CREDIT UNIONS AND THE NEW MUTUALISM

Paper to be Presented to the Australian Credit Union Historical Co-operative Ltd. Convention by the Honourable Race Mathews, Sydney, 18 October, 1997.

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An Asset of Incalculable Value

Let me at the outset express my profound admiration for the Credit Union Historical Society Co-operative Ltd. The debt credit unions, credit union members and the credit union movement owe to the Credit Union Historical Society Co-operative Limited is more than can ever adequately be acknowledged, much less repaid. Thanks to the Credit Union Historical Society the records of our movement have been preserved and the memories of its members captured more thoroughly than by any but a handful of other organisations. To adapt a phrase from one of the greatest of all phrase-makers, Winston Churchill, seldom has so much been remembered for so many by so few.

What has been created by the Credit Union Historical Society Co-operative Ltd. will be recognised in time as an asset of incalculable value in the strategic planning and management of the movement on which our future so overwhelmingly depends. Historians such as the late, great A.J.P. Taylor may well be right in arguing that history is a poor guide to how in exact terms we should conduct ourselves in the future. What is certain is that a knowledge of history is indispensible to us if we are to avoid past mistakes. As the philosopher George Santayana so rightly reminds us, those who cannot remember the past are doomed to repeat it. The issues which confront us currently as a movement are of so fundamental a character and so great a magnitude as to allow us no margin for error. What is at stake currently is whether credit unions are to survive, prosper and find their way to the sunny uplands of which Churchill also once so eloquently spoke - or whether instead we are to follow on to the garbage heaps of history the great retail co-operatives which thrived in this country as recently as the immediate postwar period, and which have now vanished as completely almost as if they had never existed.

Let me at this point pause and acknowledge our great debt to the historian Gary Lewis. We are endebted to Gary Lewis not only for the recent narrative history of our movement which the work of the Credit Union Historical Society Co-operative Limited has so recently enabled him to complete ^[1] , but also for his earlier A Middle Way: Rochdale Co-operatives in New South Wales 1859-1986 ^[2] . It is an authentic tragedy that a work of such major importance as A Middle Way: Rochdale Co-operatives in New South Wales 1859-1986 should have been lost to us for all practical purposes - should for all practical purposes never have been distributed - as a consequence of the collapse of its publishers, the Australian Association of Co-operatives. It is vital that A Middle Way: Rochdale Co-operatives in New South Wales 1859-1986 should be made familiar to credit unions, credit union members and the credit union movement, and that its lessons for us should be widely understood, debated and given effect. I can imagine no more worthwhile undetaking for a major credit union which truly has at heart the well-being of credit unionism and the credit union movement than to enable A Middle Way: Rochdale Co-operatives in New South Wales 1859-1986 to be re-issued and to achieve the circulation and public attention to which its excellence and relevance rightly entitle it. 

What then are the lessons of the past which credit unions, credit union members and the credit union movement should currently be paying closest attention? What is it most important for us to learn from the history of the mutualist philosophy of which credit unions are one among so great a number of examples? What is it about the past experience of mutualism which can assist us most effectively in meeting the challenges which are waiting for us in the months and years immediately ahead of us? How can we best ensure that credit unions and credit unionism survive and prosper where the Rochdale co-operatives which were once as numerous and successful as are credit unions today failed and have vanished?  Given that credit unions are no more owed a living by society than any other organisations in the market place, what justification has the credit union industry for staying in business?

Our Troubled Times     

In taking as my theme today the role of credit unions and credit unionism in bringing about a better life for all Australians, I speak, in effect, of the relevance of the mutualist philosophy to our times.  I speak of the need for a New Mutualism which brings back together that great family of organisations which are heirs to Australia’s enduring tradition and history of mutualist self-help.  I speak of the need for innovatory methods of applying a mutualist approach and outlook in the difficult and turbulent years which are ahead of us. Australia’s most distinguished political journalist - Paul Kelly - has called his most recent book The End of Certainty ^[3] .  As a recent seminal study by Hugh Mackay points out, “ Whether we realise it or not, all Australians are becoming New Australian as we struggle partly to adapt to the changes going on around us, and partly to shape them to our liking” ^[4] .  It may well be that the acid test for mutualism in the times to come is whether - and, if so, to what extent - it enables us to shape changes to our liking.  The most effective way for us to restore certainty to our lives is to take back control of them to the greatest possible extent for ourselves.

