Justice Minister Andrew Little has confirmed Teina Pora, who was wrongly jailed for more than 20 years, will have his compensation increased by almost $1 million to include inflation.
Mr Pora was wrongly jailed at the age of 17, for the rape and murder of Susan Burdett in 1994. His conviction was quashed in 2015.
He received an initial $2.5 million in compensation from the Crown, but that figure was not adjusted to include inflation.
- Teina Pora should get inflation on compensation - High Court
- Justice Minister Andrew Little won't appeal Teina Pora's extra compensation
Teina Pora will receive an extra $988,099, bringing the total compensation payment to $3.5 million.
"Additionally, Mr Pora will receive $45,000 in costs from his successful judicial review of the last National Government’s refusal to inflation adjust," Mr Little said.
In August 2017, a High Court judge ruled that the initial compensation package awarded to Mr Pora should have been adjusted for inflation.
Justice Rebecca Ellis said former Justice Minister Amy Adams' interpretation of the guidelines for compensation was incomplete and constituted an error of law.
Mr Pora's initial payout was based on $100,000 for each year he spent in jail, but wasn't adjusted for inflation.
In her ruling, Justice Ellis said the guidelines were brought in in 2000 and should've been reviewed over the years.
The National Government had reserved the right to appeal the ruling - but Mr Little decided against that.
Mr Little said Cabinet has decided to review the compensation guidelines "so that we don't fall into this kind of trap again".
He hoped the payment would give Mr Pora "some scope to get his life back on track" and "plan with some certainty for the future".
"Teina Pora was the victim of one of New Zealand’s worst miscarriages of justice," he said.
"He was robbed of more than two decades of his life, languishing in prison for crimes he did not commit. These were years when Mr Pora could have been working to build his future and his family."