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National Co-op Update
1998-2001

National Co-op Update (NCU) was a bi-monthly Australian co-operative journal produced by Melbourne publishers Substitution Pty Ltd and Words In Time.

The aim of NCU was to raise the profile of the Australian co-operative sector and to provide a forum for discussion about co-operatives and issues important to the sector.

Forty editions were produced between 1995 and 2002. NCU began as a subscription publication, however, from 2000 NCU was funded from a Victorian government grant administered by the Co-operative Federation of Victoria. NCU ceased publication in September 2002 after the government withdrew funding for the journal.

CDS Director, Tony Gill played a role in the ongoing development of NCU - by facilitating a partnership between NCU and the Co-operative Federation of Victoria (CFV), promoting NCU to CFV members and other co-operatives around Australia, and contributing over 40 articles that were published in NCU between 1998 and 2001.

Tony also arranged for co-operative historian, Dr Gary Lewis, to write a series of articles for NCU in 1999-2000 highlighting landmarks in the development of the Australian co-operative movement in the 20th century.

The following are the articles written by Tony and edited by the publishers. The articles are copyright to the publishers.

NEWS HEADLINES

Advantage goes national
Battlelines drawn on Business Tax Reform
Bringing balance to the 'social' enterprise debate
CDS forms first co-op
CDS launches start-up manual
CDS wins fuel co-op feasibility tender
Centenary of Federation
Centre for Co-operative Research and Development
Chairman's death overshadows record result
Changes open way for new co-operatives
Changes to Queensland Co-operatives Act
Co-op formed to support Skills.net centres
Co-op seeks to value add
Co-op to meet deregulation challenge
Co-operative directors workshop
Co-operative fundraising
CPS takes to the Internet
Development co-op formed
Farmers urged to form fuel co-operatives
First ISP co-operative formed
ICA celebration
Improvements 'herd' from merger
National conference waves the co-operative flag
National Indigenous credit union opens
New era for Darling Downs Bacon Co-op
New markets for venison co-operative
New plant for Victorian fruit co-operative
Parmalat offers merger with Dairy Farmers
People on the move
Plan calls for firewood co-ops
Progress of national scheme
Registry move to Bathurst
Reinventing co-operation
Rural fuel co-op study completed
South Australian annual conference
Success for lamb marketing co-operative
Tax reform proposals threaten co-op lifeblood
Taxation Update
Tree co-operatives
Update on business tax reform
US leader to speak
US Under-Secretary praises Victorian town


Advantage goes national
National Co-op Update No 31, January/February 2001

Victoria's Advantage Credit Union moved a step closer to its goal of becoming a national credit union, merging with Sydney-based Endeavour Credit Union in January.

The new entity, which has $1.3 billion in assets under management and about 160,000 members, is Australia's largest credit union. This status will be enhanced within a few months through a merger with the Northern Territory Credit Union. This will take the group to 210,000 members and assets of almost $1.7 billion. Advantage also plans to expand into Queensland, South and Western Australia through more mergers.

Advantage has been planning to become a national credit union for four years ago, according to chief executive, Rob Nicholls. "You need critical mass to compete. We want to keep our identity for our members, but have the resources so that we can afford call centres and Internet banking," he said.


Battlelines drawn on Business Tax Reform
National Co-op Update No 22, July/August 1999

The Co-operatives Council of Australia (CCA) has reinforced its opinion that the principles and practices of the current Division 9 of the Income Tax Assessment Act be retained and enhanced. The Division 9 provisions relate specifically to taxing of co-operatives under defined conditions.

The CCA's second submission to the Review of Business Taxation has a mixed reaction to proposals outlined in the Review's second discussion paper, 'A Platform for Consultation'.

The CCA agreed that distributions based only on an investment dividend of share face value (not shares held which relate to business activity in a co-operative) should be treated as a franked dividend.

However, it criticises the concept of taxing matters such as discounts on products, above market payments for produce and the provision of services as a shareholder dividend or fringe benefit. According the the CCA, taxing these matters as distributions would have a disastrous effect on cash flow for co-operatives and their members.

It was also argued that co-operatives should be able to accrue transactions based on the year of conducting that business activity, as many co-operatives trade on a seasonal or produce pooling basis as an extension of the members' interests.

The CCA highlighted the benefit of Section 120(1)(c) of the Income Tax Assessment Act to regional development and noted that the paper considered the continuation of the deduction "a separate issue from extending a new entity tax system".

The possibility of capital gains tax relief for co-operatives wishing to merge with other co-operatives or carry out internal restructuring, along with other issues of benefit to business generally, were also supported by the CCA.

The final report of the Review of Business Taxation was to be released at the end of July. The CCA was waiting its release before determining its next course of action.


Bringing balance to the social enterprise debate
National Co-op Update No 31, January/February 2001

Over the past year or so, various social commentators reported in National Co-op Update have sought to portray co-operatives as 'social' enterprises or 'social economy' organisations.

They have called for co-operatives to reinvent themselves to serve new purposes, such as addressing the problem of 'social exclusion' and to revive civil society. Some have argued that co-operatives are repositories of community assets, which should be turned to a variety of economic and social purposes. Others have suggested that the state transfer resources and service delivery to membership-based mutuals (including co-operatives), which would receive and allocate public funds with the aim of transforming the social status of their members.

There appears to be a misunderstanding among these commentators about the true nature of co-operatives. The proposition that co-operatives are 'social' enterprises differs from the views of the International Co-operative Alliance (ICA) and Edgar Parnell, an authority on co-operatives.

In its year 2000 international co-operative day message, the ICA stressed that co-operatives are business enterprises, not instruments of public policy - they created jobs by providing a mechanism that responds to market needs in an efficient way.