I start from the premise that Australia stands today at an historic watershed in our national affairs.  It is plain now as never before in our postwar experience that neither the welfare state as we know it today nor the unfettered market economy are capable of meeting the expectations which many have invested in them. The lessons and consequences of the “greed is good” ‘eighties are far too recent and painful to require significant or extensive reiteration.  Unemployment levels are higher than ever before in our postwar experience.  So too are levels of longterm unemployment. The capacity of even an otherwise healthy economy to provide work for all who seek it is - at the least - in serious doubt. 

The gap between the rich and the poor has at the same time become greater than at any earlier postwar stage.  The Mackay study reminds us that:

In just sixteen years (1976-92), the proportion of Australian households with an income of more than $72,000 (based on constant 1991-92 values) rose from 15 percent to 30 per cent.  At the same tie, the proportion of householdswith an income of less than $22,000 rose from 20 per cent to 30 per cent. ... If we define the economic middle class as being households with incomes between $22,000 and $72,000 (in 1991-92 terms), then the middle class has shrunk from 65 per cent of households in 1976 to 40 per cent of households in 1992 ^[5]   

We have moved within the space of two decades from being one of the most egalitarian nations on earth to one which is characterised instead by profoundly anti-egalitarian attitudes and practises.  The rebound from welfare at the same time threatens to become a wholesale retreat, as governments everywhere scramble to rebalance their budgets and extricate themselves from financial commitments which are seen to be unsustainable. The safety-net on which many have relied for support in times of adversity is seen increasingly to be ungenerous and inadequate.  

The upshot has been the emergence for the first time of an Australian underclass, similar in most respects to those which have also emerged in the United States of Ronald Reagan and George Bush  and the Britain of Margaret Thatcher.  Failing a new approach, hundreds of thousands of Australians will in future experience lifelong unemployment.  Far from either the public or private sectors responding adequately to these great structural problems, both are seen widely as compounding them.  Where jobs should be created they are instead being destroyed.  The New Poverty and the New Inequality cry out for remedies and solutions which so far have not figured on the agendas of either government or opposition parties. The differences between the 1890s and the 1990s in these respects are less striking than their similarities.

Mutualism.

Our forefathers in nineteenth century Britain faced problems of endemic unemployment, underemployment, poverty and inequality which - in kind if not in degree - strikingly resemble those of today. Then too governments could offer no effective alternative. The times gave rise instead to the philosophy of mutualism which now brings this convention together.  Great mutualist movements emerged, with a shared, unshakeable belief in “Each for all and all for each”.  Mutualism should be understood as people achieving in co-operation with one another solutions to pressing social needs which would be unavailable to them acting individually in isolation from one another. Successful mutualist movements are almost always a response genuine and specific needs. The Rochdale Pioneers, for example, established their co-operative store in Toad Lane in response to a pressing social need for affordable access to such household requisites as food, fuel, light and clothing. 

Credit co-operatives were a response to the need for affordable carry-on loans for smallholder farmers and later for affordable consumer finance.  Friendly societies were initially a response to the need for burial benefits, and, later, unemployment benefits, sickness benefits and medical care. Access to affordable life assurance was offered by mutual societies, as was access to affordable home loans by building societies.  Processing and marketing co-operatives met a pressing social need on the part of farmers to share the value added to their produce beyond the farm gate.  Worker co-operatives were a response to the need for labour to hire capital rather than capital labour and so for workers to be the owners of their jobs.  Trade unions were originally mutualist bodies or co-operatives formed by workers in response to the pressing social need to obtain a just price for their labour.

