Economic Security
The Economic Redress component of the Crown's Settlement Offer - cash and mechanisms - gave Ngāi Tahu the capacity, right and opportunity to re-establish its tribal base. This asset base provides the platform to generate the funds required for the tribe's social and cultural development.
Introduction
Economic losses to Ngāi Tahu from the Crown's land purchases of the last century were valued at more than $20 billion in economic terms.
The Crown's Settlement Offer of $170 million was clearly much less than this amount. However, in deciding whether the Crown's Settlement Offer was acceptable, it was important to ask:
Was the offer 'sufficient' to re-establish the tribe's economic base, in order for it to fund the social development of Ngāi Tahu?
Could the tribe do better by other means, and would these be more or less risky than the 'Settlement Offer'? If the tribe could do better, when could these alternatives be achieved, and would they deliver cultural redress - such as mahinga kai - as well as economic redress?
The Ngāi Tahu Negotiators believed that the $170 million, with the 'bolt-ons', was sufficient redress to re-establish an economic base for the tribe.
Cash Compensation
The $170 million cash in the Crown's Settlement Offer comprised:
- A $10 million non-refundable payment which was made 'on-account' in June 1996, to show the Crown's commitment to achieving a final settlement.
- A second $10 million non-refundable 'on-account' payment, when Te Rūnanga o Ngāi Tahu accepted the Crown's Settlement Offer.
- The balance of $150 million, payable once the Settlement Legislation was passed.
Interest was paid on the Ngāi Tahu Settlement amount between October 1996, when the Heads of Agreement was signed, and the date that the cash was paid. Interest totalling approximately $25 million was paid once the settlement legislation was passed.
Deferred Selection Process (DSP)
The Deferred Selection Process (DSP) mechanism allowed the tribe to buy if it chose to, Crown assets from a defined 'pool', within 12 months of Settlement Legislation being passed, up to a total value of $250 million. By doing so, the tribe had an opportunity to buy a range of assets, in a number of economic sectors and locations that best produced the income required for social development.
There were a number of Pre-Selected Assets that the tribe decided to buy from the Crown once the Settlement offer was accepted. Once the tribe bought these pre-selected assets, including the High Country Stations, they were able to use the remaining cash compensation to buy other available Crown assets of their choosing.
The pre-selected assets were:
- The High Country Stations
(see Cultural Redress - Ownership and Control) - Assets in the Ngāi Tahu 'Land Bank'
Eight other properties, such as properties currently owned by Telecom in Christchurch and Queenstown.
The 'Land Bank' was set up in 1991 as a protection for Ngāi Tahu while the Claim was still outstanding. As Crown agencies wanted to sell surplus lands the tribe had an opportunity to place those lands in the Land Bank, to ensure they were available for use in a settlement. The tribe has also been able to buy certain assets out of the Land Bank with its own money since 1994.
The range of assets in the DSP "pool" included:
- 55 commercial properties, including for example, the Christchurch and Dunedin Police stations
- 54 farms in the Ngāi Tahu rohe owned by Landcorp
- Certain Crown forestry assets in the rohe, including six Aoraki commercial forests, and 27 Crown Forestry Licence (CFL) lands
The DSP 'pool' provided the tribe with access to land and property assets, and the forestry and farming sectors. Ngāi Tahu could choose to buy those assets - whether the Crown wished to sell them or not. Some of the properties Ngāi Tahu selected are still required for use by the Crown - Police and Courts sites in Christchurch and Queenstown, for example. Consequently these properties are leased back to the Crown at market rentals. As these leases are with high quality tenants, they produce a sound cash flow.
In respect of the Aoraki forests Ngāi Tahu could have chosen to buy the land, the trees, or both. For the CFL lands Ngāi Tahu had the choice to buy the land, but not the trees on the land (since the trees are owned by private parties). By choosing to buy the CFL lands, the tribe could also obtain the associated accumulated rentals of around $20 million, as described above.
The DSP pool contained in excess of $400 million of assets. The tribe was able to use its cash compensation to buy DSP assets up to a total value of $250 million. Because the cash compensation was less than $250 million, the tribe needed to raise funds from other sources - for example from banks. An important point is that any assets not taken under the DSP are still covered by the Right of First Refusal.
An important feature of the DSP mechanism is that it gave the tribe time to select desired assets. All DSP assets were bought at their current market value as at the date the Deed of Settlement was signed. However, Ngāi Tahu had up to 12 months from the date of Settlement Legislation to inspect, value and choose which Crown assets, if any, it wished to buy from the DSP 'pool'.
Right of First Refusal (RFR)
The Settlement included a Right of First Refusal (RFR). This mechanism, which will last forever, in respect of a defined range of assets ensures that Ngāi Tahu will have first opportunity to acquire a large range of Crown assets, at their current market value. These assets will become available to Ngāi Tahu as and when the Crown chooses to sell them. Among other things, the RFR gives Ngāi Tahu an opportunity to secure assets that it might not be able to get through other means and accumulate groupings of assets over time that can be used to the tribe's advantage.
