CO-OPERATIVES IN AUSTRALIA – AN OVERVIEW

This article was contributed by Todd Green of Regional Development Australia Mid North Coast.

Co-operatives are people-centred organisations that are owned, controlled and used by their members. Each member has an equal say in what the co-operative does – so in addition to receiving the products and services they need, members help shape the decisions that their co-operative makes. The main purpose of a co-operative is to benefit its members.

Co-operatives are based on the values shown in diagram 1. These values are put into practice through the seven international co-operative principles shown in diagram 2.

Diagram 3 shows how a co-operative in Australia is identified and regulated.<Endnote 1>^. Co-operatives may be distributive or non-distributive co-operatives, broadly reflecting economic and social benefits respectively. Distributive co-operatives are formed to undertake commercial operations where members can share in profits made from trading and benefits from asset growth. The sharing of profits from a distributive co-operative can include dividends, rebates, reduced costs and/or enhanced services. A non-distributive co-operative can be formed with or without shares; commercial activities can be undertaken, although surplus funds are not distributed to members but used to support the activities of the co-operative. Both types of co-operatives require their members to maintain an active relationship with the co-operative. An active membership can include purchasing or supplying goods or services, paying an annual subscription, or being a tenant of a housing co-operative.

Co-operatives in Australia are involved in a wide range of activities, falling broadly into four categories: consumer (buying and selling goods to members at a competitive rate); marketing (branding, marketing and distributing members’ products and services); service (providing services to members, such as health, electricity or housing); and community (resource, information and skill sharing that encourages ownership and participation). Financial co-operatives comprise credit unions, mutual building societies and friendly societies.




RECENT CHANGES

This material was contributed by Co-operatives Australia.

In recent years, the Australian ‘co-operatives sector’ has been characterised by:

• large co-operatives growing organically and through mergers
• losses due to mergers and demutualisation
• emergence of new fledgling co-operatives and
• low levels of understanding and teaching with regard to the co-operative business model.

As a consequence of an ageing and diminishing membership, a number of co-operatives have demutualised in recent years. Strong balance sheet growth sometimes fuels demutualisation, with members persuaded to give up ownership and control in return for a one-off cash or cash/investor share offer.

Some co-operatives have defied the trends, growing through innovative organic growth, mergers and joint ventures. New co-operatives have also emerged in recent years, demonstrating that member ownership and control remains a viable business model.

It is hoped that the United Nations 2012 International Year of Co-operatives will provide a focus on co-operatives and other member-owned businesses.

The incoming Co-operatives National Law will modernise the law governing Australian co-operatives and is expected to renew interest in the co-operative model.


ENDNOTES

1. The diagram and other information in this section reflect the situation after the signing of the Co-operatives National Law and the National Regulations. <Back>