The usefulness of all these institutions, and the validity of their mutualist principles, is evidenced by their survival.  They have endured - and skilfully adapted themselves to new needs and challenges - in the face often of hostility on the part of the professions, the indifference and incomprehension of governments and the short memories of many who in the past figured among their most notable beneficiaries.  For example, Australia's credit union now have more than three million members - one in every six of our population - and assets totalling around $18 billion. The membership of credit co-operatives affiliated with the World Council of Credit Unions is in excess of 44 million. The 1992 Friendly Societies’ National Report lists no fewer than 21 major areas of activity in which friendly societies are currently engaged.

The success of the Victorian Friendly Societies Pharmacy Co-operative - established as recently as 1982 - clearly exemplifies what can be achieved from small beginnings. The pharmacy co-operative now operates two dispensaries of its own, and provides management services for a further twelve dispensaries. The financial strength of the venture totals in excess of $5.5 million. The current assets of friendly societies all told are in excess of $9 billion.  Co-operatives affiliated with the International Co-operative Alliance - the world umbrella body for the co-operative movement - currently total more than 650 million members. Taking into account the worldwide membership of friendly societies and building societies, mutualism is a movement numbering more than a billion people.  Add to this the policy holders of the great mutual assurance societies who are also the members of those societies, and the number becomes still more impressive. Mutualism rivals in its following many of the world’s major religions.

It is appropriate at this time to ask whether a New Mutualism - intellectually revitalised, its sense of purpose renewed, re-stated in contemporary terms and able to build on solid and long-standing foundations - may not remain at least as relevant to our current situation as it was to those whose demands mutualism has met so triumphantly in the past.  It is unnecessary in a forum of this character to refer by way of answer to the success stories of individual credit unions which are already well known to you.  I offer instead outstanding examples of the success of mutualism in enabling ordinary peope to house themselves, to bring about the economic development of the communities of which they are a part and to provide themselves with jobs.  I refer in particular to the great common equity rental housing co-operatives of Ontario in Canada, to the Desjardins credit co-operatives in Quebec in Canada, and to the great industrial co-operatives at Mondragon in Spain.  There is no doubt in my mind that the need for jobs, local economic development and affordable rental accommodation will be as real and urgent in the years immediately ahead of us as was the need for affordable food and clothing in eighteenth and nineteenth century Britain, or for affordable consumer finance in Australia in the nineteen-fifties and nineteen-sixties.

Rental Housing Co-operatives.

Housing co-operatives which I visited in Toronto in Canada, in 1989, prided themselves on having eliminated what they saw as being “the high price of individual home ownership and the unpredictable rent increases, insecurity and anonymity that come with living in rental housing”.  Unlike rents, they argue, the monthly housing charge in a co-op rises only with increases in operating and mortgage servicing costs.  There are no profits or refinancing costs to be paid for.  In most areas, over time, the co-op housing charges will fall below the rents charged for private rental accommodation of the same quality.  Co-op housing, in the view of the co-ops, gives residents an equal voice in the decisions affecting their homes.  There is no landlord.  Co-op housing, it is argued, provides a unique opportunity for people to build a community and to share and assist each other in ways beyond meeting their housing needs.  Democratic control, it is said finally, guarantees that money budgeted for maintenance is spent on maintenance, and not skimmed off for extra profit while the property deteriorates.

All these Canadian housing co-operatives were independent, self-directing, incorporated organisations.  The people living in the co-operative apartments, town houses or free-standing homes made up their memberships.  Each resident member had one vote in the affairs of the co-operative.  Every year, the members elected from among themselves a board of directors to manage the co-operative.  The monthly charges paid by members represented the cost to the co-operative of its mortgage, property taxes, reserves for future repairs and other operating costs.  Since the members themselves owned the property, there was no requirement for a profit margin.  Members made a small down-payment for shares or a membership fee - together with a maintenance guarantee and their first and last month’s housing charges - when they took up residence.  Government assistance was provided in the form of interest-free loans and mortgage guarantees under Federal and Federal-Provincial Housing Programs; as it was also through interest-free loans for up to 35% of capital costs under a Provincial housing program.  The government required in return that at least 25% of each co-operative’s members should be elegible by income for welfare rental subsidies.  The Woodsworth Co-operative - where much of my visit was spent, and to which I have since returned - was in compliance with this requirement, and 44% of the residents of the nearby Windmill Line Co-operative were subsidy recipients.

