Ngai Tahu Settlement

Doug Graham Treaty of Waitangi Negotiations

SECTION 18: RELATIVITY MECHANISM

18.1 INTERPRETATION

18.1.1 Definitions

In this Section, unless the context otherwise
requires:

Additional Ngai Tahu Redress Amount means the sum of any
payments made pursuant to clause 18.4 and any other redress provided by
the Crown to Te Runanga in respect of the Ngai Tahu Claims in addition to the
redress referred to in clause 2.3.1;

Agreed Relativity Percentage means the Real Value of the
Ngai Tahu Redress Amount divided by $1,000 million expressed as a percentage,
with the Real Value of the Ngai Tahu Redress Amount being calculated for this
purpose as if all instalments of the amount referred to in clause
18.1.2(b)(ii)
had been expensed in the Crown's financial statements in the
Crown Financial Year which ended on 30 June 1997;

Claim Redress Amount in respect of any Historical Claim
(other than those referred to in clause 18.1.2(a) and clause
18.1.2(b)
) means the greater of:

(a) the amounts expensed by the Crown in respect of the redress
provided for the relevant Historical Claim as shown in the Crown's financial
statements for the relevant year, as certified by the Audit Office;
and

(b) the amount of redress recorded in the deed of settlement or
equivalent settlement document for the relevant Historical Claim.

However, the following amounts shall be excluded from the Claim
Redress Amount:

(i) payment of interest at Government Stock or similar
commercial rates;

(ii) any redress which is of a nature that a commercial value
is not normally attributed to it (for example, a right to participate in the
management of publicly owned assets, or a right of first refusal over
assets);

(iii) any ex gratia payments made by the Crown to
non-claimant land owners for property purchased to settle a Historical Claim and
all payments made by the Crown to non-claimants by way of compensation for loss
of repurchase rights or other rights in respect of property transferred to, or
other redress provided to, the claimant or claimants to settle a Historical
Claim;

(iv) any expenditure or benefit provided by the Crown to the
claimant or claimants by way of gift (including the return of Wahi Tapu) except
to the extent that its value exceeds the greater of 5% of the total redress
provided to the donee or $2,000,000 adjusted to reflect any movements in the CPI
in the period between the end of the quarter immediately before the date of the
gift and 31 December 1994;

(v) any redress provided by the Crown where the redress is
returned to the Crown by the claimant or claimants by way of gift;

(vi) any costs incurred by the Crown in the course of the
negotiation of, and the effecting of, the settlement of the Historical
Claim;

(vii) any amount paid to indemnify claimants against any GST or
any income tax paid by the claimants;

(viii) any loan by the Crown to claimants on commercial
arms-length terms;

(ix) any other item of redress which is similar in nature to
any redress provided to Waikato or Te Runanga which was not included in the Ngai
Tahu Redress Amount or the Waikato Redress Amount (as defined in the Waikato
Deed); and

(x) any Additional Ngai Tahu Redress Amount and any additional
redress provided to Waikato under the relativity provision in the Waikato Deed
or any equivalent payments made to any other claimants under relativity
provisions (if any) agreed with such claimants which are similar to this
Section;

Corporate Tax Rate means the rate of income tax payable
by New Zealand resident companies on their assessable income under New Zealand
tax legislation in the relevant year. Where that rate changes during the
relevant year, the Corporate Tax Rate will be the average of the rates
calculated by reference to the proportion of the year for which each rate
applied during that year;

CPI means the consumers price index (All Groups)
published by Statistics New Zealand (or any successor body or organisation) on a
quarterly basis. If such index ceases to be published or the basis of
calculation of the index is fundamentally changed so as to make it inappropriate
in the circumstances, then "CPI" will mean such index as the Crown and Te
Runanga may agree, or failing such agreement, as may be determined by an
independent expert with appropriate qualifications and expertise appointed for
the purpose by the Crown and Te Runanga or, failing agreement between the Crown
and Te Runanga, by the President for the time being of the Institute of
Chartered Accountants of New Zealand or its successor;

Crown Financial Year means the period of one year ending
on 30 June in any calendar year. Thus Crown Financial Year T means the
Crown Financial Year ending on 30 June of calendar year T. Similarly for Crown
Financial Years n and k;

