Another bill enacting Labor policy - Speech, House of Representatives

HOUSE OF REPRESENTATIVES, 4 APRIL 2019

I rise to speak on the Treasury Laws Amendment (Mutual Reforms) Bill 2019. The idea of mutualism is vital to communities. Mutuals build trust and reciprocity. They are an essential part of an inclusive society helping to foster empathy for our fellow human beings. Cooperatives and mutuals, as member-owned enterprises, exist and operate in the same market as investor owned enterprises. They are voluntary associations of people, democratically run for their members, for the pursuit of a common social, cultural or economic goal. Eight out of 10 Australian adults are members of at least one cooperative or mutual. They account for some seven or eight per cent of GDP and 54,000 direct jobs. Mutuals such as HCF, Capricorn Society, ME Bank, Australian Unity, Sun Super and roadside organisations including the NRMA, the RACQ and the RACV are cooperatives and mutuals that are essential to Australian society.

Mutualism is also well placed to play a role in the digital economy. Internationally we have driver owned apps competing with Uber and Lyft. Coopify is an app connecting a childcare cooperative with clients in New York. Stocksy sells stock photographs supplied by its members online. In my own electorate of Fenner I have seen firsthand the benefits of the cooperative sector, with the National Health Co-op now expanding from its original location in Charnwood to set up more than half a dozen locations across Canberra and rural New South Wales.

Labor supports this bill. And why wouldn't we? This is a Labor idea. This is a bill enacting Labor policy and we are delighted to see it finally coming to the House.

The bill amends the Corporations Act in relation to mutual entities such as customer owned banks and credit unions and customer owned insurance service providers. They were originally announced as Labor policy in November 2016 in a speech I gave at Old Parliament House announcing Labor's 'Inclusive Ownership, Inclusive Growth' package. That was a policy that drew heavily from Labor senator Chris Ketter's Senate Economics Committee inquiry. I pay particular tribute to Senator Ketter for his work in shaping Labor's cooperatives and mutuals agenda.

In 2016 the government launched the Hammond review and eventually agreed to its recommendations in 2017. It took the coalition a full 12 months to adopt Labor's reforms and then another 12 months to draft the required legislation. But we are here now and Labor is very pleased to have gotten to this point.

The bill introduces a definition of a mutual entity into the Corporations Act. It removes the uncertainty for transferring financial institutions and friendly societies in respect of the demutualisation provisions in part 5 of schedule 4 of the Corporations Act and it expressly permits mutual entities registered under the Corporations Act to issue equity capital without risking their mutual structure or status.

There are many stakeholders supporting the bill but one to whom I want to pay particular tribute is the Business Council of Cooperatives and Mutuals CEO Melina Morrison. She has been a driving force behind the creation of the Parliamentary Friends of Mutuals and Co-operatives and Mutuals, co-chaired by myself and Senator McKenzie. The Customer Owned Banking Association has been a strong advocate for this reform, and their work has been important, too, in shaping Labor's policy.

Labor's cooperatives and mutual reforms promote ethical competition and productivity. They encourage social investment and the wellbeing of workers and small businesses. Since we first announced the reform that is in today's bill as Labor policy at the end of 2016, the coalition cycled through multiple Prime Ministers, multiple Treasurers and multiple assistant ministers, but there has been one unchanging fact, which is Labor's support for the cooperatives and mutuals sector. If only the coalition had been as cooperative as the sector, we perhaps could have done this quicker but we are here now. It has only taken us 2½ years to get here.

But this isn't the end of what we need to do to assist cooperatives and mutuals playing a bigger role in the Australian economy. As I said before, they account for seven per cent to eight per cent of GDP. We believe they could account for even more, with their important role of shaking up sectors, providing strong ethical leadership and ensuring that there are customer-owned alternatives to investor-owned business models. One such reform would be to ensure that cooperatives and mutuals have equal access to government grants, particularly under the Indigenous Advancement Strategy.

It is particularly apposite that we are debating this legislation just a couple of months after the royal commission into the banking sector came down. Labor called for that royal commission in 2016, some months before we announced our cooperatives and mutuals policy. At the time, the member for Cook said that the royal commission was just a 'populist whinge'. The government in announcing the royal commission only did so after the big four banks had called for a royal commission. The member for Cook said it was regrettable that we had to have a royal commission into the banks. But no-one now looking at Commissioner Haynes' report would argue that was a regrettable report. I think there is broad recognition in the finance sector that this was the royal commission we had to have. We've seen the chair and the CEO of AMP step down. We have seen a range of referrals to the Director of Public Prosecutions. We have seen scandals involving fees paid for advice not received and fees charged to dead people. We have seen allegations of envelopes stuffed with money, of breaches of AUSTRAC notification procedures and of collusion to fix the bank bill swap rate. The royal commission has been a litany of scandals and has again reinforced the simple fact that, when it comes to ethical competition within the economy, there is only one side of this parliament, Labor, that makes the right calls.

The Customer Owned Banking Association has made a strong argument for the role of cooperatives and mutuals in providing real competition in the banking sector.

So one of the important things that we get from this bill is additional competition in a sector which is highly concentrated, even by global standards. It's important that we have a strong banking sector but it's also important that we have a competitive one, because it's that competition between our banks that places downward pressure on the margins and ensures that Australians get proper choice when they're taking out a mortgage or looking to get a good return on their savings.

With customer owned banks, there is an alternative to the investor owned opportunities which, again, have a long tradition in economics. The cooperatives and mutual sector is a sector which harks back to the words of one of the founders of economics Adam Smith, who said, '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.' When you speak to people in the cooperatives and mutual sector, those words of Adam Smith's, written more than two centuries ago, resonate with them as well. The choice is not between economy and society, as Margaret Thatcher so falsely posited. It is possible to have organisations operating ethically within our economy. Indeed, free markets depend on trust, morality and decency. It is the role of mutualism which can ensure that the best spirits of Smith are able to be found in our economy. This notion from theory of moral sentiments is absolutely critical to the reforms that we're advocating today.

Labor knows that these reforms will promote ethical competition and productivity, that they'll encourage social investment and the wellbeing of workers and small businesses. It is Labor's advocacy for this sector which has brought these reforms to the House today.

[Coalition members then began interjecting about competition and energy policy, so I spent the rest of the speech setting them straight.]

ENDS

Authorised by Noah Carroll ALP Canberra.


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | Andrew.Leigh.MP@aph.gov.au | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.