A recent social audit of the Woodsworth Co-operative established that 19% of its members had annual incomes under $10,000; as did 12% incomes between $10,000 and $19,900; 27% incomes between between $20,000 and $20,900; 19% incomes between $30,000 and $39,900; and 17% incomes in excess of $40,000, including some in excess of $100,000.  Seventeen percent of the Woodsworth residents were aged between 19 and 29, as were 38% betwen 30 and 39; 26% between 40 and 49; 10% between 50 and 59; and 9% over 60.  In the view of 84% of the Woodsworth residents, the co-operative had “a good mix of members from different ethnic, cultural and national backgrounds”, and the co-operative was currently considering a recommendation from its Social Audit Committee that a unit should be set aside for a refugee family.

Eighty-five percent of the members felt that their housing charges were “just right”.  The quality of the accommodation was rated as good or excellent by 88% of the residents, as was the maintenance service by 73% of the residents.  Good neighbourhood was a reason for living in the co-operative mentioned by 85% of the residents; as was low cost housing by 78%; inability to own private housing by 69%; and security of tenure by 66%.  Seventy-four percent of all parents reported that the co-operative was a good place to bring up children, as did 82% of single parents that it  was a good place to be a single parent and 95% of senior citizens that it was a good place for them.  Forty percent of the members had run for office within the co-operative, although the 31% of households with incomes under $20,000 accounted for only 11% of current and former office-holders.  It is at least open to question whether any survey of Australian housing - public or private - would disclose comparable causes for satisfaction.  The reality of our situation is that a significant switch of resources from public to co-operative housing would be highly cost-effective. Social dysfunction would be massively reduced.  Rental housing in Australia currently is crying out for the mutualist approach.

The Desjardins Credit Co-operatives.

The Mouvement Des Caisses Desjardins began in Levis in Quebec in 1900, at the instigation of Alphonse Desjardins. Desjardins was a Hansard reporter for the Quebec provincial parliament, and later Clerk reporting of the Canadian parliament in Toronto.  His conscience was aroused by the poverty and unemployment which were driving away large numbers of his fellow citizens to the United States in search of work.  He was appalled also by the inability of working people and farmers to borrow at interest rates which were within their means. His original caisse or credit union - La Caisse Populaire De Levis - was seen by him as “putting the savings of the people at the service of the people”.  As in all credit unions, members pooled their savings, and took turns for affordable loans. The first transactions were conducted on 23 January, 1901, at Desjardins’ home, which remained the nerve-centre of the movement until his death in 1920, and is now preserved in his memory as a museum by La Societe Historique Alphonse-Desjardins.. Caisse members, Desjardins believed, would be encouraged to adopt practice thrift and financial responsibility.  Christian and humane values would be fostered.  Usury would be discouraged.  In time, caisses would form federations, and a great movement would emerge.

Desjardins’ dream is now a reality. The Mouvement Des Caisses Desjardins. consists today of caisses populaires or community credit unions, and caisses d’economie or industrial credit unions.  Individual caisses populaires within Quebec are grouped regionally in 10 federations.  There is a separate federation for the caisses d’economie, and three auxilary federations for caisses populaires outside Quebec.  The functions of the federations are to promote the effectiveness, growth and development of their affiliated caisses, and provide joint services such as communications, technical support, training and human resources management.  The federations comprise in turn La Confederation Des Caisses Populaires et D’Economie Du Quebec. 

The Confederation sets objectives for the movement as a whole, after extensive consultation with the caisses and their members.  It is also a service provider for the caisses and federations, in part through wholly-owned subsidiary companies. Direct clearing within the Canadian payment system and at the Bank of Canada is made available through La Caisse Centrale Desjardins du Quebec. A security, liquidity and mutual aid fund is operated through La Corporation De Fonds De Securite De La Confederation Desjardins.  Majority interests are held on behalf of the Confederation by La Societe De Services Des Caisses Desjardins in four companies providing respectively security services, plastic card services, information technology services and an automated system of authorisation and payment for pharmaceutical services, and by La Societe Financiere Des Caisses Desjardins  in four intermediary companies with subsidiaries offering general insurance, life assurance, trust and investment management services and corporate financing services.

