Treaty payouts near $2.5b and continue to grow

Posted on August 21, 2011
By Mike Butler

The total redress paid under Treaty of Waitangi settlements is approaching $2.5-billion and will continue to increase, according to information from the Office of Treaty Settlements. Eleven settlements with a total financial redress amount of $216.64-million are awaiting legislation and 29 settlements totalling $2.078-billion have been completed. A further 14 agreements in principle totaling more than $220.5-million await progress, and a further 20 in negotiation are moving towards agreements in principle.

The $1-billion figure is controversial in the ethereal world of treaty settlements because that is the figure that triggers ratchet clauses in the 1995 Waikato-Tainui $170-million settlement and that of the same amount by Ngai Tahu in 1998. Once triggered, those clauses would provide both tribes with 17 percent of settlements over $1-billion.

The Treaty Negotiations Vote in this year’s Budget contains a multi-year appropriation of $1.4-billion for the five-year period 2011 to 2015. If that $1.4-billion is added to the total paid to date of $2.078-billion, it appears that the current National-Party-led government expects the redress of historical settlements to total $3.478-billion

There has been no clear statement from the Treaty Negotiations Minister Chris Finlayson or the Office of Treaty Settlements whether the ratchet clauses have been triggered. An Office of Treaty Settlements report from early last year put the total settlement redress at $958,289,025, which was under the threshold, and included a helpful breakdown of 28 settlements to that date with an amount for each. ¹ A check on their latest report from this year ² shows no total and no corresponding table, which may indicate that the office has gone coy on the total redress paid to date.

While Waitangi Tribunal reports are publicly available at www.waitangitribunal.govt.nz, and settlement deeds may be accessed at www.ots.govt.nz, because information is presented with a large amount of other information, I have assembled a spreadsheet that summarises details of the 29 settlements totaling $2.078-billion that have been completed.

I compared my list with the 2010 Office of Treaty Settlements list to see where the differences appeared. One area of difference relates to the 2008 Central North Island settlement. My addition of the components of that deal yields a total of $874-million, while the Office of Treaty Settlements puts the figure at $149,564,340. My figures, which derive from Office of Treaty Settlements deeds and summaries, list $223-million in accumulated rentals, $455-million rentals for 35 years from 2008, plus $196-million worth of land.

Settlements completed since the 2010 list was published relate to the Waikato River, which transfer $400.8-million to five tribes over 27 years.

Last year’s Office of Treaty Settlements four-month report included $12,207,780 to Ngati Manawa and $9,568,260 to Ngati Whare, both of which are awaiting legislation so therefore have not been completed. My spreadsheet does not include those settlements.

To compare apples with apples, if you take the 2010 Office of Treaty Settlements four-month report figure of $958,289,025 and deduct the amounts of $12,207,780 to Ngati Manawa and $9,568,260 to Ngati Whare, and add the $400,800,000 Waikato River settlements, the total is $1,337,312,985.

Therefore, the total settlement redress is over $1-billion whichever way you look at it. Any other version would have to involve “creative” accounting.

While news reports include a total financial redress figure, in the millions, often without further explanation, the deeds on the Office of Treaty Settlements site detail the components of each settlement.

For instance, the $170-million total redress amount for the 1995 Waikato-Tainui Raupatu settlement includes about 200 unimproved properties, plus another 200 improved properties. The list includes a polytech campus, Waikato University campus, railway land, courthouses, Corrections property, police stations, power stations, Crown forests, CoalCorp property, ECNZ property, Ruakura AgResearch, CYPFS properties, NZ Post properties and so on, that are leased by Crown entities for 31 years. Details of the ongoing rental income are not available, so it is not obvious the extent to which Waikato-Tainui were given several hundred cash cows to benefit from as they wish.

In addition, because the tribe has had $170-million worth of commercial and residential property transferred to tribal fee simple ownership with current valuations, from day one of the settlement the iwi corporation could buy further properties, which is where the government further obliged by offering the right of first refusal over government-owned properties in the tribe’s area of interest.

The settlement recipient corporation could get a valuation on a prospective purchase, borrow against 60 percent of that purchase, and use equity in settlement properties to complete the purchase. Almost immediately the iwi could buy 42 more properties worth $10-million each. With the benefits of the property boom over the past 10 years, the initial $170-million would have grown to around $500-million, with on-going stream of rental income reducing debt, further increasing capital gain.

Commercial property investment in general can be a minefield, dealing with fair-weather-friend lenders, tenants with shaky businesses, and an ever-changing economy. The newly created tribal corporations have been protected from all that with freehold properties given to them (no mortgage), and gold-plated leases with government tenants for years to come. There is also the implied “insurance” that if anything comes unstuck, the government could be blamed under the treaty principle requiring active protection.