Edgar Parnell supports this view. In his book, Reinventing Co-operation, Parnell argued that co-operatives were, first and foremost, economic enterprises, although they can also deliver social benefits if that is what their members want. "Co-operatives are a product of the market economy and are usually established to redress an imbalance in the market. They can only function properly within a free market," he said.

Mr Parnell argues that co-operatives are not the 'half-way house' between state and private sectors. He said co-operatives are private organisations, owned and controlled by private persons, and that it is not possible to 'privatise' a co-operative because they are already privately owned.

On the other hand, he said, co-operatives are not charities. "Charities are concerned at doing things for people - co-operatives are about self-help and mutual aid. Co-operatives exist not to administer or produce profits to fund charitable or political programs, but to provide benefits that meet the needs of its members."


CDS forms first co-op
National Co-op Update No 24, November/December 1999

Co-operative Development Services Ltd (CDS) has formed its first co-operative. CDS has assisted a group of lamb producers in southern Victoria establish the Southern Agricultural Producers Co-operative Ltd. The producers have become increasingly dissatisfied with the selling costs and lack of control over the existing stock marketing system. They consider that a co-operative is the best means of increasing market share and achieving better prices for their stock. The co-operative plans to sell lamb and other agricultural products direct to meat processors.


CDS launches start-up manual
National Co-op Update No 26, March/April 2000

Co-operative Development Services (CDS) has launched a manual on how to start and run a co-operative. 'The Co-operative Start-up Manual' covers topics such as getting started, the board of directors, finances, information, members and meetings. The 60-page manual, which has attracted interest interstate, is available in Victoria to co-operatives formed by CDS.


CDS wins fuel co-op feasibility tender
National Co-op Update No 29, September/October 2000

Co-operative Development Services Ltd (CDS) has won a tender to investigate the feasibility of establishing a fuel co-operative in the Buangor district, west of Ballarat, Victoria.

A dispute between former Buangor fuel trader, Trevor Oliver, and a fuel distributor over petrol pricing at Easter prompted the move to consider a co-operative. The Buangor community is concerned that the escalating price for fuel and associated delivery charges, militates against price competitiveness in regional areas and unfairly adds to the costs of doing business by rural and regional communities.

The study, an initiative of the Ararat Rural City Council, is funded by a Victorian government grant. It will:

  • assess the overall viability of fuel co-operatives in rural communities;
  • assess the community of Buangor as a pilot community for the implementation of a fuel co-operative;
  • provide an implementation plan for a co-operative if viability is indicated; and
  • provide a template for structuring such co-operatives state-wide.

CDS has assembled a group of business, legal and oil industry experts to conduct the study. The Buangor community has expressed in-principle financial support to advance the project should the study demonstrate viability. The study will build on research recently undertaken for the NSW Government by ACCORD and the Western Research Institute about using co-operatives to enhance competition in the petroleum industry.


Centenary of Federation
National Co-op Update No 21, May/June 1999

To celebrate the centenary of Federation, National Co-op Update has commissioned the co-operative historian, Dr Gary Lewis, to prepare a series of articles highlighting landmarks in the development of the Australian co-operative movement in the 20th century. The first article is scheduled to appear in the next edition of NCU.


Centre for Co-operative Research and Development
National Co-op Update No 21, May/June 1999

The new Australian Centre for Co-operative Research and Development has commenced operations.

The centre to be known as ACCORD, is an initiative of the NSW Government's Department of Fair Trading. The University of Technology Sydney, (UTS) and Charles Sturt University, (CSU) are joint hosts of the centre. Offices have recently been established at the Bathurst campus of CSU and at the Kuring-gai campus of UTS.

ACCORD has already been involved in a number of co-operative projects and activities. These include:

  • A joint Canadian, USA and Australian case study on the government's role in co-operative development. The study, commissioned by the Canadian Government through its Co-operatives Secretariat Unit, will examine government/sector relations in each of the three countries. The Centre for the Study of Co-operatives at the University of Saskatchewan, Canada is managing the project.
  • The first in a series of presentations to co-operatives on 'Critical Factors Affecting Co-operative Success'.
  • Examining opportunities for new energy co-operatives, which could be established by local governments and local co-operative and mutual organisations.
  • Surveying NSW co-operatives on issues they believe will affect their future operation and success. On the basis of this information and an additional analysis of financial performance the centre will publish the first in its proposed series of 'State of the Nation' reports on co-operative issues and performance.

The centre has also been approached to research and produce a practical and straight forward guide which will outline the strengths and weakness of the various forms of hybrid equity being used by co-operatives in Australia and throughout the world.

A Board of Management (Board) has been formed to direct ACCORD's activities. The chair of the Board is Ian Langdon, who is also chair of Dairy Farmers Co-operative. Other Board members include:

  • ACCORD's two Co-Directors: Associate Professor Mark Lyons from UTS, and Associate Professor Terry Bishop from CSU;
  • Brian Given, deputy director general of the NSW Department of Fair Trading;
  • Professor Peter Booth (UTS); and
  • Associate Professor Denise Jarratt (CSU)

An advisory committee, including a wide range of representatives from co-operatives and other relevant stakeholder groups, is being formed to help advise ACCORD on future research, teaching and development priorities. The Advisory Committee will meet for the first time in August.


Chairman's death overshadows record result
National Co-op Update No 28, July/August 2000

Warrnambool Co-operative Society Ltd, the largest co-operative registered under the Victorian Co-operatives Act, posted record sales of $32.2 million and a record operating profit of $750,000, before tax, for the year ended March 31.

The co-operative, which has more than 8,000 members, operates a department and rural store, and provides milk, harvesting and herd improvement services to the region's dairy farmers.

However, a pall of sadness hung over the record result following the accidental shooting death of co-operative chairman, Frank Creed, on his dairy farm at Boorcan in south-west Victoria in early June. Mr Creed had been a member of the co-operative for decades, serving on the board for 10 years and the chairman for the last six.