This RFR is triggered whenever Crown agencies decide to 'dispose' of the RFR assets. Dispose includes the sale of assets, and the issuing of long term leases over the assets (50 years, including rights of renewal). In certain circumstances the RFR is also triggered if the relevant assets are transferred into a company and that company is later sold. The RFR applied to an extensive range of assets in the rohe owned by the Crown as at the date the Deed of Settlement was signed, but not to assets subsequently purchased by the crown.
RFR - Range of Assets
Notes
- Crown Land - Departmental land (eg. Education, Defence, Corrections), Crown Land and Unallocated Crown Land (including Crown Forestry Land)
- Airports - Crown's 50% shareholdings in each of Dunedin and Invercargill airports, 25% shareholding in Christchurch airport (subject to existing pre-emptive rights) and the assets of Milford airport.
- Other - Includes assets from DSP pool that are not taken under DSP, and land held by New Zealand Fire Service and Transit New Zealand.
As a safety mechanism memorials were added to the titles of RFR properties, telling Crown agencies and potential purchasers of the properties that these properties must be offered to Ngāi Tahu before anyone else.
Under the RFR, the Crown sets the offer price, terms and conditions for the assets being sold. However, as a sign of the new relationship between Ngāi Tahu and the Crown, the RFR process provides that both parties negotiate in good faith to agree the price, terms and conditions for a sale of the asset to Ngāi Tahu. Hence, Ngāi Tahu cannot be forced to accept any unreasonable price, terms or conditions. Nor can the asset be sold to others on more favourable price, terms, or conditions, without Ngāi Tahu first being offered the asset on the same basis.
Relativity Clause
A special 'top-up' mechanism - a form of 'insurance' called the Relativity Clause - was also negotiated. Under this mechanism, if the value of all Treaty settlements between 1994 and 2044 ends up being more than $1 billion, then Ngāi Tahu will be entitled to a top-up payment to ensure its position is maintained relative to other tribes that settle.
How the Relativity Clause Works
Mechanism Timelines
Since the DSP and RFR mechanisms take over the role of the Land Bank, it ceased to operate on the date that Settlement Legislation was passed. Under the DSP, Ngāi Tahu had 12 months from the date of settlement to inspect, value, and decide which, if any, of the assets in the DSP pool it wanted to buy. The RFR began operating once the Settlement Legislation was passed, and continues forever. The Relativity Clause operates for all settlements in 1994 to 2044.
Economic Redress: Questions & Answers
Q: Why was the economic redress based on cash and mechanisms, not just land?
A: To give the tribe maximum flexibility and opportunity to choose the best assets to generate the funds needed for its social development, the negotiating group sought a cash settlement plus mechanisms providing access to Crown assets (such as land and forests). This way the tribe can buy whatever assets it really wants from the Crown or other parties.
Q: Why did Ngāi Tahu have to pay for assets under the DSP and RFR?
A: The Crown offered Ngāi Tahu $170 million in cash. Te Rūnanga considered a cash-only settlement to be inadequate, given the tribe's losses. The negotiating group was charged with securing 'bolt-ons' that enhanced the overall value of a settlement. The DSP and RFR mechanisms (and Interest and Relativity Clause) are such bolt-ons. These mechanisms ensure the tribe has the right and opportunity to acquire land and other assets from the Crown, even though this involves Ngāi Tahu using its Cash Compensation to do so. Without these mechanisms the tribe would have no such access to these assets.
Q: Was the $170 million Ngāi Tahu Settlement amount sufficient?
A: No package that is economically affordable by New Zealand could adequately compensate Ngāi Tahu for our full loss and thus give us 'justice'. However, the Crown's Settlement Offer was judged by the whole Ngāi Tahu Negotiating Group to be the best that could be achieved in present circumstances. It is extremely important to note the total package of economic and cultural redress contained within the Crown's Settlement Offer was much more than the $170 million component. It is also necessary to consider the offer in the light of other significant factors including:
The desirability of settlement now, rather than in another 5, 10 or even 100 years, Every year without an economic base further hinders our tribal development.
The economic and cultural components in the Crown's Settlement Offer, beyond $170 million, none of which would be attainable other than through direct negotiation.
The 'benchmark' for Treaty settlements which was set when Tainui accepted $170 million to settle their claim.
Q: Wouldn't we have got more by sticking to legal action through the Courts?
A: The Ngāi Tahu Negotiating Group and Te Rūnanga o Ngāi Tahu believed that the only way to a comprehensive settlement was through negotiation. Litigation is extremely costly, has no guaranteed outcomes, and could not provide any of the important Economic Redress elements such as Deferred Selection Process and the Right of First Refusal. Furthermore, none of the Cultural Redress elements, such as place names, statutory recognition and the Protocols with the department of Conservation would be available through the Courts.