OLD PARLIAMENT HOUSE , CANBERRA
WEDNESDAY, 9 NOVEMBER 2016
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Last month, Australian life expectancy hit a new high – 80.4 years for men, and 85.5 years for women. That means a baby born today can expect to enjoy about 30,000 days on the planet.
You can see this as a lot or a little. Compared with past generations, this is an extraordinary amount of time. In cosmic terms, it’s a mere blip.
But rather than asking “how long do I have?”, the better question is “what can I do with the time that I have?”. For most of us, that comes down to doing good work. A typical career lasts around 80,000 hours of work. How do we make the most of that time?
Adam Smith, one of the founders of modern economics, is best known for his book An Inquiry into the Nature and Causes of the Wealth of Nations. But in an earlier work, The Theory of Moral Sentiments, Smith gave what I think is one of the best answers to the question of how we should spend our lives. He wrote:
‘To be amiable and to be meritorious; that is, to deserve love and to deserve reward, are the great characters of virtue… The consciousness that it is the object of such favourable regards, is the source of that inward tranquillity and self-satisfaction with which it is naturally attended… Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love.’
Talking with people in business, I’m often struck by how well Smith’s words encapsulate what we do. Most people don’t just want to make money; they want to be the kind of person that others look up to. In Smith’s formulation, most of us want to be ‘lovely’.
Unfortunately, some fans of Adam Smith see the choice as being between the economy and the society. They remember him as the man who wrote The Wealth of Nations, but forget that he’s also the author of Theory of Moral Sentiments. When Margaret Thatcher said, ‘there is no such thing as society’, or Milton Friedman said that the public good was promoted by, ‘individuals who intended only to pursue their own interests’, they were ignoring the fact free markets depend on trust, morality and decency.
Mutualism, as an idea and in practice, lies in between but distinct from government and markets. Mutualism, it should also be said, is a complement to, not a replacement of, government and markets. The idea of mutualism is important to communities and should also inform our policy makers. Trust and reciprocity are important for an inclusive society, and they help to foster empathy for our fellow human beings.
Co-ops and mutuals, as member-owned enterprises, exist and often compete in the same markets as investor-owned enterprises. Yet cooperatives are a voluntary association of people, democratically run for their members, and for the pursuit of a common social, cultural or economic goal.
I believe it is this combination of features which is why we see actors from a range of ideological dispositions emerge as supporters of member-owned firms. Conservative UK Prime Minister Teresa May recently spoke of her mutualist thinking, noting that success and solidarity are not incompatible. Economist Thomas Piketty, as part of his broader work on inequality, has spoken of the role participatory governance can play in levelling the playing field. US Democratic Presidential candidate Hillary Clinton has put forward policy proposals in support of community banks and credit unions, and is sympathetic to greater worker participation in enterprises.
Today in Australia, we need initiatives that will build the strength of our communities. That’s because social capital – the networks of trust and reciprocity that link multiple individuals together – is declining. We are less likely to join groups, attend church or be part of a trade union. We have fewer friends and are less likely to know our neighbours. Over the past two generations, we have become disconnected.
Cooperatives are a flexible structure with the potential to not only create economic value, but also to foster community. There is also some evidence – much of it from Harvard’s Richard Freeman and his coauthors – that employees in worker-owned firms are more productive and more satisfied, and that such firms have less turnover and enjoy greater staff loyalty. We don’t want workers to have all their eggs in the one basket (remember what happened when Enron staff lost not only their jobs but also their pension plans), but having up to one-tenth of your wealth in the company you work for does not seem to me to present an excessive risk.
Some critics think cooperatives, mutuals and employee ownership are archaic ideas from the Scottish Enlightenment. So who better to respond to that critique than a doyen of the Enlightenment, Smith himself, who warned of the risk that unchecked capitalism could create, ‘an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public.’
These words hold as true to those that propose to cut taxes for the top end of town and wind back workers’ penalty rates, as to critiques of mutualism as an idea that has had its day. Mutualism, old as the concept may be, is well placed to deal with new challenges such as the digital economy. Internationally, driver-owned apps are competing with Uber and Lyft. Coopify is an app connecting a childcare cooperative with clients in New York. Stocksy is an artist owned platform cooperative that sells stock photography supplied by its members online.
And in the more traditional sphere, I’ve seen firsthand the ongoing benefits of the cooperative model in my own electorate. A few years ago, a group of community activists in one of the most disadvantaged parts of Canberra decided to set up a bulk-billing medical practice. Today, the National Health Co-op operates across eight locations in Canberra, and will soon be opening a practice in rural New South Wales.
Of course the benefits of the cooperative model will not be new to anyone here today. Nor are the challenges that face member-owned firms. I was pleased to see my colleagues Chris Bowen, the Shadow Treasurer, and Senator Chris Ketter, the chair of the Senate Inquiry into member-owned firms, affirm Labor’s support for the inquiry’s recommendations prior to this year’s election.
Further, it is my pleasure to have had responsibility for member-owned firms become part of my portfolio suite. Just as small business rightly has a designated shadow ministerial representative, so too do member-owned firms in Labor. My door is open to you all, and I will endeavour to ensure the sector is represented in policy discussions.
As part of my role, I not only wish to re-affirm Labor’s support, but announce our areas of prioritisation to facilitate growth in the sector. The policy measures fall under the banner ‘Inclusive Ownership, Inclusive Growth’ and mark a new policy commitment of Labor to member-owned firms. In my discussions with many stakeholders, the most significant limitation on the cooperatives sector has been access to capital. Inequitable access to capital constrains growth for member-owned firms, and inhibits their ability to best meet the needs of their members.
The Labor Party is committed to ensuring fairer access to capital. We are committed giving legal certainty on definitions and director’s duties in the Corporations Act, for member-owned firms. It requires us to work on facilitating new financial instruments for member owned firms, some of which will require legislative change. The Mutuals’ Deferred Shares Act in the UK is an excellent example of the type of reform that can be done. Labor is committed to reviewing and removing dual regulatory requirements on cooperatives that seek to issue securities across state borders.
Additionally, Labor will offer in-principle support for the reintroduction of the lapsed Corporations Amendment (Crowd-sourcing funding) Bill 2015 to ensure unnecessary regulatory imposts are removed, and the bill serves the capital needs of small and start-up enterprises. In addition to these reforms, a practical measure that can be implemented immediately is giving your sector equal access to government grants. Labor understands member-owned firms should be eligible for government grants on an equal footing with other organisations.
Perhaps the clearest example is the Indigenous Advancement Strategy, which does not allow non-corporations to apply for grants above a certain threshold. Cooperatives are a way for Indigenous collectives to further the goal of self-determination. Labor calls on the Government to remove the barriers to Indigenous cooperatives. Through these important reforms, we deal with some of the most pressing issues facing member-owned firms, and create the space and awareness for the sector.
And given the Senate Inquiry was handed down with bipartisan support, I hope my parliamentary opponents will put their laws where their Senate reports are, and join Labor on this path.
Mutualism is a big and important idea and I thank you for you putting it into practice every day and in practical ways.