THE HISTORY OF CO-OPERATIVES IN AUSTRALIA

OVERVIEW

This article was contributed by Nikola Balnave (Macquarie University) and Greg Patmore (The University of Sydney).

Co-operatives have had a presence in the Australian economic and social landscape since the 1850s. As democratically run member-owned organisations, they redistribute all profits back into the co-operative business, its members and/or local communities. Australia historically has had, and still has, several different forms of co-operatives including agricultural co-operatives, building societies, credit unions, worker co-operatives and consumer co-operatives. The first registered consumer co-operative in Australia was the Brisbane Co-operative Society in 1859, before the separation of Queensland from NSW.

One of Australia’s longest surviving Rochdale <Endnote 1> consumer co-operatives, the Adelaide Co-operative Society, opened for business in 1868 and successfully traded for almost a hundred years. Consumer co-operatives in NSW formed their own wholesale co-operative in 1912 to provide co-operative retailers with goods. While consumer co-operatives faced a decline in the post-war period, they played an important part in the lives of many in regional Australia, particularly in coal-mining and rural areas. Indeed, consumer co-operatives continue to play a role in maintaining the economic vitality of regional communities in a number of locations, including the Barossa Valley of South Australia, where the Barossa Community Co-operative Store, established in 1944, has built a shopping mall in Nuriootpa.

The impetus for credit unions in Australia dates back to the passage of the NSW Small Loans Facilities Act in 1941. The first registered credit union – the Homeowner’s Co-operative Credit Society Limited – was established in May 1945. Credit unions remain a vigorous form of co-operative in Australia and have been through a process of amalgamation in recent years to take advantage of new technologies and remain competitive with the four major banks. Credit unions and building societies were recognised by the Federal Government in 2010 as important institutions in ensuring competition in the Australian financial sector and providing a viable alternative to the four major banks, especially in light of the Global Financial Crisis.<Endnote 2>

Agricultural co-operatives have played a crucial role in rural Australia in assisting primary producers to process and market their commodities. The earliest of these co-operatives, the South Coast and West Camden Co-operative Company, emerged in the dairy industry on the NSW coast in the 1880s. Its aim was to remove ‘middle men’ and improve returns for farmers. The top two co-operatives in Australia in 2011 in terms of turnover were agricultural co-operatives – Co-operative Bulk Handing Ltd in Western Australia and Murray Goulburn Co-operative Co Limited, Victoria (Co-operatives Australia, 2011).

Co-operatives have also shown a strong interest in the sustainability of Aboriginal and Torres Strait Islander communities, with the first movement towards aboriginal co-operatives being in the 1950s and 1960s. A significant legacy of this movement is the Tranby Aboriginal and Torres Strait Islander College in Sydney, Australia’s oldest indigenous educational provider, which was founded in 1958.<Endnote 3>

Co-operatives have shown an ability in Australia to change their form to match changes in local conditions. For example, the Macleay Co-operative on the mid-North Coast of NSW, founded in 1905, began as a dairy co-operative with a butter factory, and now focuses on retailing.

The Rochdale consumer co-operative movement in Australia Rochdale consumer co-operatives have played an integral role in the lives of communities in mining districts, metropolitan areas and rural regions of Australia. Between 1859, when the first Rochdale consumer co-operative was registered in Australia, and the end of World War II, Australia experienced waves of interest in consumer co-operatives. With a few exceptions, consumer co-operatives tended to be established at the back-end of an economic slump, when there was disillusionment with the prevailing economic system and consumers sought a greater level of economic security. British immigrants to Australia played an important role in bringing Rochdale principles to coal-mining districts, where consumer co-operatives became a common feature. The Hunter Valley, the Illawarra region and the Lithgow Valley had some of the largest and most prosperous co-operative societies in NSW, while Wonthaggi in Victoria and Collie in Western Australia also had co-operative societies. Consumer co-operatives in metropolitan areas tended to be short-lived, with key exceptions including the Adelaide Co-operative (established in 1868) and the Newcastle and Suburban Co-operative (established in 1898). Rochdale consumer co-operatives also became a feature of rural areas of Australia, particularly in fruit-growing or poultry-breeding districts or in towns at important railway junctions such as Junee in the Riverina region of NSW, where a Rochdale consumer co-operative was founded in 1923. A rare example of the mutualisation of a private store is the Community Co-operative Store (Nuriootpa) in the Barossa Valley of South Australia, which was established in 1944, when the owner of the main store in town decided to sell it to the community following the death of his son in World War II. The NSW Co-operative Wholesale Society (NSW CWS) was established in 1912 by four Hunter Valley consumer co-operatives to overcome challenges such as price-cutting by competitors and the refusal of supply by some wholesalers. This body played a key role in advancing the consumer co-operative movement. Despite all these examples, the Rochdale movement never consolidated in Australia. It was plagued by internal divisions and received limited support from the industrial and political wings of the labour movement. Despite the economic buoyancy of the period, the Rochdale movement fell into general decline following the end of World War II. The NSW CWS went into permanent decline after 1957 and ultimately ceased operations in 1979. The Adelaide Co-operative went into liquidation in February 1962 after 94 years of trading. Perhaps the most spectacular collapse of a consumer co-operative was the Newcastle and Suburban Co-operative, which achieved a peak membership of 95,000 in 1978 but ceased trading in 1981. Many consumer co-operatives failed to survive the major economic upheavals of the 1970s and 1980s, and unlike the trend in early years, renewed interest did not emerge in the periods of recovery. The rise of chain supermarkets and shopping centres increased the degree of competition from non co-operative businesses, and a number of co-operatives fell victim to poor business decisions. The decline of working class communities in mining areas, and increasing car ownership in rural areas, created further difficulties for those co-operatives reliant on their remoteness for success. While the Rochdale movement collapsed in Australia, consumer co-operatives survive and indeed thrive in several rural locations, including Junee in NSW, Denmark in Western Australia and Nuriootpa in South Australia. The success of these co-operatives can be largely attributed to good management, reciprocal links with the local community and the adoption of franchising as a way to source and market their goods and services.