Unfortunately for Waikato-Tainui, internal bickering between the revered 155-year-old Kingitanga movement, embodied by the then Maori Queen, Dame Te Atairangikaahu, and new democratic forces, followed this sudden influx of prosperity. Five years after the tribe’s $170-million settlement, its $245-million asset base had been eroded by 16 per cent, and the tribe struggled with a $24-million debt. Details of the tribe’s woes came with news of an $8.6-million debt that was forcing the sale of the Auckland Warriors rugby league club. Tainui had invested $6.27-million in the Warriors. ³

Later settlements with other tribes extended the right of first refusal period to 50 years, while the RFR period in settlements awaiting legislation has been extended to from 100 years to 169 years. Later settlements include interest on the settlement amount to cover a time delay between settlement and legislation.

Cultural redress appeared from 1997, in the South Island tribe Ngai Tahu settlement. The cultural showcase of that deal involved vesting Aoraki Mount Cook in Ngai Tahu that gifted it to the Crown (a sometimes confusing term which is shorthand for the executive function of the government of the day which should represent the people of New Zealand).

Seventeen cultural redress sites were transferred to Ngai Tahu, runanga were appointed to hold and administer seven areas, historic reserves were created at seven areas, statutory acknowledgements and deeds of recognition were extended over 64 mountains, lakes, rivers, wetlands, and lagoons, 14 topuni (overlay of Ngai Tahu values) were created, as were a number of nohoanga camping areas, which are one-hectare sites at traditional food gathering areas for use of Ngai Tahu members for 210 days each year.

How Ngai Tahu, with a population of less than 3000 in 1840, came to be regarded as owners of the South Island, is an interesting debate that has, in official eyes, been won by Ngai Tahu. Originally a Poverty Bay-Hawke’s Bay tribe, Ngai Tahu arrived in the South Island sometime in the 17th century, when they merged there with another former North Island East Coast tribe Ngati Mamoe. Both newcomer tribes supplanted the pre-existing Waitaha (also known as Moa Hunters). Another North Island tribe, Ngati Toa, invaded in 1828, inflicting heavy casualties, forcing Ngau Tahu to retreat. Ngati Toa was involved in northern South Island land transactions with the New Zealand Company around 1840.

In the mid 19th century, Ngai Tahu sold most of the South Island in at 10 deals: 400,000 acres of Otago for 2400 on July 31, 1844; 20 million acres from Otago to Nelson for 2000 on June 12, 1848; 230,000 acres of Bank’s Peninsula in at least three deals for a total of £650 from 1849-1856; over seven million acres of Southland for 2600 on August 17, 1853; one million acres of North Canterbury for £500 on February 5, 1857; 2.8 million acres of Kaikoura for 300 on March 29, 1859; seven million acres on the west coast for 300 on May 21, 1860; and Stewart Island for 6000 on June 29, 1864.

At the Ngai Tahu settlement signing on November 21, 1997, Prime Minister Jim Bolger said: “It will allow Ngai Tahu as a tribe to develop a workable economic base and become an economic force in the South Island and New Zealand.” There was no reference to two earlier final settlements of Ngai Tahu grievances, one in 1906 involving a grant of 142,463 acres of land to settle 4063 “landless” Maori, and the other, the Ngai Tahu Claim Settlement Act 1944, which awarded 300,000, payable at a rate of 10,000 a year for 30 years.

While the Ngai Tahu deal was being negotiated, the Bolger National government proposed a $1-billion limit for the settlement of all historical claims known as the fiscal envelope. Tribal spokesmen of the day vehemently rejected such a limitation in advance of the extent of claims being fully known and the fiscal envelope was dropped before the 1996 election. The 1995 Waikato-Tainui $170-million settlement was described as “17 percent”, which was its proportion of the then set-aside $1-billion.

As already mentioned, that $1-billion has blown out to $2.078-billion, with a further $216.64-million waiting to be transferred immediately, a further 14 agreements in principle totaling $228-million awaiting progress, and a further 20 in negotiation moving towards agreements in principle, according to the Office of Treaty Settlements.

National Party led governments have settled 16 of the 29 settlements so far with a further 11 awaiting legislation. As the privatisation party, it is logical for the National Party to be a major player in such settlements, although it is interesting to note that numerous politicians who would otherwise oppose privatisation, support privatisation of state assets to Maori entities. The National Party also has a number of key members married to key iwi members throughout the country, so will always be more sympathetic to Maori demands.

There is excitement in the corporate iwi world, if a conference titled “Nga Whetu Hei Whai, Charting Pathways for Maori Industry Futures” set down for August 29 and 30, is anything to go by. Speakers are expected to highlight industry opportunities for Maori and international examples of tribal and indigenous trade and industry development will be presen

ted. Twelve panels will provide strategies in, dairy, sheep and beef, energy, ICT, and technology, forestry, property development, health and aged care and horticulture. Strategies for 30 or 40 years will be discussed.

However, there is little sign of excitement beyond the individuals directly involved in settlements or tribal business. Only around 50 percent of registered members are interested enough to vote on whether to accept settlement deals. Non-Maori are by definition excluded from the grievance settlement process. The directors of today’s tribal corporations have slim ancestral links to the people who suffered up to 171 years ago. Years down the track, these corporations will have as much benefit to non-corporate Maori as non-Maori private businesses have to Pakeha.

It’s money for jam for those in the business.