To this point, nothing about the Desjardins caisses has differed significantly from credit unions as they operate currently in Australia. What is novel in Australian terms is the adoption by the caisses of economic development and job creation as key aspects of their services to their members, through subsidiary companies established for the purpose by the Confederation. Investissement Desjardins  is a wholly-owned holding company through which the Confederation backs the development of industrial and commercial enterprises and participates actively in Quenbec’s economic growth.  Three subsidiary bodies invest on the company’s behalf.  

The objectives of the first subsidiaries -Tremplin Desjardins  - are set out as:

(a) To support the development of Regional Investment Funds;

(b) To support high-tech businesses, in industries such as communications, electronics, health care and the environment;

(c) To assist businesses associated with the Desjardins movement in gaining access to international markets; and

(d) To act as a consultant for regional federations on investment in corporations within their regions.

It is hoped that, within five years, there will be ten Regional Invesment Funds, with assets of the order of $100 million.  Tremplin Desjardins is to invest in the Funds in conjunction with three financial partners, namely:

(a) La Caisse de Depot et Placement du Quebec (a semi-public corporation managing funds for the Quebec Pension Plan);

(b) Le Fonds de Solidarite des Travailleurs du Quebec (a trade unions investment fund) and

(c) The National Bank of Canada.

The second subsidiary -Capital Desjardins -  seeks out entrepreneurs who have proven capacities for making their businesses grow and become profitable, and who need additional strategic and fiancial support for acquisition, expansion or diversification projects. The third -Gestion Desjardins - acquires or maintains majority or preponderent shareholdings in large companies which are actual or potential leaders in their sectors and should be owned in Quebec.  A further holding company - La Societe Immobiliere Des Caisses Desjardins Inc. - will ultimately systematises investment by the Confederation in real estate.  Caisse capital is supplemented for Investissement Desjardins through overseas initiatives. The organisation’s president, Raymond Gagne, sees its international thrust as having three objectives: “to find foreign investors to become partners in Quebec businesses, open foreign doors to Quebec businesses and stimulate foreign investment in Quebec”.

The movement also participates vigorously in international aid and development projects through the Societe De Developpement International Desjardins, and within Quebec fosters education, culture, social action and the development of the co-operative ideal through the Fondation Desjardins and the Centre de Formation Desjardins..  So successful - and so popular - have the caisses become that in 70% of the communities which make up Quebec they have no competitors. The Mouvement Des Caisses Desjardins now comprises 1,329 caisses populaires and caisses d’economie, with 4.9 million members and assets totalling $42.6 billion.   In Australia as in Quebec, the cry of local communities is for the means to bring about local economic development and put back to work the unemployed.

The Mondragon Co-operative Corporation.

The essentials of the Mondragon story are simple.  I refer largely for the purposes of this paper to the Mondragon co-operative group in its original form rather than the Mark II model - the Mondragon Mondragon Co-operative Corporation - which has emerged more recently. Mondragon is a small town in the Basque region, mainly engaged since the Middle Ages in producing steel. The regional economy was devastated in the nineteen-thirties by the Spanish Civil War.  Poverty and massive unemployment remained endemic well into the nineteen-forties. At that point, a remarkable parish priest, Don Jose Maria Arizmendiarietta, prompted a handful of townspeople to establish an industrial co-operative - Ulgor - using hand tools and sheet metal to manufacture paraffin-fired heating and cooking stoves for the local market.  What has developed from that small beginning is a group of more than 100 manufacturing, financial, retail, service and support co-operatives, with a workforce of 21,000 members and and a 1991 turnover of 315,172 million pesetas - up 8.8% on 1990, which was in turn a 15% increase on 1989.  No Mondragon worker has ever been made redundant, and more than a quarter of the group’s output is exported.