Former colleagues of Mr Creed paid tribute to his great passion for co-operatives, particularly the Warrnambool Co-operative. Board member, Gerald Madden, said Mr Creed's dedication to the co-operative was reflected in his concern for its members, feeling that the organisation was only as good as the service it provided. Mr Madden said his death would leave a vacuum in the co-operative.


Changes open way for new co-operatives
National Co-op Update No 20, March/April 1999

Recent changes to the Victorian Associations Incorporation Act could see a number of new co-operatives being registered in the state. The Associations Incorporation Act was enacted in 1981 as a simple and inexpensive means by which unincorporated non-for-profit associations could obtain corporate status. Previously, these organisations had two incorporation options: a co-operative or a company limited by guarantee.

There are now more than 40,000 associations registered under the Act. More than 800 have annual revenue over $500,000 or assets over $1 million. Of these, 80 have annual revenue over $3 million and around a dozen have annual revenue over $10 million.

The Victorian Government has been concerned that the Act did not contain provisions for the rejection of an application for incorporation. This has led to an increasing number of large associations being granted incorporation, even though their business activities and annual turnovers were of such a scale that they would have been more appropriately incorporated under either the Co-operatives Act or Corporations Law.

The Act allows rejection of applications for incorporation, and the transfer of associations to another form of incorporation, either voluntarily or at the direction of the Registrar of Incorporated Associations. One of the key reforms in the new Co-operatives Act is the option to form a new type of co-operative: a non-trading co-operative without shares. This type of co-operative is similar to an incorporated association; both are not-for-profit corporations (which cannot secure pecuniary profit for members) and have no share capital.

A major difference between them is the extent to which both can trade. There are no restrictions in the Co-operatives Act on trading activities of co-operatives; an incorporated association cannot be formed to carry on for the purpose of trading.

The new Co-operatives Act provides a simple and inexpensive procedure for transfer of incorporation, and allow associations to retain their not-for-profit status while not being restricted in their trading activities. It is anticipated that some large associations will soon be encouraged by the government to become either a co-operative or a company.


Changes to Queensland Co-operatives Act
National Co-op Update No 27, May/June 2000

Earlier this year, National Co-op Update reported that the Queensland Parliament had passed a number of amendments to its Co-operatives Act. While the changes only affect Queensland co-operatives, other states participating in the national Core Consistent Provisions scheme are expected to make similar amendments to their legislation. In response to readers' enquires, we outline some of the changes likely to affect the day-to-day running of co-operatives.

Directors

Amendments have been made to the provisions relating to independent directors. The ratio of three member directors for each independent director has been changed to a majority of directors must be member directors. For a quorum at board meetings, member directors must outnumber the independent directors by at least one.

General meetings

Co-operatives with fewer than 50 members will now be able to pass an ordinary resolution without the need to convene a general meeting. Ordinary resolutions, such as approving directors remuneration, distribution of surplus, accepting reports and approving membership subscriptions, can be circulated to members, and will be deemed to have passed if all members sign a document containing a statement that they favor the resolution. The current requirements for special resolutions remain unchanged.

Debentures & shares

Sections 1025, 1026, 1027 and 1043 of the Corporations Law will apply to shares, the issuing of debentures to members and employees of a co-operative, and to compulsory loans made by members to the co-operative. Sections 1032, 1035 and 1036 of the law will also apply to shares in a co-operative.

Bonus shares

The issuing of bonus shares to members out of surplus or reserves on the basis of business done with the co-operative, or on the basis of shares held by the member has been clarified.

Auditors

Qualified auditors who are not registered company auditors will be to apply for an exemption from the Registrar of Co-operatives to enable them to audit a co-operative. This will help co-operatives in remote areas that do not have ready access to a registered company auditor.

Prospective members

A trading co-operative will be required to provide a prospective member with a disclosure statement that has been either approved by the Registrar or filed at the Registrar's office. This is in addition to the current information requirements in the Act. The registrar can exempt the board or boards of a trading co-operative or a class of trading co-operative from a requirement in the new section.


Co-op formed to support Skills.net centres
National Co-op Update No 27, May/June 2000

A new co-operative, Skills.net Association Co-op Ltd, has been formed in Victoria by a state-wide network of Skills.net centres, with the assistance of Co-operative Development Services Ltd.

Skills.net is a $5 million Victorian Government program that provides Internet access and training to individuals and local communities who would not otherwise have access to the Internet. Skills.net aims to provide advocacy and support services to the centres that will help their communities understand and use information and communication technology. It has received an establishment grant from Multimedia Victoria and will eventually co-ordinate the activities of those community groups currently involved in the Skills.net program.


Co-op seeks to value add
National Co-op Update No 21, May/June 1999

A Victorian co-operative, Rupnorth Co-operative Ltd, is seeking support from its members to invest in new grain handling and noodle manufacturing facilities in the Wimmera region. In a letter sent to co-operative members, chairman Owen King said the proposed ventures offered members to invest in value-adding projects. The co-operative is having discussions with Queensland based company Grainco for a 70,000 tonne grain-handling facility on railway land leased by the co-operative, and with Indonesian company Kobe Lyna to build a noodle plant in the region.

Source: The Weekly Times 19 May 1999


Co-op to meet deregulation challenge
National Co-op Update No 23, September/October 1999

A new dairy farmer co-operative has been formed in Western Australia to prepare for the deregulation of the Victorian dairy industry on July 1, 2000. Challenge Group Co-operative Ltd plans to build a processing plant in the south-west of the state to manufacture powdered milk and specialty bread and cake mixes from spot milk, the excess milk after processors have used all the drinking milk and production milk they need.

