BCCM CEO gives evidence at House Standing Committee’s Inquiry

05 July 2023

BCCM CEO, Melina Morrison, gave evidence at the House Standing Committee’s public hearing for its Inquiry into promoting economic dynamism, competition and business formation today. Read her opening statement.

Thank you Chair,

 On behalf of the Business Council of Co-operatives and Mutuals, I wish to thank the Committee for this invitation to give evidence before the inquiry into promoting economic dynamism, competition and business formation.

Today I speak on behalf of the national peak body for the co-operative and mutual enterprise movement in Australia, the BCCM.

Yesterday Australians held their breath as the RBA announced it was holding the cash rate. For many the reprieve from another interest rate hike, however temporary, was more than welcome, it was lifesaving.

Cost of living pressures coupled with the impacts of climate events coming off the back of a global pandemic mean many Australians are doing it tougher than usual.

Nothing could be more important to Australians in these challenging times than an economy that works in the interests of ordinary Australians.

An economy shaped in the interests of its citizens is one with businesses consumers can trust; that act in the interests of the communities in which they operate, that reinvest all surpluses back into the local economy, pay their taxes in Australia, employ locally, and take a long-term view of business success.

This is the sector I represent. Co-operatives and mutuals.

Co-ops and mutuals are businesses that owned by Australian consumers, producers and workers and exist to deal them into a dynamic, competitive and fairer economy.

Eight in 10 Australians and 160,000 businesses are members of at least one co-op or mutual. There are more than twice as many member-owners of co-ops and mutuals as there are retail investors in ASX listed companies.

Co-ops and mutuals operate exclusively in the interests of their members.

They build and share wealth for the benefit of ordinary people.

And, they derisk the economy providing ballast to the volatility of stock markets.

The Committee has already heard evidence from my colleagues in mutual banking about the benefits that the sector delivers. Mutual banking is also an excellent case study of the mutual contribution to economic resilience.

Research by the late Johnson Birchall for the International Labour Organisation showed how co-operative banks grew during the Global Financial Crisis because there was ‘flight to quality’.

As one example, Raiffeisen Switzerland had its biggest growth in membership in more than 100 years of operation in 2008.

Despite the global headwinds co-ops and mutuals are growing and serving more Australians. The top 100 co-ops and mutuals increased revenue by 10 per cent in FY2022 to $37.7 billion and membership across the sector grew by more than two million.

The benefits of co-ops and mutuals, and the policy barriers, are similar across the economy.

In agriculture, it is farmer-owned CBH Group that has the most affordable storage and handling system in Australia. CBH supply chain fees are around $20/tonne less than interstate bulk handlers. CBH supports family farms, domestic food security and secures vital export earnings in competitive international markets.

In health insurance, mutual funds pay 83.3 cents in the dollar of premiums back in benefits to members, compared with 80.2 cents in the big three for-profit funds. They also operate on lower net margins of 5% compared with 8 to 14 per cent . With 35 per cent market share, they shape markets in favour of consumers by reducing profit taking across the whole industry.

In manufacturing, HunterNet Co-operative has been the lynchpin in the retention of an SME manufacturing base in Newcastle post-BHP. It brings together 141 engineering businesses operating in the region with a combined turnover of $82 billion and is the largest group training provider in Australia. At the end of 2022 it was supporting 185 apprentices across its member manufacturing businesses.

Whether it’s demographic ageing, food security, affordable housing, disaster resilience, onshoring manufacturing or the green energy transition, we are at a critical juncture for our communities and policymakers.

We are a self-help movement, and we will get on with addressing these challenges. But policy settings will determine the scale of impact we could have as a third pillar in the economy.

Rental housing co-operatives represent just 1 per cent of social housing across Australia compared to 20 per cent of social housing in Denmark and 16% in Canada.

There is just one 100 per cent Australian owned dairy co-op processor remaining – Norco Co-operative – Policy settings will determine whether co-ops can be a counterweight to the increasing concentration of ownership of food supply chains in for-profit retailers.

 In France 60per cent of the banking market is mutual and in Germany it is 45 per cent.

 If I had one message for the Committee today, it is that we need to embrace corporate diversity in this country. A monoculture approach to corporate forms reduces diversity in markets and means more businesses following the same objectives with inherent risks brought in from the short-term gain demanded by shareholders.

We’ve shown that when enabled, such as through the Mutual Capital Instrument provisions inserted into the Corporations Act in 2019, we use the opportunity to invest in a future made in Australia, and in social infrastructure like health and aged care services and risk protection.

Mutuals and co-operatives are doing the heavy lifting of the reforms they need to stay relevant to their members and true to their purpose; they are consolidating to scale in a responsible way, they are cooperating around back office and technology services, and co-operatives like Hunternet are networking SMEs with the required scale for the advanced manufacturing capability so vitally needed.

With a supportive policy environment, co-operatives and mutuals can contribute even more to a dynamic, productive and equitable Australian economy.

Take the shackles off, remove the incentive to carpetbag our mutuals, educate the architecture of government and let us get on with it. Thank you.