In March 2015, the Senate referred the following matters to the Economics Reference Committee for inquiry and report by 14 May 2015.
(a) the role, importance, and overall performance of cooperative, mutual and member-owned firms in the Australian economy;
(b) the operations of cooperatives and mutuals in the Australian economy, with particular reference to:
(i) economic contribution,
(ii) current barriers to innovation, growth, and free competition,
(iii) the impact of current regulations, and
(iv) comparisons between mutual ownership and private sale of publicly held assets and services; and
(c) any related matters.
In March 2016 the Committee tabled its report, having received 60 submissions and holding three public hearings over the course of the inquiry. In total 17 recommendations were made, as follows:
Recommendation 1: The committee recommends that the Commonwealth Government ensures that a national collection of statistics and data is undertaken to provide an accurate picture of the scale and extent of the co-operative and mutual sector.
Recommendation 2: The committee recommends that co-operative and mutuals sector be better represented in government policy discussions, and is actively promoted as a possible option for service delivery particularly where community based initiatives are being considered.
Recommendation 3: The committee recommends the Commonwealth Government work with states and territories to develop a program of supports to encourage the establishment of new co-operatives and mutual enterprises.
Recommendation 4: The committee recommends that a mutual enterprise is explicitly defined in the Corporations Act 2001, and its associated regulations.
Recommendation 5: The committee recommends that the role of directors in mutual enterprises is defined in the Corporations Regulations to align with the proposed definition of a mutual enterprise in the Corporations Act.
Recommendation 6: The committee recommends the Commonwealth Government work with states and territories to ensure the continual improvement to advice, guidance and information provided at all stages in the establishment, governance and regulation of co-operatives.
Recommendation 7: The committee recommends that the Commonwealth Government to work with all relevant stakeholders to undertake a program of education and training to inform them about the role of co-operatives and mutuals.
Recommendation 8: The committee recommends that the Commonwealth Government examine ways in which it can improve the recognition and understanding of the co-operative and mutual sector in the national secondary school curriculum and that tertiary institutions consider the inclusion of co-operative and mutuals in accounting, business, commerce, economics and law degrees.
Recommendation 9: The Committee recommends that professional accreditation bodies, such as the Law Society and Institute of Chartered Accountants, require a demonstrated knowledge of the co-operatives and mutual structure before it will licence its members to practice accounting or law.
Recommendation 10: The committee recommends that the Commonwealth Government amend the Indigenous Advancement Strategy to allow registered co-operatives the same access to allow levels of grant funding as other entities.
Recommendation 11: The committee recommends that the Commonwealth Government review, and where necessary amend the eligibility criteria for grants and funds across all of government grants and program guidelines to ensure that co-operatives and mutual enterprises are not excluded on the basis of their business structure.
Recommendation 12: The committee recommends that the co-operative and mutual sector be considered when the government is preparing a Regulatory Impact Statement that accompanies new regulatory policies.
Recommendation 13: The committee recommends that the Commonwealth Government liaise with its state and territory counterparts to ensure that the regulatory burden for small and medium sized co-operative and mutual enterprise aligns with the needs of these organisations and ensures they are not disadvantaged relative to companies of a similar size.
Recommendation 14: The committee recommends that the Commonwealth Government closely monitor the progress of the International Accounting Standards Board in developing solutions to bring co-operative shares under the definition of capital under AASB 132, and, where possible, facilitate equivalent amendments as expeditiously as possible.
Recommendation 15: The committee recommends that Commonwealth and State Governments support the formalisation of some of innovative market-based approaches to raising capital for small and medium sized co-operative and mutual enterprises, in the form of advice and information, as they become available.
Recommendation 16: The committee recommends that APRA set a target date for the outcome of discussions with the co-operative and mutuals sector on issues of capital raising and bring those discussions to a timely conclusion.
Recommendation 17: The committee recommends that the Commonwealth Government examine proposals to amend the Corporations Act 2001 to provide co-operative and mutual enterprises with a mechanism to enable them access to a broader range of capital raising and investment opportunities.
Business Council for Co-operatives and Mutuals
The Business Council for Co-operatives and Mutuals, the national peak body representing the co-operative and mutual models of enterprise, was quick to support the recommendations.
The Senate report is an important first step for government in recognising the way co-operatives and mutuals increase competition and diversity in Australia’s economy,” says Melina Morrison, CEO of the Business Council for Co-operatives and Mutuals (BCCM).
“These recommendations will help take the shackles off the sector and allow it to step up and fulfill its potential in both the economy and Australian communities.
“In recognising the capital raising limitations suffered by co-operatives and mutual, the report points to an opportunity to achieve parity for the sector with other types of businesses (like listed companies) and potentially unlock billions of dollars of investment.”
On regulatory and legislative issues, the Senate report recommends the harmonisation of disparate state regulations governing co-operatives across the country. The BCCM has been advocating for this result since its inception, and welcomes the encouragement of the Federal government in this regard.
Customer Owned Banking Association (COBA)
COBA was also quick to offer support for the Senate Economics References Committee report. COBA particularly welcomed the report’s recommendations on regulatory capital for customer-owned banking institutions and for the customer-owned model to be explicitly considered in Regulatory Impact Statements on new policies.
“This report acknowledges that the customer-owned model has not had a fair go in regulatory frameworks that are set up to deal with listed companies,” COBA CEO Mark Degotardi said.
“The report recognises that more needs to be done to accommodate the alternative model that we bring to the market – businesses that are owned by their customers, by their employees and by enterprises and community groups.
“The report provides a valuable snapshot of our diverse sector, identifies barriers to growth, innovation and competition, and focuses on the key issue of access to capital.
“We want to be able to compete with listed businesses on a level playing field.”