Chairman, Larry Brennen, told the WA Farmers Federation's annual conference on June 29 that the co-operative was formed to explore new markets, knowing that milk prices would fall in WA once Victoria's market was deregulated.


Co-operative directors workshop
National Co-op Update No 22, July/August 1999

The Co-operative Federation of Victoria held a well attended co-operative directors workshop on July 17 in Melbourne. The workshop for non-agricultural co-operatives was presented by Dr Peter Steane, senior lecturer in management at Macquarie University's Graduate School of Management.


Co-operative fundraising
National Co-op Update No 22, July/August 1999

There has been a good response from the co-operative sector to the 'Discussion Paper on Fundraising under the Uniform Co-operatives Legislation', released by state and territory governments last year.

The discussion paper, prepared by the State and Territory Co-operative Officers' Working Group, highlighted a common criticism of co-operatives - they are generally under capitalised and lack adequate fundraising powers. The paper canvassed a number of issues in relation to existing fundraising powers, including consideration of NSW's Co-operative Capital Units (CCUs), and presented a range of options for comment, including extending CCUs to other states.

The Ministerial Council for Corporations (MINCO) - responsible for approving changes to the regulation of corporations - is considering how the new co-operatives legislation should interface with the Corporations Law, in respect of listing co-operatives and their quoted securities (including debentures and CCUs).

The Queensland Registrar of Co-operatives is preparing a draft paper based on the submissions for consideration by the Co-operative Officers' Working Party. Once a common view is established, recommended amendments to co-operatives legislation will be made to the relevant state and territory Ministers. The Registrar's office has told National Co-op Update that, subject to ministerial approval, the recommendations will be released to the co-operative sector for comment before the legislation is drafted.


CPS takes to the Internet
National Co-op Update No 23, September/October 1999

Victorian-based Co-operative Purchasing Services Ltd (CPS) entered the world of electronic commerce this year when it gave local council suppliers Internet access to tenders.

General Manager, Ian Holden, says the move to e-commerce has been well received by potential suppliers, with the added benefit of halving the office traffic and hard copy document production generated by supplier inquires. Visitors to the CPS website can view the list of available tenders, select contracts of interest and buy tender documents electronically. CPS covers more than 120 categories of goods and services used by councils, ranging from travel and computers to playground equipment and quarry products.

In 1994, the Victorian Government introduced compulsory competitive tendering (CCT), requiring all councils to put 50% of their annual expenditure to a competitive tendering process. All purchases made through arrangements put in place by CPS qualify under CCT.

CPS is funded through commission paid by suppliers on its members transactions. After expenses have been covered, surplus income is returned to members by way of a transaction based bonus rebate - this recognises each member's level of support for the scheme. Since 1989, CPS has returned $800,000 surplus funds to members, in addition to point-of-sale savings members make with every purchase.

The Municipal Association of Victoria sponsored the formation of CPS in 1989 to aggregate the buying power of its members, in those days 210 councils. The state wide restructure earlier this decade the number reduced to 78.

In addition to local councils and co-operatives, CPS has a number of community and charitable organisations in its membership. The Co-operative Federation of Victoria has actively promoted CPS and has a delegate on the CPS Board. More recently CPS has entered into arrangements to provide its services to councils in South Australia in partnership with a similar co-operative there and also in Tasmania in partnership with the local government association.


Development co-op formed
National Co-op Update No 22, July/August 1999

A new co-operative has been established in Victoria to help develop new co-operatives. Co-operative Development Services Ltd (CDS) was formed on April 26 to satisfy a growing interest in forming co-operatives in the state. CDS will provide a range of services to groups wishing to form co-operatives, including group development and preparing business plans, rules, and disclosure statements.


Farmers urged to form fuel co-ops
National Co-op Update No 28, July/August 2000

Interest in fuel co-operatives is set to grow following media coverage of a public meeting in the tiny Victorian town of Buangor, west of Ballarat in June.

About 60 people voted to form a steering committee to investigate the feasibility of forming a fuel storage and distribution co-operative to serve farmers and other fuel users in the district. A dispute between former Buangor fuel trader, Trevor Oliver, and a major fuel distributor over petrol pricing at Easter prompted the co-operative consideration.

The Victorian Farmers Federation-backed, Diamond Petroleum, has offered seed capital and a guaranteed long-term fuel supply to support the proposed co-operative. Since 1998, Diamond Petroleum has been supplying imported fuel to broad-acre farmers at cost savings for diesel of more than 6 cents a litre and up to 8-10 cents a litre on petrol. Diamond Petroleum director, Bruce Dunsmore, told the meeting that farmers should organise fuel co-operatives to counter the increasing distribution and retail control by oil companies.

Co-operative Development Services Ltd director, Tony Gill, told the meeting that purchasing fuel through co-operatives was not a new concept. "Fishermen, chicken meat producers, taxi and tip truck operators use co-operatives to bulk purchase fuel for their businesses," he said. CDS has offered to assist in forming the co-operative if the feasibility study demonstrates viability.


First ISP co-operative formed
National Co-op Update No 26, March/April 2000

Australia's first Internet service provider co-operative has been formed in Wangaratta in north-east Victoria.

The North East Telecommunications Co-operative Ltd (NETC) was formed as an incorporated association in 1993 to establish a community-based regional telecommunication network in north-east Victoria. An association was considered an appropriate structure at the time until a client questioned the ability of NETC to undertake trading activities under the Associations Incorporation Act. Co-operative Development Services director, Tony Gill, who helped NETC convert to a co-operative, said that it is the first incorporated association to become a co-operative under the new Victorian Co-operatives Act.

NETC has received funding under the Federal Government's Networking the Nation program to expand so that Internet and other telecommunications services are available to rural communities in nine local government shires in north-east Victoria.