The success of the Mondragon stems in part from the fact that every worker is a stake-holder, who shares equally in the profits - and, on occasion, losses - of the co-operative of which he is a co-owner.  His rights as a member include participating directly in the making of the policies of the co-operative, which then delegates the day-to-day conduct of its affairs to a manager hired for the purpose on contract.  Members’ entitlements - and the obligations which go with them - are taken seriously. However, if the story had no more to it than that, the Mondragon co-operatives might - like some, but by no means all worker-owned co-operatives and companies on other countries - have had a short lifespan, or failed to achieve acceptable rates of growth.  The key difference - over and above the checks and balances designed into the structure of the co-operatives by Arizmendiarietta - is that, shortly after the inception of the first co-operatives, they launched a bank - the Caja Laboral Popular.  The Caja Laboral Popular - now the thirteenth largest savings bank in Spain, with a staff of 1321 worker-members, 201 branch offices and assets in excess of $US3 billion. - has made the Mondragon co-operatives capital self-sufficient, and equipped them with comprehensive financial services and skills.  It is a “support” or “secondary” co-operative, governed jointly by representatives of its staff and affiliated industrial or “primary” co-operatives.

The bank in turn has given rise to further support co-operatives.  For example, since members of co-operatives are classified by Spanish law as self-employed - and are therefore inelegible for pensions, health care and other social security benefits - the group has had to develop a social security system of its own, through the Lagun Aro  support co-operative.  The Ikerlan research and development support co-operative keeps the group at the cutting edge of technological and scientific advances, and has specialised recently in numerically-controlled machine tools, artificial intelligence and robotics.  The group’s university of technology - the Eskola Politechnica - is a support co-operative, as are its school of business administration - Otalora - and its forty-odd Hezibide Elkartea primary and secondary schools.  Students taking courses at the Eskola Politechnica can if necessary pay their way as members of a co-operative of their own - Alecoop - whose products include teaching machines.  The Mondragon group includes finally six construction co-operatives, seven agricultural co-operatives, ten housing co-operatives and 271 Eroski co-operative supermarkets and other stores. 

Following the establishment of Ulgor in 1954, the Mondragon co-operatives experienced spectacular growth.  The expansionary phase then ground to a halt in the ‘seventies, in the face of the first oil price shock, and the onset of a recession which was experienced far more keenly in Spain than in most other parts of Europe.  Faced in the ‘eighties with continuing financial stringency, the group conducted an exhaustive re-appraisal of its position, followed by a root-and-branch re-structuring which once again placed its activities on a secure foundations, while preserving intact its co-operative guiding philosophy, principles and structure.  The success with which the membership was able to work its way through to agreement on the necessary changes is an object lesson in the capacity of ordinary people to adopt and adhere to difficult decisions which they have been enabled to understand and own.

As stake-holders, the Mondragon workers expect high standards of wealth creation from those to whom the governance and management of the co-operatives is delegated.  Unlike share-holders in conventional corporations, they are in a position both to monitor performance directly on a day-to-day basis, and develop informed views about the need for improvements and how they can be brought about.  The outcome has been seen widely as an “institutionalisation of entrepreneurship”.  Even so, the concern of state socialist critics such as Beatrice and Sidney Webb - that the interests of producer co-operatives would necessarily be incompatible with those of consumers, and therefore of the community as a whole - has proved to be unfounded.  The difference is owed substantially to the adherence of the co-operatives to Arizmendiarietta’s principle of equilibrio - of balance in the relationship of one co-operative with another, of industrial co-operatives with support co-operatives and of co-operatives both individually and collectively with the communities of which they are a part.  As the Cornell University scholars William and Kathleen Foote Whyte have written following a definitive seventeen-year study of Mondragon:

In the discussion of important decisions, the word equilibrio appears again and again as the justification for any action proposed. The basis idea is that life in a co-operative should not be carried on as if it were a zero-sum game in which some win and some lose. There must be a balancing of interests and needs; we hear it said that technological imperatives must be balanced with social objectives and that the financial needs of the firm must be balanced with the economic needs of members. ^[6]

A further American writer - Roy Morrison - sees equilibrio  as the key to a successful integration of human freedom and community ^[7] .

