Andrew Leigh

How to make innovative co-ops work better, The Canberra Times, 19 October 2016

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. They chose to make it a cooperative – recognising that its purpose wasn’t to make a buck for the shareholders, but instead to address a social need. 

Today, the National Health Co-op operates across seven locations in Canberra, and will soon be opening a practice in rural New South Wales. Their approach brings together ancillary services, such as podiatrists, pathologists and dieticians – so patients don’t have to schlep off somewhere else to get a blood test or begin a diabetes management plan. The National Health Co-op are also in discussions with two other states about opening practices. It’s an innovative model for health care, and it’s growing fast.

Co-ops, and mutuals such as credit unions, are member-owned enterprises that exist and often compete in the same markets as investor-owned enterprises. Co-operatives are a voluntary association of people, democratically run for the members, and for the pursuit of a common social, cultural or economic goal.

Co-operatives have been around for hundreds of years. In 1498, the Shore Porters Society started in Aberdeen to help unload goods from ships. In 1769, the Fenwick Weavers’ Society in Scotland was established to sell oatmeal to members at a discount. In the mid-1800s, German credit unions were established to provide banking services. In colonial Australia, co-operatives provided much of the social safety net – in an era before the pension and unemployment benefits.

Today, cooperatives operate sugar mills, run university bookstores, buy wine, and sell apples. Four out of five Australians are members of cooperatives. A recent estimate of the economic value of the top 100 co-operative and mutual enterprises found they had a turnover of $25 billion, and $108 billion of assets. Cooperatives can either plough the profits back into the business (these are called ‘non-distributive’) or allocate them across members (these are called ‘distributive’).

Cooperatives are a flexible structure with the potential to not only create economic value, but also to foster community. In a nation where both living standards and social capital have been going backwards over recent years, cooperatives have a lot to offer.  There is also some evidence that employees in worker-owned firms are more productive and more satisfied with their jobs.

Clearly Australians are using the cooperative model, but given the benefits, we might ask why they are not more prevalent.

One of the biggest impediments is simply unfamiliarity.

We don’t have an accurate picture of the sector because we lack good data. The Australian Government should ensure better data on cooperatives are collected.

Small business, rightly, has a responsible minister or spokesperson in policy discussions. Yet while Labor now has a frontbencher with responsibility for Charities and Not-for-Profits, the Coalition does not. 

Governments at state and federal levels can ensure laws, grant programs and relevant government information portals reflect the sector as they do for corporations and sole traders.

School and university curriculums can ensure that tomorrow’s accountants, economists, lawyers, community organisers and entrepreneurs are familiar with the sector and its regulations.

Another significant limitation on the cooperatives sector is access to capital. Australia should be open to a conversation about allowing cooperatives to access a broader range of capital-raising and investment opportunities. It doesn’t make sense for credit unions to be competing against banks with one arm tied behind their backs.

Cooperatives should also be eligible for Government grants on equal footing to other organisations. For example, the Indigenous Advancement Strategy does not allow non-corporations to apply for grants above a certain threshold. Cooperatives are an avenue for Indigenous collectives to further their self-determination and activities, and ensuring their eligibility for grants a key policy.

These ideas are drawn from a bipartisan parliamentary inquiry, meaning that Senators from both major parties have signed off on the recommendations. So it’s time we put the ‘co-op’ back into cooperation, and put these excellent proposals into action.

Chris Ketter chaired the Senate inquiry into Cooperative, Mutual and Member-Owned Firms. Andrew Leigh is the Shadow Assistant Treasurer and the Shadow Minister for Charities and Not-for-Profits.

This Opinion Piece was first published in The Canberra Times on Wednesday, 19 October 2016.