I won't comment on the specifics, because I don't know enough. But the general principle at issue here is well worth examining:
I'll spell it out: the reason Maori "get it for free" is because we stole it from them. Giving iwi a mere 20% of what they're entitled to seems to be quite a good deal for us. The reason we have a settlements process is because massive injustices were committed in the past, which stripped an entire people of their economic base and relegated them to disposessed poverty in their own country.Now, my heart bleeds as much as the next liberal's, but it never fails to irritate me when my fellow lefties start spouting the old 'white people are all imperialist/colonialist thieves!' rhetoric. There are several problems with it:
1) Individuals are not morally responsible for the actions of their ancestors. "We" didn't steal anything.
2) I have a general distaste for legalistic obsession with 'property rights'. There exists no 'natural law' which gives first occupants an enduring metaphysical right to their land. It's irritating when libertarians get hung up over this, and no less so with lefty anti-colonialists who hijack these right-wing ideals. There are other considerations besides history.
3) Dubious use of corporate entities. It's philosophically suspect to personify a race and then attach moral attributes such as victimhood to this fictional entity. This point may well be controversial, but I don't think the category "Maori" (or "Pakeha" for that matter) actually refers to a meaningful entity. Persons can be harmed, groups cannot. The sentence "Maori were wronged" is only meaningful (and true) if it's understood as a rough translation of something like "Some Maori individuals were wronged". The corporate individual "Maori" does not itself exist. As such, trying to compensate this fictional entity does not make any sense. Nor does it make sense to compensate those Maori individuals who were not wronged.
4) Due to generations of interbreeding, there is no longer a clear-cut distinction between Pakeha and Maori. All Maori now have at least some European blood in them. Thus a) they presumably should be counted among the allegedly guilty "we"? b) Separatist rhetoric (e.g. "iwi" vs "the Crown") is highly misleading, and c) the assumption of two distinct races does not accurately reflect reality.
5) Why favour the tribal elite, rather than urban Maori?
More generally, there are two broad ways to attempt justification of affirmative action: the argument from superiority, and the argument from inferiority.* Both are misguided, and rather racist in essence.
The argument from superiority (NRT's approach) suggests that Maori people have special rights (or 'entitlements') which people of other races do not have. In NRT's case, those 'special rights' appear to be a form of property rights inherited by modern Maori (or at least iwi) from their ancestors, marking them out as a sort of natural aristocracy. I outlined five objections to this above.
The argument from inferiority, by contrast, suggests that Maori are somehow disadvantaged by virtue of their race, and so are in need of welfare. Now, good little socialist that I am, I'm all for helping those who need it. But poverty is the appropriate indicator of need, not race.** To suggest otherwise would be patronising and racist in the extreme.
So, to conclude, I really don't see any justification whatsoever for race-based legislation, preferential treatment, 'affirmative action', or whatever else you want to call it. We should be helping those people who need it, but not those who don't. Racial generalisations will not help us to differentiate between those two classes. Most importantly, in response to NRT's argument, today's Maori are not "entitled" to the entire country, or indeed any 'special treatment' at all. They are New Zealand citizens just like the rest of us, and ought to be treated as such.
* = Within the limited domain of employment, there is also the argument from market forces (I'm just making up all these names, by the way), which I have a bit more sympathy for.
** = If a disproportionate number of Maori happen to be poor (for whatever reason), then a fair, poverty-targeting welfare system will (as an innocuous side-effect) result in that same disproportionate number of Maori being helped. And that is as it should be. However, the welfare system should not be actively targeting any particular race.
Update: With regard to point #4, see also this article by Denis Dutton, which mentions one of Tremain's memorable cartoons:
He portrayed an exasperated, potbellied European-looking bloke with scraggy beard and a bone carving around his neck, exclaiming to the reader, "Oh boy, I've got a grievance all right! The despicable way my Maori ancestors were diddled and hoodwinked by my Pakeha ancestors".