Quantification of Loss – negotiations with the Crown

On the 20th anniversary year of the settlement of Te Kerēme, we look back at the vastly different worldviews of Ngāi Tahu and the Crown on how to quantify the Ngāi Tahu loss, and how resolution was reached despite this huge gulf. Kaituhi Dr Martin Fisher explains.

Central to the tensions that arose during the course of the Ngāi Tahu negotiations was the question of how the total value of the settlement would be ascertained and dealt with. While the Crown approached the negotiations from the perspective that earlier settlements of the 1940s only required updating, negotiators for Ngāi Tahu believed that the amount returned to them had to reflect the value of what they had lost. Ngāi Tahu understood that full reimbursement would have been impossible, but they believed that some rationalisation or formula was necessary.

The negotiations established some of the basic parameters by which the Treaty settlements were intended to provide recompense for past loss, and the extent to which they were intended to facilitate an improved socio-economic position for Māori, through better education and employment. The Ngāi Tahu settlement, and indeed all settlements, have been estimated as less than 1 per cent of the value of the assets that were improperly acquired from the ownership of these groups. Ngāi Tahu spent much time and effort attempting to obtain a settlement that more accurately reflected what they perceived as the financial value of their losses, and as a result the question of quantification featured as a central part of the negotiations.

For Ngāi Tahu, the question was whether the amount offered by the Crown was sufficient to secure an agreement to the Crown’s requirement that Treaty settlements be a full and final settlement of their historical Treaty claims. In achieving full and final settlements, the Crown’s focus was not only on limiting the amount made available in these settlements, but doing so in a way that set acceptable precedents for settlements to come.

Other than the issue of compensation for military invasion, nearly every type of Treaty claim is represented among the many and diverse claims that together make up Te Kēreme. As soon as negotiations formally began in September 1991, it was clear to both parties that there would be a number of issues to assess under the settlement. Setting completely aside the matter of fisheries (which would become settled under the 1992 pan-Māori agreement for half of the Sealord fishing company and fishing quota), there were specific issues such as the establishment of a legal personality under Ngāi Tahu control, the return of some conservation lands, mahinga kai areas, and the transfer of pounamu. Looming large over all of the specific issues was how the settlement would address the claim regarding the miniscule prices and tiny “Māori reserves” provided for the land purchases around the Ngāi Tahu rohe.

Generally referred to by the title of “Reserves Not Awarded” early in the negotiations, the discussions around the issue were related to some of the first deliberations in the modern Treaty settlement process regarding the quantification of loss. Before the $170 million benchmark had been formally established, first by the pan-Māori 1992 Fisheries Settlement Report, and confirmed by the 1995 Waikato-Tainui raupatu (land confiscations) settlement, it was unclear exactly to what limit financial compensation would reach. Trying to resolve these issues with the Crown, Ngāi Tahu negotiators and advisors were often referred to Treasury officials.

Debates began over how compensation would be framed. Ngāi Tahu viewed the issue strictly as a property rights issue that needed to be resolved. Treasury especially, and the Crown generally, attempted to frame the matter in the language of needs rather than rights. Treasury began spending an inordinate amount of time attempting to calculate how much it would cost to address the needs of Ngāi Tahu individuals and to elevate them economically to a nationally median level of prosperity. Although Ngāi Tahu argued against the needs basis on which Treasury was attempting to alter the discussions, the iwi began to scramble to enlist as many tribal members as possible to show the Crown that the needs of Ngāi Tahu whānui were wide and extensive. At the same time it built its own rationales and calculations for compensation on the basis of property rights.

After promising early discussions in the first six months of their negotiations, matters gradually came to a standstill regarding the overall financial size of the settlement. After Ngāi Tahu put forward a position of $1.3 billion, the Crown, with Treasury leading the way, countered with a completely unexplained figure of $100 million.

Since there were no precedents to work with, Ngāi Tahu and the Crown were both negotiating from uncertain positions. As a result, the Crown put Ngāi Tahu in a very challenging situation by asking Ngāi Tahu to table its own view of the financial side of a potential settlement. In such a situation Ngāi Tahu were essentially forced to begin the bidding, and to do so at anything but a high point would have been foolish. Nonetheless, Ngāi Tahu put forward clear and calculated rationalisations.

The Waitangi Tribunal in its main 1991 report had not found in favour of Ngāi Tahu in its specific claim to “tenths” having been promised as reserves in the 1844 Ōtākou purchase. However, the Tribunal did generally condemn the Crown’s provision of paltry reserves, and although it could find no (contemporary written European) evidence specifically in the case of the Ōtākou purchase in which “tenths” had been promised, it did find overall that had the Crown reserved a tenth of the land purchased at Ōtākou, and across all of the purchases of land from Ngāi Tahu, it would have been “greatly to the advantage of Ngāi Tahu.”

Using this “tenths” principle from the Tribunal report, Ngāi Tahu established a case for a settlement that would represent 10% of the most basic value of all the lands purchased by the Crown in the Ngāi Tahu rohe. In the early 1990s, the prairie value (that is the value of the land based on its original state) of the approximately 34.5 million acres purchased between 1844 and 1864 was around $13 billion. As a result, in early February 1992, Ngāi Tahu sought a settlement valued at $1.3 billion, ignoring all of the economic potential (and risks) of those lands that was possible over the corresponding 130-year period. From a Ngāi Tahu perspective it was a very conservative estimate of their loss, while the Crown viewed it as far too large and unrealistic.

