The New Zealand Settlements Act 1863 was to enable the Governor to establish Settlements for colonization in the Northern Island of New Zealand. This law was a companion to the Suppression of Rebellion Act 1863. Both Acts followed nine years of armed conflict that started with the Puketapu inter-tribal feud in Taranaki in 1854 and escalated to fighting between government forces and dissident tribes in Taranaki and Waikato from 1860 to 1863, and the loss of more than 1000 lives.

A report in the Press on November 17, 1863, reported the passage of the Act, which said:

Whereas it is necessary that some adequate provision should be made for the permanent protection and security of the well disposed inhabitants of both races, for the prevention of future insurrection or rebellion, and for the establishment and maintenance of her Majesty's authority, and of law and order throughout the colony: And whereas the best and most effectual means of attaining those ends would be by the introduction of a sufficient number of settlers, able to protect themselves and to preserve the peace of the country : And whereas there are large tracts of land, lying unoccupied, useless, and unproductive, which may be made available for the introduction and location of such settlers.

Sections of the Act were as follows

1. Short title

2. Governor in Council may proclaim District.

3. Governor in Council may set apart sites for Settlements.

4. Governor in Council may take land for such Settlements.

5. Compensation to be granted.

6. Persons not submitting deprived of Compensation.

7. Compensation to be granted according to the nature of the Title of the party claiming.

8. Compensation Courts to be established,

9. The Governor in Council to appoint Judges.

10. Judges to take oath.

11. Extent of Jurisdiction.

12. Power of Judges to compel attendance of witness, &c.

13. Colonial Secretary to transmit claims and Judges to hear them.

14. Certificates to be granted.

15. Grantee of Certificate entitled to amount from Colonial Treasury.

16. Towns, &c., to be laid out on land subject to this Act for Military Settlers.

17. Governor in Council may cause remaining land to be laid out in towns, &c.

18. And to be disposed of according to regulations to be made by the Governor in Council.

19. Disposal of proceeds of sale.

20. Act may apply to land obtained by purchase, &c.

Armed conflict with dissident tribes continued a further nine years until February 14, 1872, when the last shots were fired at the guerrilla leader Te Kooti as he retreated into the Ureweras. The conflict claimed the lives of 2154 anti-government Maori and 745 pro-government Maori, settlers, and British soldiers. To give an idea of the financial cost of the conflict, $1-million (which is $110-million in 2014 dollars) had been budgeted for war expenditure out of the $3-million intended borrowings of the New Zealand Loan Act 1863.

Proposed confiscations were contentious at the time. Former chief justice Sir William Martin argued at the time that the confiscation of New Zealand private land would only result in a “brooding sense of wrong”. Native Minister Donald McLean said the confiscations were an expensive mistake.