The push for a 'third way': mutuals, co-operatives win favour

Australia should heed the European trend of using mutuals and co-operatives to deliver services traditionally provided by government in areas such as disability, employment, housing, aged care and healthcare services, a new business-backed report argues. And the federal government has immediately signed up to the idea.

The Business Council of Co-operatives and Mutuals (BCCM) white paper — Public Service Mutuals: A third way for delivering public services in Australia — recommends government “create an enabling environment for the growth of PSMs” by working with stakeholders and experts to identify policy or funding barriers. It argues:

“… the research undertaken to date, and the experience in the UK and other jurisdictions, shows that co-operatives and mutuals have the potential to generate better social outcomes, greater value for money, higher returns on investments, greater economic and social resilience, and higher levels of consumer engagement and employee wellbeing.”

The McClure review interim report into Australia’s welfare system, released in June, also spoke of mutuals approvingly. It argued that:

“Mutuals and co-operatives can play an important role in disadvantaged communities. With appropriate support they can be established to provide training and jobs, as well as goods and services for low income people. They are a vehicle for social and economic participation for both individuals and communities.”

At the launch of the BCCM report on Thursday, Social Services Minister Kevin Andrews backed the expansion of co-operatives and mutuals as a high priority. He said the BCCM “exemplifies the philosophical world view that governs the Liberal approach to public policy”.

“By instinct the Abbott government is a party of limited government,” he said at the launch in Parliament House. “The question I’m keen to explore is how we, the government, can help you, the co-operatives and mutuals sector, take things to the next level.”

Invoking Ronald Reagan, Andrews used his address to criticise “big government” policies, employing the slightly obscure French term for heavy state intervention in the economy: dirigisme. “The BCCM, I think, constitutes the antithesis of dirigisme — it’s a private sector initiative that seeks to achieve good things through self-initiated co-operation rather than through state imposed sanction,” he said.

“Rather than the cumbersome, one-size-fits-all, heavy hand of government regulation from on high, this council fosters flexible, adaptable, grassroots solutions that respond to individual needs.”

The Minister noted that co-operatives and mutuals pre-date “the modern welfare state”. He said friendly societies provided services to over 1 million Australians at the start of the World War I, while only 100,000 citizens received benefits from the government.

The BCCM was established in July last year, following discussions with larger mutuals including NRMA and Australian Unity. It claims to represent over 13 million Australians who belong to 1600 co-operatives and mutuals, which turn over about $17 million every year.

CEO Melina Morrison (pictured) thanked Andrews for the government’s commitment to fund “pathfinder case studies”, which aim to explore exactly how the mooted expansion of public sector mutuals could take place. She said the sector saw the federal government’s role in this process as “custodianship and stewardship and mentorship”.

Public servants are “demonstrating through their engagement that there’s an interest in working out how this ecosystem of support and development may occur”, Morrison said.

The white paper, authored by academic Les Hems, describes metaphorical “scaffolding” that the government could provide to support the sector.

“These [supports] could include enhancing access to learning, promoting collaboration through mentoring, peer support and the use of expert knowledge,” Andrews said at the launch. “As the organisations achieve a self-sustaining level of operation this scaffolding could then be progressively removed.”

England and Wales have recently secured their 100th public service mutual. The schemes have received positive coverage, with some arguing that the model gives staff greater control over decisions, though there is debate about how to measure results so far. The BCCM report argues that one benefit of mutuals is that surpluses generated can be re-invested into the organisation.

PSMs provide nearly £1.5 billion of public services in the UK. They employ 35,000 people and, according to the government, have generated over 3000 additional jobs in the last three years. Health service providers comprise the majority of British schemes, which could also include other social services such as housing, education and fire services.

Here, the Department of Social Services will use the UK as a model for a new Civil Society National Centre for Excellence, which is set to launch in coming months.