The ACT Party says the Government is pushing ahead with its "ethno-state agenda" by requiring some Government agencies to award a small fraction of their contracts to "Māori businesses".
The policy - known as 'Te Kupenga Hao Pāuaua' or 'Supporting the Māori Economy through Social Procurement' - is intended to "accelerate the economic recovery for Māori businesses" and "is an important step towards a more inclusive and prosperous society", Jackson said in December when it was announced.
ACT leader David Seymour, who has been targeting the Government lately over its controversial He Puapua document suggesting a move towards greater Māori self-governance, said the policy is "creating further ethnic division".
"Firms up and down the country who contract to Government agencies from Kāinga Ora to councils to Defence have received emails saying that they will be awarding at least 5 percent of contracts to 'Māori businesses'," he said on Thursday, claiming it was sparking "disquiet up and down the country as the practical reality of the Government's ethno-state agenda is seen in action".
Seymour said contractors are being asked to state whether they're a Māori business or not.
"The definition of a 'Māori business' will never be properly pinned down, in the long run it will be just another bureaucratic hurdle that those with the right consultants will navigate."
The Government does actually have a definition of what constitutes a Māori business - one that has "at least 50 percent Māori ownership" or is "a Māori Authority as defined by the Inland Revenue Department". This is a more restrictive definition than the Companies Office uses - which allows firms to self-identify as Māori based on other factors, such as "staff members, philosophy and tikanga, management practices, branding and marketing, tangible assets such as land or fishing rights, or intangible assets like kaupapa Māori or cultural property".
"It is difficult to imagine how the Government could be more divisive, usually a Government asking people to register along racial lines would be unthinkable," said Seymour. "That it is becoming normalised in New Zealand shows how much constitutional trouble we are in."
The target for the policy is just 5 percent, which although much smaller than the Māori share of the population, is still considered "aspirational".
"The ultimate goal will be to increase the target level over time", the Cabinet paper states, hoping to eventually "change to a target based on the value of contracts awarded to Māori businesses" before Māori businesses "attain a proportion of Government procurement contracts that reflects their proportion of the New Zealand population". Taxpayer money spent on Māori businesses "is likely to linger longer in these communities", the paper states, "rather than going directly offshore".
While many agencies are "required" to hit the target - ACC, Kāinga Ora, district health boards, Corrections, Department of Conservation, Defence, NZQA and Pharmac among them - many are only "expected" or "encouraged" to.
The paper also states Māori businesses are "more likely to hire staff from their own communities, start them on higher wages and offer training to enable career progression".
"The Government has provided no evidence for this claim, appearing to rely only on stereotypes," said Seymour.
The claim appears to have been lifted in its entirety from an Auckland Council document published last year, Sustainable Procurement: Our Objectives, which also doesn't provide any evidence. The council's definition of a Māori business rests purely on ownership, not staffing levels.
"The policy is one for elite Māori, those who are in business," said Seymour. "It will be a boon for prosperous Māori, those who already have businesses. Those Māori who are truly struggling with education, housing, and jobs will be no better off."
Last year, then-Māori Development Minister Nanaia Mahuta said international evidence showed procurement quotes for indigenous businesses "resulted in increased wealth, financial stability and employment opportunities, as well as wider social and community wellbeing benefits for indigenous peoples".
Jackson, who took on the role after last year's election, in December said contracts with Aboriginal and Torres Strait Islander businesses in Australia have gone from $6 million to "almost $2 billion in just four years".
$7.3 million has been allocated towards the policy.
The Government has been adamant the suggestions in the He Puapua document are not policy.
Jackson told Newshub the progressive procurement policy aims to support sustainable, long term behavioural change of Government agencies and businesses procurement practices.
He said it's for all Māori businesses that choose to access Government procurement opportunities.
"Information from the implementation to date indicates there has been interest and opportunities for a wide variety of Māori businesses - not just the 'elite' businesses described.
"From today Government agencies are required to capture their progress towards a minimum 5 percent target of annual procurement contracts for goods and services being with Māori businesses.
"The target will be reviewed in 2022 to ascertain its impact."