Tested against the principles of co-operation - democracy, voluntarism, autonomy, equity, mutuality, universality and the capacity to evolve - Mondragon emerges with flying colours. Economically, the story is similarly impressive. The ‘nineties find the Mondragon co-operatives once again undergoing expansion.  Earnings and exports are up. New markets are being acquired. A random selection of current products includes industrial robots, heavy earth-moving machinery, tugs, fishing-boats, and other small ocean-going vessels, buses and motor coaches, machine tools and hydraulic presses, refrigerators, washing machines and other white goods, furniture and hi-fi systems.  As from the inception, productivity of the co-operatives has been higher by far than that of comparable private sector businesses in nearby areas, and signs of dysfunction such as absenteeism are spectacularly fewer. Overall, wealth has been created. Jobs have been provided for workers who would otherwise be unemployed. Household purchasing power has increased and the regional economy has been stimulated.  In 1991, in the face of continuing recessionary conditions, the Caja Laboral Popular lifted its level of deposits per worker-member by 11.45%, its earnings per worker-member by 13.2% and its profits by 14.8%.  Clearly somebody is doing something spectacularly right.

Re-Inventing Credit Unionism

Are there then lesson for credit unions and mutualist bodies more generally in Australia in the Ontario, Desjardins and Mondragon experiences? Three lessons in particular spring to mind. The first lesson is that mutualist bodies no less than bodies in the public and private sectors must be prepared today to constantly re-invent themselves in the face of changing circumstances. In particular, mutualist bodies must be prepared to re-position themselves in the face of changes in the the pressing social needs to which they are a response. There is no point in continuing to cater for a need which no longer exists or is being met as well or better from another source. The most useful way of thinking of mutualist bodies may well be as accumulations of scarce social capital whose use changes over time with changing circumstances and priorities.

I am reminded in this respect of a co-operative I visited recently in Detroit. The co-operative in question was formed in the nineteen-thirties in response to a pressing social need for affordable, hygenic household milk delivery services.  When the corporate dairies moved in with comparable services at a comparable price, the co-operative re-invented and re-positioned itself so that the social capital it had accumulated was applied to meeting a pressing social need for affordable optometrical testing and the supply of spectacles. When this function in turn was taken up by the optometrical corporations, a further re-invention of the co-operative took place. The co-operative at this point re-tasked itself to meet a pressing social need for accommodation and support services for older people. It now operates condominiums - large apartment blocks - for older people across America. Each condominium is now a free-standing, self-governing co-operative in its own right, within the over-arching co-operative structure.

What is important here is that a growing body of social capital has been kept intact over more than half a century. The pressing social needs of today are being met by the co-operative as effectively as were the very different needs which were responsible originally for its inception. The lesson for Australia's credit unions is plain. The pressing social need for affordable consumer finance which brought about the establishment of credit unions in the nineteen-fifties and nineteen-sixties is today being catered for no less effectively by banks and other financial intermediaries. As has been seen, the pressing social need our members are experiencing currently is for regional economic development and jobs. What the Desjardins and Mondragon experiences exemplify with triumphant success is credit union driven mobilisation of local and regional capital for local and regional economic growth. Not the least exciting advantage for credit unions from the adoption by the Australian government of the recommendations of the Wallis committee is the extent to which the way is now clear for us to now follow more closely the example of our Desjardins and Mondragon counterparts.

Entrenching Mutualism         

The second lesson follows from the first. It is that accumulations of social capital such as have been created in credit unions and other mutualist bodies are far too scarce and precious for us to allow them to be dissipated. It is vital that mutualist bodies should now entrench their mutualist character and principles so that the accumulations of social capital created by successive generations of their members should not now be pillaged as we have seen happen in the case of great mutual assurance bodies such as National Mutual and the AMP, and was only so narrowly averted in the case of the NRMA. The situation is the same irrespective of whether the threat is from an external corporate raider such as recently - and thankfully unsuccessfully - attempted to take over the great consumer co-operative movement in Britain, or whether is from a greedy management intent on bribing members into a shameful betrayal of their obligation to hold in trust the assets they have inherited from their predecessors and should in turn pass on to those who come after them.