THE HISTORY OF WORKER CO-OPERATIVES

This article was contributed by Anthony Jensen, University of Sydney.

“A worker co-operative is a business that is owned and democratically controlled by the people who work in it.” (Co-operatives UK)

Unlike England and Southern Europe, Australia has not embraced worker co-operatives as a route to job security, self-determination and justice. Despite this, Australia has a very rich history of worker co-operative experiments. The period up to the 1915 Conference on Trade Unionism in Australia, saw the union movement experimenting with worker co-operatives as part of the response to the economic turmoil of the time. They were supported in the Trades and Labour Council in 1893 (Markey, 1985). In this period, starting with the building of the Coburg Goal in the 1850s and the setting up of the Age Newspaper in 1867, there were waves of attempts by workers to form co-operatives in economic downturns and, by the 1890s, Australia had a vibrant ‘co-operative sector’ (Markey, 1985).

Paradoxically, the high profile establishment of the Australian Co-operative Commonwealth in Paraguay, New Australia, 1893 to 1905, that arose out of the 1891 shearers’ strike, proved to be pivotal. It became the catalyst for the Arbitration System of 1904 and the Harvester Agreement of 1907, ensuring that the Australian workingman would earn a basic wage, which would provide for himself and his family in frugal comfort. As a result, in Australia, the self-help worker co-operative model was not a prominent solution used by trade unions to solve economic problems and only a very small number of worker co-operatives was formed as trade unions learnt to ‘lean upon the state’ (Atkinson, 1915).

In the 20th century, drawing on the Rochdale tradition, worker co-operatives continued to emerge where coal mines were developed co-operatively (such as in Balmain in1923). Even so, such was the low profile of worker co-operatives that they were not included in the 1923 New South Wales Co-operation Act. However, from the 1930s, a viable model of worker co-operatives emerged when a number of businessmen sold their business to their workers. The main one operating along co-operative lines was in the clothing trade, Fletcher Jones and Staff, formed in 1944.<Endnote 4>

A number of ‘counter culture’ community style worker co-operatives were formed in the 1970s, the most notable being at Maleny in Queensland. In the 1980s, hundreds of businesses in Europe and the United States of America were bought by their workers to save jobs – and many re-formed as co-operatives. This phenomenon emerged also in Australia, with the New South Wales Government’s Worker Co-operative Program that facilitated approximately 25 buyouts in a successful pilot program during the 1980s. A similar program existed in Victoria and South Australia, while Western Australia also reported worker buyouts to save jobs.

In 1992, a new Co-operatives Act in New South Wales included clauses that specifically allowed for worker co-operatives to be registered and two new ‘third way’ worker co-operative buyouts were formed. There were hopes that this Act would be a template for the other Australian states and territories but this did not occur.

In 2009, the Australian Government provided funding from the ‘Jobs Fund’ to the Australian Employee Ownership Association to establish the Australian Employee Buyout Centre (AEBC). The role of the AEBC was to implement a time-limited assistance program to businesses, with a view to saving jobs by assisting employees to buy a distressed business or a business from a retiring owner. The vehicle for implementing the employee ownership model in these projects has been the Employee Share Ownership Plan, which can operate in a co-operative like way.


ENDNOTES

1. Named after the first food co-operative started in Rochdale England in 1844. The principles espoused by the founders have become established as ideals for the operation of co-operatives. <Back>
2. Swan joins push towards credit unions, Perth Now, December 10, 2010 . <Back>
3. Special article, Aboriginal and Torres Strait Islander community co-operatives and credit unions, describes some of these co-operatives. <Back>
4. The F.J. Foundation. <Back>