18

Patrick Nicholas

If you ever meet Patrick Nicholas you wouldn’t think he would have two cents to rub together.

\/ ou could spend hours with him and for your life not know why anyone would take the time to interview him. For he is a man of mystery, strongly introverted, reluctant to speak about himself or his way of thinking.

But luckily, in stepped Mary Fry, one of New Zealand’s best known mediums (able to talk to the dead). While in Tauranga she approached Patrick, saying she had been in contact with his grandparents, and they wanted him to help the Maori people. What could a twenty-four year old do?

The following is an interview with Patrick Nicholas on how to solve the social and economic problems that face the Maori people.

Before comprehensive solutions can be contemplated to achieve these goals, one must have an understanding of the basic. These will be explained first.

Q. Tell me, do you believe maori land is utilised to its full potential and if not, why?

A. Many trustees of maori land throughout the country, especially retired farmers, seem to have the belief that they know everything there is to know about land utilisation. New Zealand has a proud tradition in agriculture and horticulture, in some areas we lead the rest of the world, so you can imagine the shocked faces when I say to you “I doubt if there are many trustees who have the faintest clue about land utilisation”. Pick any block of land in this country, tell me how many uses you can see for it, the possible returns, and the number of jobs it can create. For every one you can pick, I will show you a thousand better.

Many people make the mistake of thinking that assets’ only uses are those that they were made for, for example shipping - to carrying things; commercial buildings - renting; land - growing things. Take land utilisation for example. When people look at land all they can see are cows, sheep, or timber. One must understand that these landbased enterprises are capital intensive and therefore, like all capital intensive projects, produce few jobs for the amount of capital employed, and have a very low return on investment. Around the 1930’s there was this fellow from around the East Cape by the name of Apirana Ngata, a man who tried to solve the economic problems that faced the Maori people by, of all things, milking cows. As one would have expected and as history has shown, his attempts were destined to fail. Many of the world’s

KUPU WHAKAMIHI

greatest businessmen have made their fortune in capital intensive industries because when they look at assets what they see is collateral, something that can be borrowed against, then the funds borrowed can be employed in any venture they want. The difference being trustees can only see soil and think what they could grow on it, while the more astute businessman can see that land can be used for any commercial enterprise that the mind can perceive. A business that can create a much larger number of jobs for the amount of capital employed and that have a much higher return on investment. Also, ‘off the farm’ investments make it so much easier to use leverage. This priciple is not new.

When someone is going into business they go to their business advisors, the advisors ask them how much money they can put in. They answer none. Then the advisor will ask whether they own their own house. They reply yes. Then the advisor would tell them how the capital in their homes can be released to start up the business of their choice. The same principle works with homes, land, ships, and buildings. The principle is difficult for some people to grasp how a paddock covered with gorse can be used for an investment into computer technology, and that’s without removing the gorse. How enormous profits can be made from leased land without having to wait for the lease to expire.

Q. So you say, if the Maori people could see that land was collateral their economic problems would be over?

A. No, it takes a lot more than that to perform miracles. A couple of thousand years ago a fellow by the name of Jesus Christ taught his followers that faith was a prerequisite to performing miracles, and that if one had enough faith he could say to a mountain, move, and it would move. If one understands the saying “Make molehills into mountains”, that molehills means little problems and mountains are big problems, then Jesus meant “If one had enough faith he could say to unemployment, be removed, and it would be removed.” Going by the size of Jesus Christ’s following there must have been some truth in his teachings. If the Maori people had the faith Christ was talking about, they could solve all their problems. He didn’t mean going to church and reading the Bible all the time. I believe he meant having a positive mental attitude, having faith in one’s ability and constantly visualising oneself in a positive state. Muhammed Ali once said, “If you only believe, you can get anything you want. All the pretty girls, flash Cadillacs, and huge mansions.” Ali, along

with Jim Thorpe, was probably the greatest sportsman of this century. All that a man achieves and all that he fails to achieve is the direct result of his own thoughts.