ICA Celebration
National Co-op Update No 22, July/August 1999

To celebrate the United Nations International Day of Co-operatives, the Queensland Office of Fair Trading sponsored a conference, 'Employment and other Community Benefits through Co-operation' in Brisbane on July 8. More than 50 people attended the conference, which was addressed by Judy Spence, the Minister for Fair Trading, and a number of other speakers. The program included:

  • a background to the United Nations International Day of Co-operatives;
  • the new Australian Centre of Co-operative Research and Development;
  • sustainable human settlement development;
  • new and community co-operatives;
  • the use of co-operatives to provide employment and other benefits; and
  • the future for co-operatives.

Improvements 'herd' from merger
National Co-op Update No 31, January/February 2001

Four co-operatives and an association serving the Victorian dairy industry are planning to merge to form two regional co-operatives.

In Gippsland, the directors of South Gippsland AB Co-operative, Maffra Herd Improvement Co-operative and South Gippsland Herd Improvement Association have agreed to put a proposal to their members to merge the three entities. Subject to member approval, it is expected that the Gippsland Herd Improvement Co-operative Ltd will be registered by the end of June.

In western Victoria, the directors of Cobden AB and Colac Herd Improvement Co-operatives are putting a proposal to their members to merge the two co-operatives.


National conference waves the co-operative flag
National Co-op Update No 21, May/June 1999

More than 70 delegates, representing major Australian co-operatives, state co-operative federations and a number of Federal Government agencies attended the two-day Co-operatives Council of Australia (CCA) conference in Canberra on April 20-21.

The aim of the conference was to let federal politicians and government officials know about the co-operative movement and the issues around business tax reform.

The speakers included parliamentary representatives of all major political parties, representatives of business and community co-operatives, and the conference's major sponsor, legal firm Corrs Chambers Westgarth.

South Australian Liberal Senator, Alan Ferguson, spoke about the benefits of taxation reform. He referred to the Ralph Review of Business Taxation and pointed out that it was an independent review and was not government policy.

Senator Ron Boswell said the National Party is fully committed to supporting co-operatives. He discussed the increasing pressures of concentrated market power and corporate agricultural marketing on the primary producer, saying that co-operatives remained the only vehicle whereby the producer can retain control over their industry and their income. The Senator also highlighted the importance of co-operatives to rural and regional economies.

The Shadow Minister for Small Business and Tourism, Joel Fitzgibbon, told delegates that while the Opposition held no formal position on the abolition of Division 9 of the Income Tax Assessment Act, he saw no reason why the Labor Party would change its position of 1996, when it opposed the repeal of section 120(1)(c) in the Senate.

Australian Democrats' Senator John Woodley outlined the Democrats positive support for co-operative and mutual enterprises. Senator Woodley referred to their role in saving section 120(1)(c) in 1996 and expressed the Democrats interest in working with the CCA on getting a fairer tax outcome for co-operatives.

The other speakers were Graham Blight, director of Ricegrowers Co-operative and former president of the National Farmers Federation; Professor Bob Fagan from Macquarie University; Neville Younghusband, chairman of Netco Grain Co-operative; Ron Stone, CEO Ballarat Community Education Centre Co-operative; Dr. John Swindells, CEO Mackay Sugar Co-operative; and Britt Maxwell of Corrs Chambers Westgarth.

The speakers covered a number of topics including value adding, the social and economic benefits of co-operatives, demutualisation pitfalls, role of a community co-operative and taxation.

The delegates attended a cocktail party at Parliament House with members of the Senate. The Communications Minister, Senator Richard Alston, welcomed delegates on behalf of the Federal Government. The 30 senators who attended the function took the opportunity to discuss co-operative issues with delegates, including business tax reform.


National Indigenous credit union opens
National Co-op Update No 21, May/June 1999

The First Nations Advantage Credit Union opened on May 3, marking a new chapter in Aboriginal history. In a traditional ceremony held in Shepparton Victoria, Yorta Yorta Elders welcomed guests onto Yorta Yorta land before Paul Briggs, chairperson of First Nations Advantage Credit Union, and Senator Herron, the Minister for Aboriginal and Torres Strait Islander Affairs, declared the new credit union open.

Senator Herron and Australian Aboriginal and Torres Strait Islander Commission (ATSIC) chairman, Gatjil Djerrkura, have hailed the launch as an important initiative that will help Indigenous people take control of their economic development.

The Minister said the credit union would provide culturally appropriate financial services and access to credit at reasonable cost, as well as training and employment opportunities for Indigenous people in the financial services industry. "We must encourage joint venture partnerships like this to assist Indigenous Australians in breaking free from welfare dependency," Senator Herron said.

First Nations will initially operate as a division Advantage Credit Union, Victoria's largest credit union, which will provide facilities, services and management expertise to assist in the eventual establishment of an independent, fully Indigenous-owned and operated entity.

The ATSIC chairman paid tribute to the Victorian Indigenous community for setting up the credit union. Mr. Djerrkura said ATSIC was happy to provide support to a venture that would offer Aboriginal and Torres Strait Islander people many substantial benefits. "Limited access to credit and capital is a significant barrier to indigenous people across Australia. The establishment of First Nations is another important step in empowering Indigenous Australians," Mr. Djerrkura said.

The national launch of First Nations Advantage Credit Union represents 11 years of planning and development from concept to implementation.

The strategic partnership with Advantage Credit Union was formed with financial assistance from ATSIC and the resources of CreditCare, a joint initiative of the Commonwealth and New South Wales Governments and Credit Union Services Corporation Australia to assist rural, remote and Indigenous communities regain access to retail financial services.

Mr Briggs said the credit union aimed to use the established national financial service networks of Advantage Credit Union to meet the unique needs of Aboriginal and Torres Strait Islander peoples. "Our partnership with Advantage gives aboriginal nations immediate national access to critical financial services networks, back office processing functions and expertise which would take years for us to establish alone," he said. "We applaud the support and enthusiasm Advantage has offered First Nations as an act of social responsibility.

