Ngai Tahu Settlement

Doug Graham Treaty of Waitangi Negotiations

18.2 CALCULATION

The Crown shall calculate on or about 30 September in each year
from 1996 to 2044 inclusive the Present Value of the Total Redress Amount for
Receipt Dates up to the end of the preceding Crown Financial Year (which is
referred to subsequently as Crown Financial Year T) and provide to Te Runanga a
statement setting out such calculation and providing details of the Claim
Redress Amounts which comprise the Total Annual Redress Amounts and the identity
of the relevant claimants within 20 Business Days of the calculation being made.
If Te Runanga disputes that calculation it shall notify the Crown within 40
Business Days after the date on which the statement is provided to Te Runanga.
If it does not do so it will be deemed to have accepted the calculation. In
addition, the Crown's statement under this clause shall set out the Crown's view
as to whether the grounds for a claim for further redress to be payable under
clause 18.4 exist and, if so, its calculation of the amount but this
requirement will not apply if no claim to further redress is permitted under
clause 18.5 at the time the statement is given.

18.3 CLAIM

If, in respect of the calculation in clause 18.2,
involving Crown Financial Years up to and including Crown Financial Year T, Te
Runanga believes that the Present Value of the Total Redress Amount up to and
including Crown Financial Year T exceeds $1,000 million, then, subject to
clause 18.5, Te Runanga may claim further redress from the Crown pursuant
to clause 18.4. However, Te Runanga shall not make a claim which would
involve it disputing the Crown's calculations under clause 18.2 if it has
previously accepted or has been deemed to have accepted that
calculation.

18.4 FURTHER REDRESS

If Te Runanga makes a claim pursuant to clause 18.3, and
the Present Value of the Total Redress Amount up to and including Crown
Financial Year T exceeds $1,000 million, then the Crown shall pay to Te Runanga
such further sum as is necessary to ensure that the sum of the Real Value of the
Ngai Tahu Redress Amount, and the Real Value of any Additional Ngai Tahu Redress
Amounts up to and including Crown Financial Year T, is the Agreed Relativity
Percentage of the Real Value of the Total Redress Amount up to and including
Crown Financial Year T. The sum to be paid shall be further adjusted for CPI
movements from 31 December in Crown Financial Year T to the end of the quarter
immediately before the payment is made.

18.5 TIME LIMIT ON CLAIMS

Te Runanga may make a claim under clause 18.3 on more
than one occasion, but no claim may be made within 5 years of the 30 September
date in clause 18.2 giving rise to a payment under clause 18.4,
and no claim may be made after the end of 2044, but nothing in this clause
shall prevent a claim being made in 2044.

18.6 PAYMENT

18.6.1 Crown Statement

If Te Runanga makes a claim under clause 18.3, the Crown
will, within 20 Business Days after the claim is made, provide to Te Runanga a
statement indicating whether any amount is payable under clause 18.4 and,
if so, how much that amount is. This requirement will not apply if the amount
claimed by Te Runanga is the same as that specified in the most recent statement
provided by the Crown under clause 18.2.

18.6.2 Payment by Crown

If the Crown's statement under clause 18.6.1 (or under
clause 18.2, where no statement under clause 18.6.1 is required)
indicates that any amount is payable to Te Runanga under clause 18.4, the
Crown shall pay that amount by the date which is the later of:

(a) 40 Business Days after the date of the statement referred
to above; and

(b) if an appropriation is required, as soon as practicable
after the appropriation is made,

but in any event not more than 6 months after the date of the
statement referred to above.

18.7 DISPUTES

If the amount specified in the Crown's statement in clause
18.6.1
is different from the amount claimed by Te Runanga or Te Runanga
otherwise disputes the amount payable, then:

18.7.1 the parties will endeavour to resolve the dispute
amicably and will undertake good faith negotiations to that end. If the dispute
cannot be resolved by negotiation within 20 Business Days of Te Runanga first
disputing the amount payable and both parties agree to resolution by mediation,
arbitration, reference to an expert or other alternative dispute resolution
process then the matter will be resolved by the means agreed by the parties at
the time. If the parties cannot agree on a method of resolution of a dispute,
either party may exercise its legal rights against the other; and

18.7.2 the Crown will pay the amount not in dispute as required
under clause 18.6.2 and, if it is finally determined that a further
amount is payable, will pay such amount within 10 Business Days after the date
on which the determination is made or, if a further appropriation is required,
as soon as practicable after the appropriation is made but, in any event, not
more than 6 months after the date on which the determination is made. There is
no agreement as to whether interest is or is not payable.

