Australian Government ‘Cottons On’ to the Value of Cooperatives

The federal budget has revealed the government has “cottoned on” to the value of cooperatives, in a move welcomed by the national peak body representing Australian member-owned businesses.

The budget, handed down on Tuesday, pointed to an ongoing commitment to the cooperative and mutual sector by the federal government, and included a number of measures to further facilitate cooperation in business.

Business Council of Co-operatives and Mutuals (BCCM) CEO Melina Morrison told Pro Bono News they were pleased with the focus on collaboration.

“We represent every sector of the economy so it’s impossible to give an A-plus or B-minus overall tick to the budget,” Morrison said.

“What we’re really happy with is that where government has funded initiatives, particularly small and medium enterprise initiatives, human service initiatives, and initiative into regional centres, they’re putting money into the community in a way that’s encouraging them to come together in these powerful models of collaboration.”

According to Morrison, the budget reflected a number of models that co-ops had been putting into practice for many years.

“What we’re really seeing in a lot of these budget measures is that governments are starting to cotton on to the thing that cooperatives have known forever,” Morrison said.

“When communities cooperate for localised place-based service delivery models, when businesses cooperate to team up [and] clean up, they cooperate in clusters and then small businesses can access markets that usually favour larger entrants.

“These are things that the government is actually giving money to communities and businesses to do in this budget. They’re giving them money to cooperate. Sometimes they call it collaboration or collecting together but it’s basically cooperation and it’s what we’ve been doing for decades if not centuries.”

In particular Morrison drew attention to the $20 million funding that was included for the Small and Medium Enterprises Export Hubs to allow businesses to form “clusters” to access larger markets.

“They’ve picked up on the established model of enterprise cooperatives which is where SMEs cluster together in order to be able to contract out into global supply chains and attract very large lucrative global tenders,” she said.

“An example of this is the 30-year-old Hunternet cooperative which is a cluster of SME engineering firms which is sort of the ‘jewel in the crown’ of regional clustering that the government is looking at.

“Again in the case of Hunternet they pool labor, so they can share labor demand across more than 200 firms. In fact they have a waiting list for their cooperative because it’s such a powerful way of doing business.”

Enterprise co-ops help Australian farmers compete against organisations that are many times their size, by realising economies of scale across their supply chains.

Australian local supply chains help Australian firms, particularly those without the necessary economic and operational scale, to compete against larger multinational corporations.

Morrison said the Small and Medium Enterprises Export Hubs program would enable the development of more enterprise cooperatives to gain access to export markets.

“We would like to see every farmer thrive in the way the producer-owners of Australia’s $3.27 billion co-op grain handler CBH do,” she said.

“Enterprise cooperatives strengthen communities and play a significant role in ensuring that Australians continue to profit from global demand for Australian-grown produce.

“The BCCM is very pleased to see government acknowledge the systems Australia’s rural sector uses already.”

She said another clear example of the government adopting cooperative models could be seen in the $60 million National Disability Insurance Scheme labour market development fund.

According to Morrison, cooperative and mutual entrepreneurs have long anticipated the looming workforce shortage, and “have been busy” setting up equitable employment structures in this space.

“Carers are frequently highly altruistic individuals motivated by more than remuneration alone. Cooperative models offer carers the autonomy and flexibility to serve the people in their care as best they can,” Morrison said.

“Worker cooperatives like BCCM member The Co-operative Life also incentivise traditionally low-paid care work by giving the carers a share in the business. They can get on with the work they are already doing in helping other Australians.”

She said the cooperative model should also be considered in relation to housing.

“There are 177 housing cooperatives already delivering affordable housing using the common equity model with support from BCCM members Common Equity Housing Ltd and Common Equity NSW,” she said.

“The housing cooperative model is robust. It delivers affordable housing across the ownership spectrum, from full ownership to secure tenancy, with flexible options for low-income, first home owners, last home owners, and key service workers.”

She said cooperatives stood to be affected by the announcement of $4.8 million to the Australian Bureau of Statistics for affordable housing stock estimates, and $5.5 million to continue research into housing and homelessness policies.

“Our members welcome accurate statistics on affordable housing stocks so that this much-needed housing will get to the people who need it fairly and quickly,” she said.

She said the announcement of $20 million for this financial year to reform business registries also addressed recognition and regulatory barriers faced by cooperatives.

“Cooperatives and mutuals account for 8 per cent of Australia’s GDP, but to accurately total the number operating in Australia right now would require a joint effort between State Registrars, the ATO, the ABS and ASIC,” Morrison said.

“Business registry reform will help cooperatives and mutuals currently building Australia’s future without proper recognition. Our businesses often miss out on funding they would otherwise be entitled to, due to irregularities in the way companies are recorded.

“Government can use monthly company statistics to gauge effective policy, but can’t do the same sort of impact assessment on our sector. Centralised and useable data will provide them with the insights they need to consider our businesses when developing new policy.”

Our 2018 budget coverage is brought to you by Community Sector Banking.