Advantage Credit Union will not receive any financial return from their involvement with First Nations. As an act of reconciliation First Nations Advantage Credit Union is an excellent practical example of Aboriginal peoples working hand-in-hand with the wider business community, the result of which should be mutually beneficial."


New era for Darling Downs Bacon Co-op
National Co-op Update No 22, July/August 1999

Construction has begun on Australia newest state-of-the-art export accredited pig abattoir in Toowoomba Queensland.

At a time when the domestic pork industry faces many challenges, Darling Downs Bacon Co-operative Association Ltd, Australia's leading ham, bacon and smallgoods processor is building new abattoir, boning and storage facilities on its existing site at Willowburn in Toowoomba.

Formed in 1911, Darling Downs Bacon represents 50% of Queensland's pig producers. The co-operative has about 170 members.

Darling Downs Bacon chief executive, Robbin Ferris, said the new facility and its substantial output would allow the co-operative to compete for business on a much wider national and international scale. Designed in conjunction with the co-operative's workforce, the new facility will have the capacity to process 12,500 pigs per week, which includes an industry service kill component.

The facility will progressively employ 300 in the construction stage, in addition to 675 staff which is planned to increase on completion of the project. The total project, including necessary upgrades in infrastructure, represents a $37 million investment.

Completion of the plant would further enhance the region's growing reputation as a production source for the growing and processing high quality, clean Australian food. The first part of the project, the abattoir, is expected to be open next January-February, with the remainder complete by September 2000.


New markets for venison co-operative
National Co-op Update No 24, November/December 1999

The Australian Venison Producers' Co-operative Ltd has secured several new markets in Europe and Japan. Access to the European market was secured following it winning, against fierce local competition, a tender put out by the Deer Industry Association of Australia. Access to the Japanese market was secured via a lucrative contract in that country.

The success at tender and the new Japanese contract will substantially increase the level of product being exported. To meet the increased demand for venison, farmers are being encouraged to enter the industry. Workshops outlining the industries potential will be held throughout the country early next year.

The co-operative was established seven years ago and has 120 active members. Over the years, it has built up strong Asian markets and also some trade into the United States and Germany.


New plant for Victorian fruit co-operative
National Co-op Update No 23, September/October 1999

The Australian Fruit Marketing Co-operative Ltd officially opened its Silvan, Victoria, processing plant in mid September. The factory, which the co-operative bought last year from National Foods, will process local berries and market 100% Australian jam products.

The co-operative was formed in 1997 after strawberry growers east of Melbourne lost 30% of their market as a result of the local jam factory deciding to source product from Mexico. A reason for this decision was that the factory no longer wanted to deal with a number of individual growers, preferring to have one contract to supply berries.

Industry figures claim that, largely due to Australia importing about 4,500 tonnes of frozen strawberries a year, the number of Victorian berry growers has dropped from 400 to 200. The factory, which has the capacity to process 1,000 tonnes of fruit a year, will supply other companies and manufacture jam, fruit sauce, topping, mustard, chutney and other products under its own labels. The co-operative has taken on 25 berry growers to supply it with berries and other fruit.


Parmalat offers merger with Dairy Farmers
National Co-op Update No 23, September/October 1999

Dairy Farmers Group (DFG) has put off consideration of the $471 million merger offer from Italy's Parmalat until after the members vote on the restructuring of the group. DFG will send the offer to members, but the board itself will not consider the proposal until farmers have discussed the matter at their annual meeting in November.

Dairy Farmers chairman, Ian Langdon, played down the chance of a comprise with Parmalat. "All Parmalat is offering is to take control and we have a mandate from our farmers to maintain control," he said.


People on the move
National Co-op Update No 23, September/October 1999

Bill Quinlan, CEO of Warrnambool Co-operative, has retired after nearly 40 years in the post. Mr Quinlan began as an artificial insemination technician and, in response to dairy farmer demand, sold farm supplies out of the boot of his car. Since opening its first store in the Victorian town of Allansford in 1960, the Warrnambool Co-operative has grown into a multi-million dollar business, with an annual turnover in excess of $30 million and employing more than 200 staff . It operates a department and rural supplies store in Warrnambool, and provides milk harvesting and herd improvement services to dairy farmers in the district. Brien Bierne, previously managing director of the Melbourne shopping complex Melbourne Central, and senior executive at Myer Stores, David Jones and McDonnell East, has been appointed as the new CEO.

Col Davis is the new manager of the NSW Registry of Co-operatives. He has replaced Bruce Horton, who will remain in Sydney when the registry moves to Bathurst.

Tony Gill stepped down from his role in the Co-operative Federation of Victoria on September 30. Mr Gill has served the Victorian co-operative sector for the past 10 years, first as Victorian executive officer of the Australian Association of Co-operatives Ltd (1989 - 1993) and then as secretary of the federation (1993 - 1999). He was involved with re-establishing the Co-operative Federation of Victoria in 1993 and helped draft the Victorian Co-operatives Act 1996. As Victoria's representative on the Co-operatives Council of Australia (1994 -1999), Mr Gill played a leading role in gaining industry support for the Victorian Act to be adopted around Australia. He also helped draft the council's submission to the Ralph Inquiry into Business Tax Reform.

Jan Wade, the Minister for Fair Trading in the Kennett Government, retired from politics at the recent Victorian election. Mrs Wade was the minister responsible for developing the Co-operatives Act 1996. She provided the leadership and resources that resulted in the historic 1996 agreement between the states and the Commonwealth to adopt a state-based national scheme for consistent co-operatives legislation.


Plan calls for firewood co-ops
National Co-op Update No 28, July/August 2000

A business plan prepared for the Victorian National Parks Association (VNPA) has recommended the establishment of farmer-owned co-operatives to meet Victoria's future demand for firewood.

