The Waka Umanga Bill is designed for a niche in the legal product range. It is supposed to offer iwi and other Maori groupings a more culturally sensitive template for governing themselves. I think its market is potentially much bigger. There is a gap in the product range of collectives. With a bit of refinement this Bill could fill that gap neatly.

To become another Maori gift to the nation it needs some clear-eyed pruning, some expansion to offer  practical model documents, and the deletion of its racist exclusivity. All three would improve its performance for Maori as well.

 The whole legal product range for governing collectives and managing communal assets must satisfy a few common purposes. They should let people know, in advance (i.e. without needing to spend money on lawyers in dispute):

who are the members;

who is in charge;

what the bosses are supposed to be doing with their power (the purpose of the collective);

how far outsiders can treat the bosses as if they owned the collective;

who is liable if the collective hurts outsiders;

how the bosses are stopped from diverting benefits to themselves and their families, at the expense of the rest;

how to change the bosses when they need to be changed, even if they do not want to go.

The great task of good law for incorporations is to overcome the communal blight – when everybodies’ business becomes nobodies’ business. Each individual member has a small ‘investment’. Only those enjoying power have much at stake individually. Accordingly it can take a long time for the members to revolt.

On the other hand expanded rules and procedures to stop those in power from abusing it often condemn the organisation to endless politics, driving away managers with initiative.

The limited liability company gets as near to solving this insoluble as anything ever has. It has been described as more powerful than the steam engine -Anglo American law’s greatest contribution to ending poverty and famine around the world.

They solved the power/accountability problem with the cake cutter’s knife. When the cake cutter must take the last slice, the portions are always fair.

Under classical company law, the owners (and the directors and managers as stewards on their behalf) have absolute control of the collective assets. But they can not take any benefit until all the other stakeholders have had their contractually defined slices of the cake. The owners get only what is left, called profit.

It can be very large, or negative. When it has been negative for long enough to use up the equity cushion, insolvency hands control to stewards for the creditors. Ownership passes to new hands.

Absent dishonesty the stewards are not liable for decisions and risks that go wrong, but on the other hand the owners could sack them without interference from the law. 

The genius of the solution has always been atacked by well meaning folk who prefer more ‘inclusive’ rules. Yet the world-wide triumph of collectivism under that Anglo-American model , contrasted with the miserable corruption and disappointment of most other collective management models, has always drawn even those who hate symbols of capitalist success into attempts to  hybridize the company form.

Is the waka umanga another of those attempts?

Perhaps, in its genesis, but that does not mean it is unnecessary, or a bad idea.

It has legitimate purposes. The company form works best when the objective is simple – increasing the wealth of the owners, after paying the contractual stakeholders (workers, customers, suppliers) what they are owed.

We have had unprecedented years of integrity in our collectives. That has depended on the courts measuring bosses by asking if they were acting in the interests of members. If the bosses are give multiple conflicting objectives it becomes much harder. They can disguise and excuse non-performance. Nevertheless the question is still relevant.

But there is a class of collective where the benefit of members is simply the wrong question.

For waka umanga the ‘wealth’ of its members may be secondary to their desire to ensure the strength, persistence and power of the entity itself. Members at a particular time may have to sacrifice their own interests for the longer term good of the collective. Company law duties and tests do not work properly for such organisations.

Nor do the other possibilities – trusts, unincorporated associations, incorporated associations, building societies, friendly societies, credit unions, co-operatives, industrial and provident societies. They are all an awkward fit when the purpose may be the glory of the organisation itself, and the mana of future members, above the measurable interests of the members at any particular time.

Many organisations could be better served by the waka umanga form, if it deals properly with this issue.

Most churches, for example. They are there for the greater glory of their respective gods. The benefit of their members may be a by-product of serving the god’s church. The poor fit of the law of corporations to churches may have helped make them a happy hunting ground for fraudsters. Churches work very well for the Tammy Bakers and other ‘bishops’ who decide what the god wants.

If the waka umanga emerges from Parliament properly focussed on its key tasks it should be a model much in demand. There is a risk that it will retain so many well meant encrustations of process that few will be bothered to use it. The Bill is overloaded already with some of the most irritatingly useless features of modern company legislation, plus a few extra drawn from awful local authority law.

Simplification could create an example for us all. I hope that the production testing and de-bugging is not seen as something of interest only to Maori. Pakeha should take a close interest, without apology. After all, the company is a pakeha taonga. If Maori can polish it and give us a fix for one of its weak areas, we’ll all benefit.