The Origin of The Relativity Clauses

Originally published on The Spinoff

Relativity clauses are in the news again, with the “revelation” by that both Waikato-Tainui and Ngāi Tahu received additional cash payments under the terms of their respective settlements with the Crown in December. In total, $370 million was paid out, with Waikato-Tainui receiving $190 million and Ngāi Tahu receiving $180 million.

For those outraged by the fact that these iwi – the first to take the plunge and start the settlement process at a time when they were told the funds were small and the settlement period finite – are receiving top-up payments, I’ll explain a little bit about relativity clauses, and why are they going to continue to be a feature of the Treaty settlement process. To understand this issue we need to go back to the 1990s and the fractious debate around the ‘fiscal envelope’.

In tracing the genesis of issues such as these, it is tempting to go all the way back to 1840 and start recounting history from then through to the modern day. Every piece of our history provides the context for the discussions around the invocation of the relativity clauses. But for present purposes, let’s start in 1990 and the election of the National Party after a six-year absence from the Treasury benches. Included in the 1990 National Party manifesto was a commitment to settle all Treaty claims by 2000, an optimistic time frame given the ongoing settlement negotiations some 28 years later. In order to fulfil this commitment and to ensure that the costs of settlement were not exorbitant given the fiscal constraints of the early 1990s, a cap to the total value of settlements was proposed by the National government.

The announcement of a $1 billion ‘fiscal envelope’ for Treaty settlements in 1995 resulted in widespread protest from Māori around the motu. Ranginui Walker writing in Ka Whawhai Tonu Matoudescribed the protests that followed. “Starting on the University of Auckland and Auckland Institute of Technology campus,” the protest quickly spread to hui in Turangi, Waitangi and to a series of consultation hui held by Te Puni Kokiri. In Turangi, the fiscal envelope was called “an affront to tino rangatiratanga.” In Tauranga the government’s proposal document was thrown on the ground and stomped on. In Te Kuiti a copy was shredded in front of the prime minister, and on the East Coast blankets were returned to the Crown in a symbolic exchange for the return of land to the tribes. The protests would later be characterised by Wira Gardiner (responsible for facilitating the consultation hui in his role as CEO of Te Puni Kokiri) as like being subjected to “the flames of hell”.

Evocative language, but even my recollections as kid at the time bring to mind a period of strong anger from Māori that the value of our losses and the 150 years of subjugation was worth only an infinitesimally small amount of what was taken from us.


Nevertheless, two iwi proceeded to settlement. First, Waikato-Tainui in 1995 for $170 million and Ngāi Tahu in 1997, also for $170 million. These were to be the benchmarks on which all subsequent settlements were to be based. Both were settled on the basis of the fiscal envelope. Both were savvy enough to ensure that they were protected in case the government backed down from its adherence to the fiscal envelope in the face of overwhelming Māori protest against the policy, which it did. Thus, the relativity clauses.

These clauses are relatively straightforward, stating to the effect that should the total value of all Treaty settlements exceed $1 billion in 1994 dollar terms, the value of the Waikato-Tainui settlement would be revalued upwards by 17% of the total value above $1 billion, and for Ngāi Tahu, a revaluation upwards of 16% would occur. And so while the settlements were indeed “full and final”, the relativity clauses were part of those settlements to ensure that neither Waikato-Tainui or Ngāi Tahu were punished financially for being the first iwi to settle with the Crown. Think of the relativity clause payments as deferred payments that, but for the fiscal envelope, would have otherwise been received when the original settlements occurred.

But the relativity clauses are problematic in one respect. In quantifying the extent of the losses of Waikato-Tainui and Ngāi Tahu as a fixed percentage against the total losses experienced by Māori around the country, the settlements impose on Māori a sense of ranking of our losses, as if the hurt experienced by one iwi is somehow worth more than those experienced by others. Our pain cannot be quantified. It can not be reduced to a dollar amount, or a percentage. The relativity clauses caused disharmony between iwi in the mid-1990s as iwi felt cornered into fighting over the remaining $660 million of the fiscal envelope. They continue to cause disharmony today as every dollar of settlement money that an iwi receives costs the Crown $1.33, resulting in downward pressure on the value of settlements finalised in recent years.

The Treaty settlement process is far from perfect, and the relativity clauses are another flaw in the haphazard design of the system. But in all the noise around the additional money received by Waikato-Tainui and Ngāi Tahu, it needs to be remembered that the total cost to the Crown of settling Māori grievances arising from the loss of land, culture, and identity over the past 170 years will amount to less than $3 billion, paid out over 30 years. While Ngāi Tahu settled for $170 million in 1997, the Crown’s own research at the time indicated that the total value of the loss suffered by Ngāi Tahu amounted to $16 billion. The price of relativity is little more than a drop in the bucket when compared to the actual loss suffered by Māori.

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