The plan was commissioned by VNPA in response to increasing concerns about the unsustainable demand for firewood from native forests. Victoria consumes between 725,000 tonnes and 1.5 million tonnes of firewood each year. It is mainly sourced from the state's Box-Ironbark woodlands and Red Gum forests.

Firewood plantations on private land are seen as a way to take the pressure off native forests. The plan suggests that a firewood co-operative could offer a range of services to help landholders establish and maintain plantations, and to sell and transport firewood to markets.


Progress of national scheme
National Co-op Update No 24, November/December 1999

The national scheme of co-operatives legislation is progressively being adopted around Australia. To date, the Northern Territory, South Australia, Queensland, and Victoria have new Co-operatives Acts, with New South Wales amending its 1992 Act to conform to the scheme. All these states and the Northern Territory have recognised the other states and territory legislation - the only exception being Victoria, which has yet to recognise the NSW Co-operatives Act.


Registry move to Bathurst
National Co-op Update No 21, May/June 1999

The Co-operative Federation of New South Wales is having discussions with the Minister and senior officers in the Department of Fair Trading in an attempt to modify the decision to move the Registry of Co-operatives to Bathurst.

The federation believes that the move would be disastrous for NSW co-operatives. It is concerned that the move will result in a loss of expertise from Registry staff not relocating to Bathurst and will make it harder for co-operative advisers to meet with Registry staff. With only 8% of the 838 NSW co-operatives located in Bathurst and adjacent central western region, the federation believes client service will suffer if the move goes ahead.

Source: CFNSW newsletter Autumn 1999.


Reinventing co-operation
National Co-op Update No 21, May/June 1999

Despite the concept of co-operation being essentially quite simple, many people lose sight of the basics once they become involved in a co-operative.

In 1995, with the objective of dispelling many of the myths and misunderstandings that surround co-operatives the world over, the UK Plunkett Foundation published 'Re-inventing the co-operative - Enterprises for the 21st Century'. The book has since become a 'best seller', referred to by some as the co-operative director's bible.

Its author and past director of the Plunkett Foundation, Edgar Parnell, has produced a new and revised edition. The new edition, 'Re-inventing Co-operation - the challenge of the 21st Century', covers the essentials for understanding how to make co-operatives successful in today's world, but also has new and expanded chapters on the need to re-invent co-operation. Other areas include accounting and financing, making federalism work, the use of subsidiaries, and communication and education within co-operatives.

The new book highlights the fact that most early co-operatives began with a set of mixed economic and social objectives. However, newer types of co-operatives, focusing almost exclusively on providing economic benefits to their members are now growing rapidly throughout the world.


Rural fuel co-op study completed
National Co-op Update No 31, January/February 2001

The results of a study into rural fuel co-operatives in Victoria was presented the State Government and the Rural City of Ararat in December 2000 .

The study, produced by Co-operative Development Services Ltd , provided an overview of oil industry trends for rural communities and assessed the viability of fuel co-operatives in rural Victoria. More specifically, it gave an assessment on the viability of a fuel co-operative for the Victorian farming community of Buangor for their district.


South Australian annual conference
National Co-op Update No 23, September/October 1999

The Co-operative Federation of South Australia will hold its annual conference at the Pavilion on the Park in Adelaide on Friday, October 22. The half-day conference will focus on business tax reform. Speakers will include Liberal Senator, Alan Ferguson, and Co-operatives Council of Australia (CCA) chairman, Jim Howard. The conference will be preceded by a CCA meeting to consider the final report of the Ralph Review on Business Taxation and proposed changes to co-operatives legislation.


Success for lamb marketing co-operative
National Co-op Update No 26, March/April 2000

The Southern Agricultural Producers Co-operative (SAPCo) Ltd, which was formed only six months ago, has sold 30,000 lambs direct to meat processors.

A group of 28 lamb producers in south-west Victoria formed the SAPCo after becoming disillusioned with the erratic prices and mixed quality signals from the sale yard auction system.

Tony Gill, director of Co-operative Development Services Ltd (CDS), which formed the co-operative, said producers wanted to take control of their destiny by managing the supply of lambs and meeting the specifications of meat processors. "They chose a co-operative because it is a structure where producers can collaborate with the aim of improving profitability of their enterprise, " he said.

Mr Gill said the co-operative was formed after five years of research, group learning, skill development, and market trials by the South West Prime Lamb Group. "When they approached CDS for assistance in forming their co-op, they already had a clear idea where they wanted their business to go. It was then a case of making sure their internal co-operative structure was appropriate for their needs," he said.

Producing what the consumer wants is SAPCo's ultimate aim in managing the production system from farm to the plate. Processors can buy qualities of lambs on specification from the co-operative, rather than relying on visual appraisal at sale yards.

To ensure the stock meets specifications, the co-operative has a quality assurance program for lamb management. The co-operative has engaged a live animal assessor to ensure stock for sale meets weight and fat-score specifications of processors. Members also receive market and production data from processors.


Tax reform proposals threaten co-op lifeblood
National Co-op Update No 18, November/December 1998

A government review of business taxation has concluded that Division 9 of the Income Tax Assessment Act, which recognises the unique features of co-operatives, will be superseded by the new redesigned company tax arrangements proposed in the Federal Government's White Paper - A New Tax System.

The key features of the redesigned tax arrangements are:

  • consistent tax treatment for all business entities, including co-operatives;
  • the introduction of a general profit first rule, whereby distributions of profit outside share buy-backs would be treated as dividends;
  • full franking of all profits paid to individuals or other entities outside consolidated groups; and
  • refunds of excess imputation credits.

