Proceeds ‘payout’ won’t happen . . .

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

In answer to a correspondent's question about proceeds from a sale of Eastland Network, your editor agrees that the Trust Tairawhiti model of building up capital and investing some of that over time in identified regional needs is better than distributing proceeds widely, and thinly, to beneficiaries.

Trust Tairawhiti could make payouts to its beneficiaries, who are essentially all adults and businesses in the Gisborne district, one subset of which is the region's power users.

It won't, though, as much as that would be useful for many households suffering from fast-rising costs this year. There would be equity issues over sharing proceeds with long-time power users versus recent arrivals; and there would be very limited benefit in distributing proceeds to households and businesses that don't need it.

The decision back in the early 1990s to establish a community trust rather than sell the electricity network or create a consumer trust, where regular dividends are paid to power users, has proved a good one. Equity of $20m at establishment has grown more than 20x to $430m at last count a year ago.

The deed for Trust Tairawhiti is a flexible one that allows it to “provide for beneficiaries in such manner as the trustees shall from time to time decide” . . . and two years ago the trustees decided that the best use of the large amount of capital built up in the trust (over and above their requirement to “preserve the value of the capital of the trust fund”, calculated last year at $293m) was to invest $100m into regional wellbeing intitiatives by 2025.

This ambition is the key reason Eastland Network is being put up for sale. The trust's assets were valued at $834m at last count but only 10 percent of that was outside its 100 percent shareholding in Eastland Group; and building up trust assets outside the group has been a goal of trustees for many years.

The trust has said it intends to invest its share of the proceeds of a successful sale of Eastland Network into community wellbeing, as well as diversifying the trust's portfolio of assets and boosting long-term community investments.

Eastland Group will take a share of the proceeds as well, to invest in renewable energy projects and help fund the port redevelopment.

As to Gisborne District Council's involvement, it is the capital beneficiary of the trust, which is set by its deed to wind up in 2073. GDC appoints trustees, including a separate mayoral appointee, and has some involvement in the annual statement of intent for the trust.