Co-operatives: an overview

Co-operatives are a distinct form of organisation which occurs in most countries around the world. They differ from companies, trusts, incorporated associations and other legal structures and have their own agreed set of principles which maintains their unique features. The International Co-operative Alliance (ICA) is the umbrella organisation for all the co-operatives in the world and is the venue where these principles are debated and agreed. The ICA definition of a co-operative is:

A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.

Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

1. Voluntary and Open Membership
2. Democratic Member Control
3. Member economic participation
4. Autonomy and independence
5. Education, Training and Information
6. Co-operation among Co-operatives
7. Concern for community

The ICA has 230 member organisations from over 100 countries representing 730 million individuals. In fact, if you include the Chinese co-operatives, the majority of the world's people are members of co-operatives.

The co-operative movement traces its beginning to a retailing co-operative set up in 1844 at Rochedale, England. Retailing (also known as consumer) co-operatives have been the most common type of co-operative in Europe ever since. Retailing co-operatives introduced many innovations into the retailing sector such as self-serve shopping. Japanese retailing co-operatives have introduced innovations such as a system of groups of members (hans) pre-ordering goods which are then delivered directly to them, as well as producing a range of environmentally-friendly 'own brand' products.

Credit co-operatives, called Credit Unions in Australia, are the fastest growing section of the international co-operative sector. The 36,000 credit co-operatives have a membership of 77.5 million, mostly in the United States and Europe. There are millions more people involved in micro-credit schemes, still in the pre-cooperative stage, in developing countries. Credit co-operatives have been responsible for the introduction of innovations such as Automatic Teller Machines.

The 1970's and 80's high unemployment levels initiated a search for employment generating schemes. Enterprise co-operatives, which could be formed by a group of individuals with low start-up capital, became an important part of the sector for the first time. The networks of enterprise co-operatives in Emilio Romagna, Italy and Mondragon, Spain are now being closely studied by business theorists interested in their ability to create vibrant regional economies. The keys to the success of these two regions were close social and cultural ties in the communities (high social capital) and the presence of organisations which provide business advice and education as well as financial support to the co-operative sector.

Housing co-operatives made a major contribution to rebuilding housing in Europe after the Second World War. They are still common, particularly in England and Denmark. Housing co-operatives, along with credit and agricultural co-operatives, have shown the greatest growth in Asia and Africa. In India there are around 70,000 housing societies with over a million members. In the United States more than 1 million families live in co-operatives.

The international experience proves that co-operatives are a viable and innovative sector of the economy which can mobilise the skills and savings of all members of the community towards socially beneficial ends.

Co-operatives in Australia

The previous speaker discussed housing co-operative sector. There are also many other types of co-operatives active in Australia. Some types, such as Credit Unions, are not registered or known as co-operatives here.

In 1993, the total number of co-operatives in Australia was 2,366 with an estimated annual turnover of $5.4 Billion. There were 19 co-operatives amongst the top 500 exporters in 1993/4. In Queensland, there were 186 registered Co-operatives at 30 June 1998. They had combined assets of $968 million and a gross revenue for the year of almost $1.4 billion.

The larger co-operatives in Queensland have always been those for primary producers. like canegrowers and dairy farmers. Retailing co-operatives were widespread in the past and some still survive as the only grocer in country towns, for example in Esk and Toogoolawah in the Brisbane Valley. There are now also a number of organic foods co-operatives which serve a niche market.

The growth of other forms of co-operatives was restricted by the reluctance of banks to provide finance and by the provisions of legislation. Enterprise (worker) co-operatives were difficult to form under the previous Co-operative & Other Societies Act as it required twenty-five members to form a co-operative and few small businesses can afford to employ that many staff.

Housing co-operatives have largely been government-funded and have inevitably lost some of their autonomy because of the requirements of public funding. As I said in the introduction, I live in a co-operative which was deliberately set up to provide a model of privately-funded co-operative housing.

The I.D.E.A.S. Co-operative Society Model

The I.D.E.A.S. Co-operative is an equity co-operative with a broader aim than only providing housing to its members. IDEAS stands for 'Integrated Development of Ecocities: Actions & Services' and its objects are:

1. To advance the development of Ecocities through the example of our actions and the services offered.
2. To engage in educational activities which further the mission of the cooperative, both within its membership and in the wider community.
3. To develop and promote models of urban communities which contribute to the revitalisation of cities in a sustainable and economical manner.
4. To develop innovative models of medium density and not-for-profit housing incorporating urban permaculture, energy-efficient architecture, household recycling and cooperative, non-consumerist lifestyles.

As part of our commitment to minimising resource use, all houses are 'share houses' not occupied by single families. Each resident has the right to a bedroom space and use of all the common spaces. Each household works out its own arrangements for buying food and paying bills through regular house meetings.

The weekly charge is $60.00 at the moment. Part of the weekly charges paid by residents is used for a maintenance fund (for repairs to buildings or equipment), some for a housing fund (for the deposit on the next house) and the rest is used to pay the mortgage or rent. Equity is calculated by each resident purchasing a share every five months and then dividing their number of shares by the total number held in the property. This is the proportion of the value of the property that they own. This system means that those who have been there longer are given a greater equity in the property.

The co-operative deals with the landlords, pays the bonds and monitors individuals payments in the rental properties . This is a great advantage for people who are often discriminated against in the private rental market. It also assists in reducing disputes over rental payments and other bills within shared households.

Most of the existing residents prefer to live in share housing for the cost and social benefits, but have chosen to be part of a co-operative structure because it is secure and provides a way of gaining equity. There is a shared ideology of environmental responsibility and common ownership amongst the members.

The advantages of the IDEAS Co-operative Model include:

It is not restricted to target groups defined by the government. People on variable incomes such as contract workers, or low incomes such as part-time workers can be assured of stable housing.
• It is not restricted to low-income earners. This allows a variety of residents - from unemployed youth to medium level public servants at the moment.
• Residents accrue equity which can be taken with them when they leave or equity can be transferred to another co-operative house. In future, we hope to have reciprocal arrangements with co-operatives in other cities or even overseas.
• It relies on shared houses, so costs of living are lower and we can afford better quality of life eg satellite TV, Internet account.
• The co-operative has a wider mandate than housing, so it can provide an auspice for other activities. We provide accommodation to Brisbane Region Environment Council. We have also provided in kind support to a group of members who are forming a worker co-operative to design web pages (the Ideas-Web Co-operative).

One way the government could assist this type of co-operative would be to support the formation of a Co-operative Bank such as they have in the United States and Britain. Alternatively, it could overcome the problem of providing grants to equity-based co-operatives by providing mortgages through a unit trust. Co-operatives could then buy units through their mortgage repayments, until the co-operative owned the whole property.

Conclusion

Co-operatives have a rich history lasting over 100 years. They are a tried and tested model for common ownership and mutual aid which provides a third sector of the economy between the state and the market . Co-operatives have social as well as economic benefits and allow people with little capital to come together to service their own needs.

Co-operatives are part of an international movement which has transformed the everyday lives of millions of people around the world. I urge you all to hang in there and join us in building a vibrant co-operative movement in Queensland. The Cooperative Community Council would welcome your input and I would be happy to discuss the IDEAS co-op model in greater detail.