Jim Howard, president of the Co-operatives Council of Australia, says the redesigned tax arrangements are incompatible with nature and objectives of co-operatives. "It is not appropriate to treat all distributions of a co-operative in the same manner as a dividend in a company that operates under the profit first rule," he says. "A co-operative does not operate under the profit first rule, as its primary purpose is to provide services to its members. As a co-operative is an extension of a members' business, the rebates received from distributions are treated as a refund on goods or services purchased or sold by the co-operative."

Under the existing Tax Act, co-operatives and companies that meet the requirements of Division 9 can claim a tax deduction on the distribution of rebates and dividends to members and on the repayment of certain loans. These deductions are derived from the basic tenant, recognised in the existing act, 'that a person's income consists only of money's derived from sources other than him or herself'.

"The provisions in Division 9 do not convey special privileges to co-operatives," Mr Howard says. "Rather, co-operatives are taxed in this way because of the long established and accepted principle of 'mutuality', which is intrinsic to the nature of all co-operative enterprises."

Division 9 had its origins in 1918, when the Commonwealth Income Tax Act first recognised a co-operative as a distinct business entity. After a series of amendments during the 1920's, the present Division 9 was inserted in the Act in 1936, following the recommendations of the Ferguson Royal Commission on Taxation in 1932-34.

According to Mr Howard, similar co-operative taxation provisions to that in Division 9 can be found in the Income Tax Acts of nearly all the countries that recognise co-operative enterprise. "If the proposed reforms were implemented, Australia would be out of step with most of its major trading partners by not recognising co-operatives in its taxation system," Mr Howard says.

The council, in consultation with state co-operative federations and co-operative tax experts, is preparing a submission in response to the government's White Paper. The submission will argue for the retention and improvement of Division 9, supported by international comparisons.

Two further papers will be released by the review in early 1999. The first will make some international comparisons between features of business tax, and the second will seek comments on detailed issues, including the government's approach to reforming taxation of co-operatives.

The council is also planning to conduct a political campaign during 1999, targeting all political parties. Mr Howard urges all Australian co-operatives to support the council's campaign. "The proposed tax arrangements are a serious threat to the principles of fair treatment for co-operatives," he says. "To secure the future of the co-operative movement in Australia, it is imperative that all co-operatives stand united behind the Co-operatives Council of Australia."


Taxation Update
National Co-op Update No 21, May/June 1999

Representatives of the Co-operatives Council of Australia met a number of federal ministers and other politicians in the week before the national conference to put the case for retaining Division 9 of the Income Tax Assessment Act. According to CCA chairman, Jim Howard, the feedback was very positive, and the council is likely to meet with officials of the Ralph Committee in the near future.

The council will also be submitting a brief response to the Ralph Committee's third discussion paper A Strong Foundation , highlighting the major concerns expressed in the council's earlier submission to the Review of Business Taxation.


Tree co-operatives
National Co-op Update No 10, July/August 1997

Australian Forest Growers has commissioned Tony Gill, secretary of the Co-operative Federation of Victoria, to produce a starter kit for tree growers' co-operatives. The project is assisted by a grant under the Commonwealth Farm Forestry program.


Update on business tax reform
National Co-op Update No 26, March/April 2000

The Federal Government and the Business Tax Reform Secretariat are deliberating on the second stage of the business tax reforms. One matter that has been clarified is the application of the principle of 'mutuality' - the notion that, as a general rule, you cannot do business with yourself. Co-operatives have been long regarded as mutual organisations.

The proposed legislation supports the Common Law principle that mutual operations are non-taxable. It does not, however, go into detail because the Common Law definitions of mutuality are so thorough that they do not need to go into print.


US leader to speak
National Co-op Update No 20, March/April 1999

Women in agricultural co-operatives will have the opportunity to meet Dr Jill Long Thompson, one of the United States' most senior rural women, in her tour of the Gippsland region of Victoria in late March.

Dr Long Thompson is Under Secretary for Agriculture and Rural Development and was Chair of the Second International Conference on Women in Agriculture held in Washington DC last year. She has broad experience in Congress, rural development and agriculture issues. She was a college business professor and co-manager of her family's farm in Indiana.

Dr Long Thompson, will be the keynote speaker at the Technology and Community Leadership Project Conference to be held on Tuesday, March 30, at Monash University's Churchill campus. The conference, which is being organised by Uniting our Communities Inc and Monash University, with funding from the Commonwealth's Networking the Nation program, aims to increase rural women's awareness and application of information and communications technologies.

Dr Long Thompson also has an interest in co-operatives and wishes to meet women who occupy management or directors' positions in agricultural co-operatives.


US Under-Secretary praises Victorian town
National Co-op Update No 22, July/August 1999

Mirboo North, a small rural community, was praised for its co-operative initiatives by the US Under Secretary for Agriculture and Rural Development, Dr Jill Long Thompson, during her recent four-day tour of Victoria's Gippsland region.

In a reference to the town's co-operative approach to solving problems, including the closure of its local bank and newspaper, Dr Long Thompson told the local newspaper co-operative that Mirboo North was "one of the most innovative towns in the world."

Referring to a study of US rural communities that thrived through hard times, she said, "The most significant factor was that communities that did well were the communities where people worked together within the community ... not only getting involved, but using the business approach to putting together a strategic plan ... and working towards carrying out that plan."

During her keynote address to the Technology and Community Leadership Project Conference held at nearby Monash University Churchill campus on March 30, Dr Long Thompson shared her concern about the negative impact on rural communities of amalgamating family farms into bigger units. Dr Long Thompson said that co-operatives helped smaller farmers survive by achieving greater purchasing and selling power, resulting in reduced costs and increased income. She told the conference that farming co-operatives are a major economic force in the US. A new generation of farm co-operatives has grown up in recent years, formed in response to low commodity prices and a market dominated by big buying conglomerates.

Source: Mirboo North Times 8 April 1999

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