Bryan Gould: TECT cheques... who really benefits?

Money delivers more when it is invested in the community, says Bryan Gould. Photo / Getty Images

Some years ago, as vice-chancellor of Waikato University, I found myself heading a campaign to raise money for an Academy of Performing Arts at the University.

There is no tradition in New Zealand, as there is in America, of charitable giving on a large scale by wealthy individuals, and we quickly exhausted the possibilities of those generous souls who were able and prepared to help.

I was beginning to despair that we would ever reach our $20 million-plus target, when a local charitable trust, the Wel Energy Trust, came to the rescue. The trustees were constantly torn between, on the one hand, using their available funds to help consumers by funding discounts on electricity bills and, on the other, supporting worthwhile local projects. It was our good fortune that they opted to support us – and the result? A world-class facility that has brought great pleasure and prestige to both the university and its community.

The Tauranga Energy Consumers Trust (TECT) – the Tauranga equivalent of the Wel Energy Trust – have faced a similar choice. Their current practice is to use the greater part of their available funds (which are derived mainly from their large shareholding in Trustpower) to issue cheques to Trustpower consumers so as to reduce, seemingly, the burden of their electricity bills; and they make grants only with what is then left.

They are now considering changing that practice so as to become a charitable trust, ready to support a wider range of local projects that might not otherwise get off the ground. This will mean, in due course, the end of the regular cheques – and, not surprisingly, there is no shortage of objectors to such a change.

For individual consumers, particularly those on low incomes, the non-arrival of the cheques (even though the blow is to be softened by the immediate payment of a substantial lump sum of $2500 to each customer and the continuation of a further five annual payments, while the making of grants would start immediately) will mean that an apparently significant boost to their budgets will be removed. Everyone enjoys getting "something for nothing", particularly when the "something" can be spent on whatever they like. And one suspects that what many would miss is the thrill of receiving a cheque in the post.

Trustpower, too, say that they oppose the change, for reasons that might seem obvious. Competition in the electricity supply industry is hotting up, and consumers are increasingly likely to go to a website established for the purpose to check where they can get the best deal. When consumers discover that their Trustpower bill is higher than they might have to pay elsewhere, it is very convenient for Trustpower to be able to point to the TECT cheques as reducing the net cost.

There are many businesses of course, who would love to have a fairy godmother paying out cheques to their customers. From the customer's viewpoint, however, the budgetary benefit delivered by the cheques would be just as real if they were just charged lower prices instead.

It is hard to see, in other words, the particular advantage to be gained for the customer from a convoluted process which allows Trustpower to go on charging, in my view, more than they should and then being able to point to a cheque being paid out by a third party. Wouldn't it be simpler for the customer if Trustpower just reduced their charges? It's something they won't do, I suspect, for as long as the cheques keep coming.

The decision as to which course to take will be made by consumers. In the end, the answer should depend on a clear-eyed analysis of the economics, and a clear answer to the question of who really benefits from the current practice. Those answers should then be compared with the potential boost to the city from the ability to fund major projects that would otherwise never reach fruition. As always, money delivers more when it is not spent in small amounts by individuals on their own purposes but is brought together into larger totals and invested in projects for the good of the community.

- Bryan Gould is a former British MP and Waikato University vice-chancellor.

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