But a positive mental attitude is a grey matter, meaning between the ears. To cultivate that is the greatest way to raise the Maori off the lower socio-economic level. Because it is people development and people are our greatest resource. Land utilisation is only the second greatest way, because land is our next greatest resource.

Q. Is there more to land utilisation than you have told me?

A. Sure. We could spend the rest of our lives talking and we would only have covered the tip of the iceberg. Understand this, the fact that land-based industries produce few jobs for the amount of capital employed, and have a very low return on investment compared to other industries is only of secondary importance. The biggest problem with Maori economic development is that they have continually committed the greatest sin in business, which is to wholly own your business. This is the secret of business, “to make maximum use of other people’s money (0.P.M.) and resources. This is the reason why some businessmen struggle to make ends meet, while others in the same line of business are able to build immense fortunes.

If one aim in business is to make a lot of money, one must not totally own his business. He must use mortgage gearing or O.P.M. which means borrowing funds or other forms of finance. His owner’s equity must only be a fraction of the total value of the enterprise. If you have social reasons for going into business, you could use other forms of leverage. You probably would not use borrowed money because there is a charge on it, interest. Instead you would use other people’s capital.

Let’s start with making money and mortgage gearing. Mortgage gearing has probably created more self-made mil-

lionaires than all other forms of commercial endeavours put together. It is the reason why so many property investors are among the group who are self-made millionaires. Mortgage gearing is the most important form of leverage, usually it depends on inflation.

For example, Mr Kuware and Mr Mohio have SIOO,OOO each. Mr Kuware buys a commercial building valued at SIOO,OOO. In five years’ time that building is worth $200,000 so Mr Kuware would be quite happy with himself. But Mr Mohio, having a bit of business flair, using benefits of scale and 0.P.M., bought ten buildings at SIOO,OOO, a total of $1,000,000. Because he has only SIOO,OOO he borrows $900,000 for five years, interest only. For argument’s sake we will say that the rent he was receiving from the buildings equalled the interest he was paying. Therefore, after five years he would own ten buildings, like Mr Kuware’s they would be valued at $200,000 each, total $2,000,000. Because he was only paying the interest on his loan, he would still owe $900,000, hence he would be worth $1,100,000 compared to Mr Kuware’s $200,000. Maybe you can understand what I said before about capital assets. The money made by Mr Mohio was due to the gearing ratio of his mortgages and inflation not by the rents received.

Many people make the mistake of thinking that the only reason for business is to make a profit. One must understand that business can be used to solve any and all problems, get jobs, get your land back, etc. The reason for this error is the fact that the business arena is dominated by pakehas who do riot place any value on being able to provide their people with jobs or regaining ancestral land.

Before we go any further, it is necessary for me to tell you the importance of imagination in business, and why it is dangerous to ever limit your thinking.

The most profitable business transactions are those where the other party do not understand your motives. When the pakeha came to New Zealand they brought their laws and customs including their system of property ownership which was foreign to the Maori. The pakeha possessed an “own property forever” mentality, whereas the Maori possess a “you have to occupy (ahi ka)” mentality and tribal ownership mentality. Because the pakeha was able to enforce his laws he was able to exploit the Maori because of the difference in mentality. Another example: An olden day Maori owns a gold mine. He can’t understand why a pakeha is willing to offer him a musket and a couple of fish hooks for this yellow rock, so he is able to be exploited because he does not possess a make money mentality. But mentality can also work in favour of the Maori. If a Maori went into business and all he had was a “get jobs for your people” mentality and he was dealing

with make money mentality pakehas, he would have a field day. The pakehas, like the so called old time Maori in the gold mine example, would be totally ignorant to the other party’s intentions, thus both would get exploited. It is important to remember that if your motivps are to get jobs for your people you must keep it secret from the pakeha.

