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:
x 
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:
= PVC + 
PV(TARn)
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 = 
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
Õ = standard mathematical notation for a multiplicative series
å = 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:
RV(TARn) = 
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:
= PVC + 
RV(TARn)
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:
RV(ARn) = 
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:
= 
RV(ARn)
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 government92', 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.
SECTION 18: RELATIVITY MECHANISM
18.8 CHANGE IN CROWN FINANCIAL YEAR
ATTACHMENT 18.1
EXAMPLE OF OPERATION OF SECTION 18
(Clause 18.9)
