Australian’s Business Council of Co-operatives and Mutuals (BCCM) has welcomed landmark legal reforms for co-operatives and mutuals through the Treasury Laws Amendment (Mutual Reforms) Act 2019.
BCCM has been at the forefront in advocating and developing the new law, which opens up new opportunities for co-ops and mutual businesses to grow while safeguarding their mutuality for future generations.
The new legislation adds a legal definition of mutual entities, which recognises mutuals as a legitimate business model in highly competitive sectors.
And a major change for mutuals and members is the expanded ability to raise capital, enabling growth in a broad range of industries.
“It highlights the valuable role of mutuals and creates more competition in business, giving customers more choice,” said Melina Morrison, BCCM’s CEO.
“This levels the playing field and gives mutuals the opportunity to compete with the larger, listed entities including the big banks. Stakeholder owned business models ensure customers are put first in all transactions.
“In this era of accountability, we are pleased for our members that all sides of parliament have acknowledged the social conscience of our sector. We thank both major parties for the ongoing bipartisan support that has led to the changes.”
Michael Lawrence, CEO of the Customer Owned Banking Association (Coba), also welcomed the changes, and praised its bipartisan support from legislators.
He said: “From its inception right through to its passage, this bill has had resounding support from all sides of politics. There is a clear understanding among members of Parliament that this bill will help customer-owned banking institutions become more competitive and take on the ‘Big Four’.”
He added: “Our sector is grateful for the support and advocacy from both sides of politics and the Parliamentary Friends of Mutuals and Co-operatives for their unwavering commitment to passing this Bill.
“Being able to raise capital will allow customer owned banking institutions to allocate more funding to projects that will deliver greater choice and competition for consumers.
“With greater competition, comes greater consumer outcomes. This is a milestone for competition in the banking sector and one that will only help improve customers’ outcomes.”
Brian Branch, president and chief executive of the World Council of Credit Unions, said other countries could learn from the reforms because they had given Australia’s credit unions and mutual banks greater flexibility than their overseas peers to grow their businesses.
Mr Branch, who is on a fact-finding tour of Australia, told news website Banking Day: “In other countries such as the United States, credit unions are limited to funding their businesses through retained earnings, which puts a break on their growth.
“We’ve seen some experimentation in Canada that was largely around subordinated debt but it was simply too expensive. The Australian reforms are a milestone.”
Mr Branch leading a delegation from the US credit union sector to Australia, which also includes Jim Nussle, president of the Credit Union National Association (Cuna). The delegation is being hosted by Coba.