For example: A few years ago you could have got a plentiful supply of fishheads for free. All you had to do was to go up to a pakeha fishshop owner and tell them not to bother dumping their fish heads, tell them that you would take the fish-heads off their hands without charging them (pakeha fishshop owners) cartage. The pakeha would readily oblige. But nowadays the fishshop owners know your motives; they now know fish heads are a delicacy and, as could be expected, charge a fortune. Law of mentality is a difficult concept to grasp, but if you believe when I say to you that if a Maori went into business with a “get jobs for their people” mentality he would whip the pakeha because of their fixations they have on making money. Their reward would be in jobs, not money. The Maori should be able to get control of a large number of jobs with very little capital input. The Maori must never let the pakeha know they are in business to provide jobs for their people, for if they did they would suffer the same destiny as the Maori with fishshop keepers, because their motives would be known and the Maori would lose the initiative and hence would have to pay dearly for what before was so cheap.

Q. Please explain techniques where one can provide far more jobs for the amount of capital employed?

A. One must first go back to what I said before. That the greatest sin in business is to wholly own your own business. Now I will explain methods where one can still control an enterprise with just a fraction of ownership. The first method is double-up.

For argument’s sake, we will say that it would take $24,000 to create a job.

Investor Kuware and investor Mohio have $1 million each. Investor Kuware starts up a company with assets of $1 million therefore he can control between 41 and 42 new jobs.

Investor Mohio sets up a company, but he offers half to investors Tom, Dick and Harry. Therefore he has a company with assets of $2 million. Because he owns 50% of the company he has a controlling interest, therefore at $24,000 to create a job, he can control between 83-84 new jobs, or alternatively investor Mohio could have used his $1 million to buy a half share in an existing $2 million company.

But investor Mohio does not stop there. He has a controlling interest in this first company, so he uses the $2 million there to buy a 50% share in a $4 million company, then with the second

company he buys a half-share in a third company with $8 million company. If it takes $24,000 to create a permanent job, then investor Mohio could control 333 to 334 jobs.

In theory, Investor Mohio could continue on and on, buying half shares in different companies until he had control of enough assets to eliminate all unemployment among our people. Many Maori people have called for Maori control of resources. Maybe this is a method they could use.

The result is that if Maoris wanted to create new jobs for their people if they took investor Kuware’s example they could create one job for every $24,000 of capital they had. If they took investor Mohio’s example they could control one new job for every $3,000 of capital they had. Only one eighth of investor Kuware’s cost. But one must remember, although investor Mohio controls $8 million he only receives income off $1 million of that $8 million. Therefore he controls eight times the number of jobs of investor Kuware, but has the same income. Therefore jobs benefit, but no monetary benefit. That is why you will not find this method in any textbooks or taught at any university.

But it is sometimes not necessary to own half a company to control it. The following is another method, I will call it voting power. When there are restrictive voting rights, a group can get control of a company with just a fraction of the share capital. In this example I will use New Zealand Forest Products, it is a large asset rich company and, like others in this league, scared stiff of corporate raiders. It therefore has structured its voting rights to make it impossible for one large company to come in and take it over. But unknown to their management, they have made it incredibly easy to be taken over by a large group of little people.

Its voting rights are: 1 vote for every $2 of capital up to S2OO of capital. From there, 1 vote for every $4 of capital up to S4OO. 1 vote for every $lO of capital thereafter. But no-one is allowed more than 15,000 votes. Watties has a quarter of the shares, but only 15,000 votes. It cost over SIBO million to buy. One could get the same amount of votes with SIBO,OOO and 150 people. Rough estimation says that 4% of the capital at 1 vote for every $2 of capital could completely outvote the other 96%. Another important fact is that New Zealand Forest Products has large shareholdings in other large companies, so this 4% would not just have control over the other 96%, but also many other companies, including:

U.E.B. Industries 39V2% Watties 23.7% Nissan Datsun 28V2%

Watties has approximately a third of Goodmans, which is the largest shareholder in the Australian giant Elders. Elders owns Hodder and Tolley plus Jordan Export. So you see that 4% in N.Z.F.P. can be very influential.

