Victorian Nationals Senator Bridget McKenzie.THE federal Senate is looking to conduct an inquiry into the operation of co-operatives and mutuals in the Australian economy, including those in the agricultural sector.

A notice of motion was made to the federal Senate last week for the Economics References Committee to hold an inquiry that’s due to report by May 14.

The motion was backed by Victorian Nationals Senator Bridget McKenzie and South Australian independent Senator Nick Xenophon.

Senator Xenophon and the Nationals have repeatedly expressed concerns about anti-competitive conduct in the retail supply chain by Coles and Woolworths, and the negative impacts on farmers such as the selling of $1 per litre milk.

The Senate inquiry’s terms of reference calls for a specific focus on the economic contribution co-ops and mutuals make to the national economy and current barriers to innovation, growth and free competition.

The inquiry would also look at the impact of current regulations, comparisons between mutual ownership and private sale of publicly held assets and services, and any related matters.

It’s understood the Senate inquiry is likely to go ahead but will be delayed by up to two months, due to the Committee’s current heavy workload.

Co-ops could overcome economic challengesSenator McKenzie said the Australian economy was facing major challenges with productivity, competitiveness and resilience which co-operatives and mutuals had the potential to help overcome.

“Co-operatives operate across many sectors of our economy, including agriculture, motoring, finance, insurance, retail, health and childcare,” she said.

“Victoria is home to many of Australia’s top ranked co-operatives and mutuals, with the top 10 co-operatives and mutuals in Victoria having a combined gross turnover of $5.37 billion and more than $15.7 billion in total assets.

“Regional Victoria is home to Australia’s second top ranked co-operative, Murray Goulburn, which employs more than 2000 people and contributes an estimated $6 billion to the Australian economy.

“However, our co-operatives face a number of challenges and need greater support from government to continue contributing to Australia’s ongoing prosperity.”

Senator McKenzie said one of the key challenges faced by co-operatives and mutuals was laws affecting co-operatives not being applied consistently across Australia.

She said Victoria and NSW are the only States to have signed up for consistent national laws, meaning co-operatives and mutuals operating across State borders faced the added cost of dual regulation under State and federal laws.

“Co-operatives and mutuals also face disadvantages regarding competition policy, and the fact there is presently no federal minister responsible for co-operatives and no federal government programs to assist co-operatives,” she said.

“I strongly encourage the Senate Economic References Committee to commit to this investigation to lay the foundations for better support and assistance for Australia’s co-operatives and mutuals, ensuring continued prosperity, particularly in regional Australia.”

Community benefits of co-opsCBH CEO Dr Andy Crane is chair of the Business Council of Co-operatives and Mutuals (BCCM) and was recently questioned about the new role at a different federal Senate inquiry into grain logistics.

Dr Crane said the BCCM was established just over a year ago to represent an under-recognised sector of the Australian economy – member-based, member-owned organisations.

“When you bring them together – the CBHs, the Murray Goulburns of the world, the mutual funds – it is a significant sector of the Australian economy,” he said.

“There are more Australians who are members of co-ops and mutuals than own shares.

“We are designed to promote a better understanding of co-ops and mutuals and why the government needs to take account when it is writing regulations and legislation and not to only use a corporate yardstick for all the measures.”

Dr Crane said the BCCM represents businesses that are long-lasting, very sustainable and “they are democratic and represent their members very well”.

“They are Australian owned and driven and they have motivations that make them both very good for their members and also good for society,” he said.

“One of the co-operative principles is ‘good for your community’.

“They operate in a closed-loop way whereby their members ensure they never stray too far from what they want them to do.

“I believe over the 80 years of CBH’s history that has been the case.

“As much as you hear differing reports in the papers about the boards’ and the growers’ discussions, that is a cooperative at work,” he said.

“It is members making sure that its organisation is there for them.

“The value generated from within those business stays within them, so, for us, we re-invest everything.

“They are not profits, they are retained earnings.

“So they tend to be good employers, focused on the community, longstanding and a very important part of a diverse Australian economy.”

Dr Crane also dismissed a suggestion that co-operatives act virtuously 24 hours a day, 365 days of the year, in terms of how they interact in the market with commercial players.

“We are not looking for some virtuous support,” he said.

“We are saying we are a very important part of our diverse and strong Australian economy.

“Right at this moment it is really good that we exist, and we are showing what we can do in the future.

“We are seeing that the advent of health co-operatives, providing GP services, are very much relevant here in Canberra.

“Successful start-up cooperatives as well as large ones are competing on the international marketplace.”

At the inquiry, Western Australian Liberal Senator Dean Smith said an organisation’s structure “does not necessarily dictate or constrain the way that it behaves in the marketplace”.

“Mr Crane, I think, used the words, ‘co-operatives are never too far away from the interests of their members’, which suggests that there could be a case when it is not wholly representative of its members interests,” he said.

“It is how co-operatives operate in the marketplace that I am particularly interested in.”

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