The looting of the mutual assurance societies is an act of larceny on a scale so vast as to dwarf those of the Bonds and Skases of the nineteen-eighties. We should not fail to take warning from the mutual assurance debacle. Credit unions are now in many instances so large, their assets so considerable and their memberships so passive as to present a serious temptation to managers who have not necessarily grown up in the movement or been sufficiently exposed to its mutualist principles. Who but a saint would not be tempted by the example of the Managing Director of the AMP, Mr George Trumbull, in enriching himself to the tune of $10 million from the abrogation of the mutualist principles he was employed to uphold? ^[8]

All of us who have at heart the well-being of credit unions and credit unionism should therefore be deeply - even desperately - concerned that the in many respects excellent Wallis Reports Issues Paper No. 2 released by the Credit Union Services Corporation recently under the title "Capital and Mutuality" recommends at page eight that members, as owners, must have the right to decide to de-mutualise their credit unions ^[9] . Such a recommendation gravely misunderstands or misrepresents the relationship between credit unions and their members. We are the trustees for assets which others before us created, to which we therefore have no moral entitlement and from which others after us are entitled to benefit no less than ourselves. To again adapt a phrase from a wholly different context, people who genuinely

New Opportunities  

The final lesson is that as old doors close - as old opportunites vanish - new ones are constantly becoming available. This is nowhere more true than in the establishing of strategic alliances. Credit Care is a case in point. Thanks to the three-way Credit Care partnership between the Credit Union Services Corporation, the Australian Government and the Government of NSW, credit unions have had significant success in filling the vacuum which has been left behind by the closing of banks in regional and country centres. In the process, links have been formed with local councils and communities which may in the future become the basis for the major involvement by credit unions in regional economic development which so high a proportion of our members so plainly require of us.

In a wholly different sphere, I was struck in Britain recently by the interest which Tony Blair's new Labour Party government there is taking in the use of mutualist bodies such as friendly societies to deliver a second-tier system of compulsory contributory retirement pensions. Given the involvement of Australian credit unions in the delivery of superannuation products, there is no reason why we should be in any less qualified than friendly societies for delivering such second-tier pension arrangements as Australian governments may in time come to favour. In Mondragon, I saw related arrangements in operation. The Mondragon social security secondary support co-operative - Lagun-Aro - delivers core social security benefits on behalf of the Spanish governmentto members of its affiliated co-operatives, which it then tops up on a generous scale with benefits from its own resources.  It may well be that the notably prescient 1984 study  of friendly societies by David Green and Lawrence Cromwell - Mutual Aid or Welfare State: Australia's Friendly Societies - should now be required reading for all those of us who would like to see credit unions retain their current position as Australia's pre-emininet mutualist bodies ^[10] .   

Conclusion.  

Standing by the grave of the father of the co-operative movement and father of mutualism, Robert Own, as I did in the northern summer of 1989, it seemed to me that nothing about mutualism as we know it today would in any way have been unfamiliar or unacceptable to Owen.  I was reminded that we in the mutualism movement - be it through credit unions, building societies, friendly societies, general co-operatives or mutual assurance societies - are the custodians of perhaps the most powerful idea ever to have been given rise in human history.  I was reminded also of Victor Hugo’s prophetic observation that nothing is so powerful as an idea whose time has come. 

At a time when the advocates of the statutory corporation school of state socialism, and their “greed is good” counterparts in the corporate sphere, have simultaneously, permanently and irrevocably discredited themselves, the way is open for mutualism in all its forms to assume the larger role - locally, nationally, regionally and on a worldwide basis - to which its merits so plainly entitle it.  What has been identified mistakenly by some as marking an end to history marks potentially the birth of new opportunities and applications for mutualism.  My subject today - credit unions and the New Mutualism for which our troubled times cry out - is one aspect of the on-going effort which our movement now requires of us, so that the dream of Robert Own can, at long last, be brought finally to fruition. The events of recent years, and the problems which the world now finds confronting it, have opened up for us, as a movement, a window of opportunity such as we have not previously experienced - and which, if it is not grasped now, may never be seen again.