The Westpac Banking Corporation is another company with restrictive voting rights, but one must always understand that although this 4% can outvote the other 96% and have extensive influence in many other companies, the financial benefits are not great, for one will still only receive 4% of the profit of N.Z.F.P. The benefits would be in the influence over a large number of jobs, increased economic clout, control of 0.8% of Aotearoa, that N.Z.F.P. owns, plus all the land which it leases.

Q. Tell me, is it possible for a tribe to get all it’s ancestral land back?

A. There are three ways I can think of that you could use. First conquest; second, political means; and lastly, financial means. Many Maoris have wanted the land returned, but none have known how to go about it. One reason why they have failed in the past is because they have not understood how to utilise capital assets. People in charge of Trusts and Incorporations can only see cow milking, which provides a low return on investment and makes it hard to build up a deposit. Secondly, even if they had a deposit, they still can only see cow milking, so how do they pay off their loan? One could probably begin to believe that one could solve all the problems that face the Maori people if only they knew how to utilise their land. If they know how, the only barriers that could stop them are legal barriers and the competence of the trustees. Both are serious problems.

Before we discuss these two problems, I must warn you that one must never make the mistake of looking at land completely in terms of dollars and cents. It means so much more to the Maori people. But was it not Ngata that said to use the tools of the new world for your survival while still retaining your taha maori?

The Maori gave up the idea of conquest to regain the land a long time ago because of the pakeha numbers. There may be political methods to regain the land, but I will stick to economics.

Many of the old prophets made prophecies that the land would be returned. As I said at the beginning, the reason why maori land has never been fully utilised is because when people look at land all they can see is soil. They immediately think one cow per acre. If they wanted to increase their returns they would try to graze two cows per acre, or try new fertilisers to boost that one cow’s production. If they have imagination they may contemplate goats or horticulture. But when one sees land as collateral, if one could see an acre as enabling one to borrow one thousand dollar, then one could invest in any enterprise they

wished. But what is important if you have top grade management, you can put together a ten thousand or even one hundred thousand dollar enterprise.

This is very important, the secret of success in business is to be able to set up enterprises well beyond one’s small resources.

The followers of Te Whiti O Rongomai and Tohu Kakahi at Parihaka often chanted the following from Ihaia:

“And the days of thy mourning shall be ended ... thy people shall inherit the land for ever. .. A little one shall become a thousand and a small one a strong nation.”

Q. Tell me, what do you think of Mondragon co-operative?

A. Many peop'e are going around saying the answers to the Maori economic plight are to be found in Basque, Spain, also called the Mondragon Experiment. But the difference between the Basque and the Maori is that the Maori has been colonised. The Maori today is a physical and mental wreck compared to his ancestors. That is not a criticism of the Maori today, but to remark on the physical prowess and mental agility of his predecessors. Back in the 1850’s,the Maori of New Zealand was just as successful as the Basque of today. Even so, when you get down to the nitty gritty, the co-operative idea is much the same as the company idea. Ten shareholders put in ten thousand dollars each to form a company that provides one hundred thousand dollars of jobs. Ten co-opera-tive members put in ten thousand dollars each to form a co-operative that provides one hundred thousand dollars worth of jobs. I hope one can realise the difference between these and what I am talking about. They say get SIOO,OOO and create SIOO,OOO worth of jobs, while I have been saying get SIOO,OOO and control $1 million worth of jobs.

One should disregard the figures given in this interview, for it is the principles that are important. These are:

1. Land can be used for any commercial enterprise that the mind can perceive. 2. All that a man achieves and all that he fails to achieve is the direct result of his own thoughts. 3. The greatest sin in business is to wholly own your business. 4A. Many of the most profitable business transactions are those where the other party do not understand your motives. 48. In business one should not give away your motives. 4C. Many people understand how to run a business to make a profit, but few know how to run a business to solve social problems. 4D. If a Maori went into business to provide jobs for his people he would have a field day because of the pakeha’s fixation on making money.