18.8 CHANGE IN CROWN FINANCIAL
YEAR

If, during the period between the date of this Deed and the end
of 2044, the Crown changes its balance date, the parties will make such
adjustments to this Section 18 as are required to ensure that the
provisions of this Section 18 can be applied practically and in a manner
which makes neither party better off nor worse off. If there is any dispute
between the parties as to the necessary adjustments, 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.

18.9 EXAMPLE

The example in Attachment 18.1 is included in this Deed
as an illustration of the operation of this Section 18.

ATTACHMENT 18.1
EXAMPLE OF
OPERATION OF SECTION 18
(Clause 18.9)

1 Introduction

This example illustrates the application of Section 18,
using an assumed payment stream and other assumed parameters. It is stressed
that all parameters are purely illustrative and do not reflect the views of
either party about their values. In addition, the calculations do not involve
any rounding, although the presentation of calculations involves some
suppression of decimal points.

The examples are to cover the first additional redress payment
arising under the mechanism, and the second payment 5 years later. The examples
show the calculation of the "Present Value of the Total Redress Amount", the
"Real Value of the Total Redress Amount" and the calculation of each of the
first two illustrative additional redress payments to Te Runanga.

2 Assumptions

For the purposes of this example, it is assumed
that:

(a) the Total Annual Redress Amounts (TAR) are as shown in
Table A;

(b) CPI values for the commencement of calendar years are as
shown in Table B;

(c) the nominal Government Stock Rates for Crown Financial
Years, which "centre" on 31 December in a Crown Financial Year and are used to
discount back over the following calendar year (see Figure 1), are shown
in Table B;

(d) the Corporate Tax Rates for calendar years are as shown in
Table B;

(e) the "Real Value" of the "Ngai Tahu Redress Amount" is $180m
(purely for the purposes of illustration); and

(f) the "Agreed Relativity Percentage" is 18.2% (purely for the
purposes of illustration).

3 Application of Section 18

The clauses in Section 18 applied in this example are
clauses 18.2, 18.3, 18.4 and 18.5.

Following clause 18.2, the first calculation is
performed around 30 September 1996, and this is now discussed.

(a) Calculations Performed Around 30 September 1996 (T =
1996)

Following clause 18.2, we seek to determine the Present
Value as at 31 December 1994 of the Total Redress Amount up to and including
Crown Financial Year 1995/96 (CFY 96). From paragraph (b) of the definition of
"Present Value" in clause 18.1.1:

This "real discount rate" is reported in Table B for the
calendar year 1995.

= $94.551m

and so

= $449.869m [equation (3)]

The last two calculated numbers, $94.551m and $449.869m, are
each shown in their appropriate column in Table A.

At this point reference to Figure 1 may be useful. The
Total Annual Redress Amount in CFY 96, denoted TAR96, is deemed to
arise at 31.12.95. Thus, to convert it to its real dollar value at 31.12.94, one
uses the CPI index at 31.12.95 (denoted CPI1996) and that at 31.12.94
(denoted CPI1995). This is the first term [.] in equation (1). This
real dollar value is then discounted back to 31.12.94 by the "real post tax
interest rate" for the 1995 calendar year. To generate this "real post tax
interest rate", one uses the nominal interest rate for this calendar year
(R95, averaged over a time span of one year but centred on 31.12.94),
the corporate tax rate t95 over this calendar year, and the CPI index
values at the beginning and end of this calendar year (denoted
CPI1995 and CPI1996). This is reflected in equation
(2).

We now turn to clause 18.3. Following clause
18.3
, we ask if:

Referring back to equation (3), we find that this condition is
not satisfied. So no claim under clause 18.3 arises at 30 September 1996.
The following year, the calculations will be performed again, as
follows:

(b) Calculations Performed Around 30 September 1997
(T=1997)

Following clause 18.2 again, we now seek to determine
the Present Value as at 31 December 1994 of the Total Redress Amount up to and
including CFY 97. From paragraph (b) of the definition of "Present Value" in
clause 18.1.1:

and

= $268.199m

with the "real discount rates" used here being taken from
Table B for the 2 calendar years separating 31 December 1994 from
TAR97, i.e. calendar years 1995 and 1996 (see Figure 1).
Thus

= $718.069m

and this figure is now shown in the last column of Table
A
.

Following clause 18.3, we again refer to equation (4)
(except that CFY 96 becomes CFY 97). Again the condition is not satisfied and so
no claim under clause 18.3 arises at 30 September 1997.

(c) Calculations Performed Around 30 September 1998
(T=1998)

In the same way as before, the Present Value calculation is
performed around 30 September 1998. As shown in the last column of Table
A
, the result is

Following clause 18.3, we again refer to equation (4)
(except that CFY 96 becomes CFY 98). Again the condition is not satisfied. So no
claim arises around 30 September 1998.