After promising early discussions in the first six months of their negotiations, matters gradually came to a standstill regarding the overall financial size of the settlement. After Ngāi Tahu put forward a position of $1.3 billion, the Crown, with Treasury leading the way, countered with a completely unexplained figure of $100 million.

At the end of February 1992, as a show of compromise, Ngāi Tahu halved their original proposal of $1.3 billion to $650 million. Ngāi Tahu envisioned having a diverse range of Crown assets such as forestry cutting rights and land, commercial property owned by the Crown, properties already in their land-bank, Landcorp land, state-owned enterprise (SOE) shares, Housing Corporation properties and mortgages, indigenous forests, coal mining licences, Crown pastoral leases, and any remaining compensation as cash to make up their proposed $650 million settlement.
Ngāi Tahu also offered payment deferral mechanisms, in which the settlement could be paid over many years and could even be tied to New Zealand’s Gross Domestic Product (GDP) growth relative to the mean Organisation of Economic Cooperation and Development (OECD) GDP growth. Faced with what it perceived to be an unrealistic proposal, the Crown began to internally debate how to proceed.

On the side of the Crown, Sir Douglas Graham began the negotiations by stating that he did not want to engage in a sort of “Dutch auction.” O’Regan accused Graham and Crown officials of creating a negotiation process that was far worse; O’Regan termed it a “lolly scramble.” In O’Regan’s view, the Crown was forcing Māori into conflict with each other by pitting iwi against iwi for the limited financial compensation that was available overall.

Officials at the Treaty of Waitangi Policy Unit (TOWPU) attempted to develop a settlement package which doubled Treasury’s original figure to $200 million at the Cabinet level in July 1992. However, they were countered by Treasury officials. The recommendations of TOWPU were never accepted by Cabinet, and matters were overtaken by the fast developing pan-Māori fisheries settlement, of which Ngāi Tahu would be a part. Following the September 1992 fisheries settlement, the Crown began an extended two-year policy development process internally with a number of different government departments contributing, including TOWPU, Treasury, the Crown Law Office, the Department of Conservation, Te Puni Kōkiri, and others. The process would eventually evolve into the fiscal envelope proposal. This undertaking effectively sidelined the Ngāi Tahu negotiations from the second half of 1992 until 1994. Ngāi Tahu and the Crown continued to meet at their monthly meetings, but there was little advancement in the negotiation process.

Ngāi Tahu lead negotiator Tā Tipene O’Regan expressed the Ngāi Tahu objection to the fiscal envelope approach, which the Crown was developing to settle all Treaty claims fully and finally. On the side of the Crown, Sir Douglas Graham began the negotiations by stating that he did not want to engage in a sort of “Dutch auction.” O’Regan accused Graham and Crown officials of creating a negotiation process that was far worse; O’Regan termed it a “lolly scramble.” In O’Regan’s view, the Crown was forcing Māori into conflict with each other by pitting iwi against iwi for the limited financial compensation that was available overall. He also accused the Crown of taking on the same colonial positions that government officials Walter Mantell and James Mackay had taken to create the Ngāi Tahu grievances in the 19th century. While there was only a measured response to O’Regan’s letter from Graham, internally Crown officials were frustrated at the allegations of colonial attitudes. Some officials were working very hard to persuade Ministers to be more generous and some were not as helpful, but both groups bore the brunt of Ngāi Tahu frustrations. The work commissioned by Ngāi Tahu to estimate the value of its loss was set aside by the Crown. The fisheries settlement and the fiscal envelope policy would establish a new benchmark and set a fiscal cap, divorced from iwi estimates of loss.

The quantification of historical loss was an important issue for Ngāi Tahu during their negotiations. While the Crown made clear that political decisions rather than purely quantitative equations would ultimately determine the amount of compensation, Ngāi Tahu nonetheless tried to have the quantification of loss as a factor in their settlement before the decision was gradually made for the $170 million fisheries settlement in 1992 that set the benchmark. The envelope policy was developed to create some certainty for the Crown’s own fiscal planning, and to sell the policy to the public – both Māori and Pākehā. Its gradual development in the middle of the Ngāi Tahu negotiations was frustrating for each group, as they had to deal with the uncertain development of new principles for negotiation.

Ultimately, Ngāi Tahu settlements were connected to the fiscal envelope policy, but the Right of First Refusal process and Deferred Selection Process, interest payments on the unpaid sum and the relativity clauses negotiated by Ngāi Tahu allowed for the prospect of additional financial redress on top of the $170 million nominally provided. As the Crown effectively divorced estimates of loss from the quantum provided, Ngāi Tahu understood that it would have to maximise its economic benefits within the rigid system imposed by the government. The quantification of loss would have little effect on the final quantum, but the historical evidence and moral weight behind its estimation will certainly stand as proof of the substantial discounts which settling groups have accepted to begin some form of development and healing.

Dr Martin Fisher is a lecturer at the Ngāi Tahu Research Centre at the University of Canterbury.