Government Stock Rate for a Crown Financial Year means
the average of the monthly average 5 year Government Bond Yield Rates reported
by the Reserve Bank of New Zealand in the Reserve Bank Bulletin for the months
of December and January in that Crown Financial Year. If for any reason the
Reserve Bank of New Zealand discontinues the reporting of such rates, then the
Government Stock Rate will be the nearest possible equivalent, based on yields
reported by an independent agency. If there is any dispute between the parties
as to the appropriate alternative method of determining the Government Stock
Rate, the dispute will be referred for determination to an independent expert
with appropriate qualifications and expertise appointed for the purpose by the
Crown and Te Runanga or, failing agreement, by the President for the time being
of the Institute of Chartered Accountants of New Zealand, or its
successor;

Historical Claim means a claim submitted to the Waitangi
Tribunal or its successor body or otherwise made against the Crown on the basis
of the principles of the Treaty of Waitangi which arises from any act or
omission of the Crown that occurred on or before 21 September 1992;

Ngai Tahu Redress Amount means the aggregate of
$10,000,000 paid by the Crown to Te Runanga pursuant to the Deed of On Account
Settlement and $160,000,000 to be provided by the Crown pursuant to this
Deed;

Present Value:

(a) in respect of the redress provided for the claims referred
to in clause 18.1.2(a), as at 31 December 1994, will be treated as
$355,318,314; and

(b) in respect of the Total Redress Amount, for each Crown
Financial Year (from 1996 to 2044 inclusive), such Crown Financial Year being
referred to as Crown Financial Year T, the following calculations are to be
performed to determine the Present Value as at 31 December 1994 of the Total
Redress Amount up to and including that Crown Financial Year T:

(i) first, for each Crown Financial Year from 1996 to T inclusive, each such Crown Financial Year being referred to as n (so that n is from Crown Financial Year 1996 to T inclusive) calculate the Present Value as at 31 December 1994 of the Total Annual Redress Amount for that Crown Financial Year n, according to the following formula:

and

(ii) then calculate the Present Value as at 31 December 1994 of the Total Redress Amount up to and including Crown Financial Year T according to the following formula:

The symbols used in the above formulas have the following meanings:

PV( ) = Present Value as at 31 December 1994 of the term in ( )

TARn = Total Annual Redress Amount in Crown Financial Year n

CPIn = CPI figure as at 31 December of Crown Financial Year n, which ends on 30 June of calendar year n (i.e. the CPI figure as at 31 December of calendar year (n-1)). Similarly for CPIk, CPIk+1 and CPI1995

Rk = Government Stock Rate in Crown Financial Year k, which ends on 30 June of calendar year k

tk = Corporate Tax Rate in calendar year k

O = standard mathematical notation for a multiplicative series

a = standard mathematical notation for an additive
series

PVC = Present Value as at 31 December 1994 of claims
referred to in clause 18.1.2(a), being $170,000,000 plus $185,318,314,
equalling $355,318,314;

Real Value:

(a) in respect of the redress provided for the claims referred to in clause 18.1.2(a), as at 31 December 1994 will be treated as $355,318,314;

(b) in respect of the Ngai Tahu Redress Amount, will be treated as the aggregate of:

(i) $10,000,000 deflated to reflect any movements in the CPI in the period from 31 December 1994 to 31 December 1995; and

(ii) the instalments of the remaining $160,000,000 each deflated to reflect any movement in the CPI in the period from 31 December 1994 to 31 December in the Crown Financial Year within which such instalment is expensed in the Crown's financial statements;

(c) in respect of the Total Redress Amount, for any Crown Financial Year (from 1996 to 2044 inclusive) where clause 18.4 requires the Real Value of the Total Redress Amount to be calculated up to and including such Crown Financial Year, such Crown Financial Year being referred to as Crown Financial Year T, the following calculations are to be performed:

(i) first, for each Crown Financial Year from 1996 to T inclusive, each such Crown Financial Year being referred to as n (so that n is from Crown Financial Year 1996 to T inclusive), calculate the Real Value as at 31 December 1994 of the Total Annual Redress Amount for that Crown Financial Year n according to the following formula:

where:

RV( ) = real value as at 31 December 1994 of the term in (
)

and other terms are as defined above; and

(ii) then calculate the Real Value as at 31 December 1994 of the Total Redress Amount up to and including Crown Financial Year T according to the following formula:

and

(d) in respect of any Additional Ngai Tahu Redress Amounts,
for any Crown Financial Year (from 1996 to 2044 inclusive) where clause 18.4
requires the Real Value of the Additional Ngai Tahu Redress Amounts to be
calculated up to and including such Crown Financial Year, such Crown Financial
Year being referred to as Crown Financial Year T, the following calculations are
to be performed:

(i) first, for each Crown Financial Year from 1996 to T
inclusive, each such Crown Financial Year being referred to as n (so that n is
from Crown Financial Year 1996 to T inclusive), calculate the Real Value as at
31 December 1994 of any Additional Ngai Tahu Redress Amount in that Crown
Financial Year n according to the following formula:

where:

ARn = Additional Ngai Tahu Redress Amount deemed
to have been provided in Crown Financial Year n

and other terms are as defined above; and

(ii) then calculate the Real Value as at 31 December 1994 of
any Additional Ngai Tahu Redress Amounts up to and including Crown Financial
Year T according to the following formula:

Receipt Date means, in respect of any Additional Ngai
Tahu Redress Amount or any component of the Total Redress Amount, the date on
which it is deemed to be provided under clause 18.1.2;

Total Annual Redress Amount means the sum of the
Claim Redress Amounts deemed to be provided within a Crown Financial
Year;

Total Redress Amount means the aggregate of the Total
Annual Redress Amounts in respect of Historical Claims (including the redress
referred to in clause 18.1.2(a) and clause 18.1.2(b));

Waikato means the party to the Waikato Deed other than
the Crown;

Waikato Deed means the Deed of Settlement dated 22 May
1995 between the Crown and Waikato.

18.1.2 Date of Redress

For the purposes of calculating Real Value or Present
Value:

(a) the redress provided for the fisheries claims settled by
the Deed of Settlement between the Crown and Maori signed on 23 September 1992,
the $170,000,000 redress provided to Waikato under the Waikato Deed and the
redress provided for all other Historical Claims settled between 23 September
1992 and 30 June 1995 will be deemed to have been provided on 31 December
1994;

(b) the Ngai Tahu Redress Amount will be deemed to have been
provided as follows:

(i) the $10,000,000 paid by the Crown pursuant to the Deed of
On Account Settlement will be deemed to have been provided on 31 December 1995;
and

(ii) each instalment of the remaining $160,000,000 will be
deemed to have been provided on 31 December in the Crown Financial Year in which
the Crown treats such instalment as having been incurred for the purposes of the
Crown's financial statements under generally accepted accounting
principles;

(c) any Claim Redress Amounts (other than those referred to in
clause 18.1.2(a) and clause 18.1.2(b)) will be deemed to have been
provided on 31 December in the first Crown Financial Year in which the Crown
treats the cost of the redress as having been incurred for the purposes of the
Crown's financial statements under generally accepted accounting principles;
and

(d) any Additional Ngai Tahu Redress Amount paid in accordance
with clauses 18.3 and 18.4 will be deemed to have been provided on 31
December in the Crown Financial Year T referred to in clauses 18.2, 18.3 and
18.4
.

18.1.3 Principles

In assessing whether any expenditure or provision of benefits
by the Crown constitutes the provision of redress for an Historical Claim, and
should therefore be categorised as a Claim Redress Amount, the following
principles shall be applied:

(a) the expenditure or benefits will be treated as the
provision of redress for an Historical Claim if there is a transfer of value
from the Crown to one or more persons who have made an Historical Claim (or a
transfer of value from the Crown to another person with the intention and effect
of benefiting the person or persons who have made the Historical Claim) in
consideration of the settlement of that Historical Claim or contingent upon the
settlement of that Historical Claim; and

(b) any expenditure or benefits which can reasonably be
regarded as having been provided for the purpose of "good government" and not
under Article II of the Treaty of Waitangi will not be treated as the provision
of redress for an Historical Claim. The following factors will be taken into
account in determining whether expenditure is for the purposes of "good
government":

(i) the expenditure or benefits are provided by the Crown to
Maori or to all citizens or generic groups of citizens of New Zealand on a basis
which provides for Ngai Tahu to claim a fair share (including but not limited to
any change or development of Article II rights after 1994 or any change in
property rights made by statute or regulation which confer rights on Maori) and
such expenditure or benefits are not for the express purpose of settling an
Historical Claim;

(ii) the Crown retains a discretion over the amount and form of
the provision of the expenditure or benefits and their continued
availability;

(iii) the recipients of the expenditure or benefits are
accountable to the Crown for the use or distribution of the amount of the
expenditure or benefits; and

(iv) the expenditure or benefits arise from any legislative or
regulatory change made in the course of "good government", including those
designed to remove or avoid any contemporary breach of the principles of the
Treaty of Waitangi, and such expenditure or benefits are not for the express
purpose of settling an Historical Claim;

Nothing in this clause 18.1.3 limits or affects the
exclusions referred to in the definition of "Claim Redress Amount" in clause
18.1.1
.