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Co-operative Contradiction

Co-operative Contradiction

The Victorian Government's Co-operative Development Program, 1981- 85

David Griffiths

The study of history is the sole basis for understanding the past and its influence on the present and future. In assessing co-operative development in Victoria, therefore, it is useful to examine past initiatives and the lessons these have for decisions today and tomorrow.

The specific purpose of this paper is to briefly assess the experience of the Co-operative Development Program that was initiated, operated and closed by the Victorian Government's Ministry of Employment and Training between 1981 and 1985. For additional details see:

  • CDP Chronology 1978-86
  • CDP Funding 1981-86
  • CDP Bibliography
  • CDP Co-operative Profiles 1981-86

The key theme of this paper is the influence of co-operative contradictions on the establishment and development of the Co-operative Development Program - contradictions that undermined the development of the Program. A co-operative contradiction is a process and/or initiative that is in contradiction with co-operative philosophy and principles.

The paper is dedicated to the following people who not only worked for or with the CDP but were also committed to the visionary implications of the Co-operative Development Program - Jim Asker, Tony Ayers, Hector Bugeja, Joe Burke, Carlo Carli, Monica Fawcett, Brian Greer, Leigh Holloway, Oenone Serle, Karina Veal and John Wilson.

The history is based on the records and recollection of the CDP Co-ordinator, David Griffiths, for the period 1981-84. The history will be subject to further revision based on additional and/or corrected information and insights. Readers are invited to submit additions and/or corrections.

The Program's Establishment

The Co-operative Development Program was established by the Liberal Government's Ministry of Employment and Training in April 1981

.In 1978 the New South Wales Government had established a Work Co-operative Program with a $3 million budget. This program inspired groups in Victoria to establish their own co-operatives - primarily to generate employment opportunities for young people who were unemployed.

The Victorian Government's formal interest in co-operatives began with the Work For Tomorrow Conference in 1979 when Premier Rupert Hamer foreshadowed support for co-operatives as an employment initiative. Hamer also announced the establishment of a Victorian Employment Committee(VEC). When established the VEC established sub-committees - including a Small Business and Co-operatives Sub-Committee. The Co-operative Federation of Victoria Ltd was represented on this Sub-Committee by its Executive Officer, Mr. W.W.Rawlinson.

The VEC was responsible to the Minister for Youth, Sport and Recreation, the Hon. Brian Dixon, M.P and its Executive Officer was Mr. Michael Roux. Under Dixon and Roux, by 1980 the VEC was funding three co-operatives on an experimental basis - Box Hill Workforce Cooperative, Maryborough Bootstrap and the Maryborough Producers and Resources Co-operative. The origin of all the co-operatives was to create employment opportunities for young people.

Roux was concerned to determine whether a formal program of support for co-operatives should be developed and he commissioned David Griffiths, a former and recent employee of the Brotherhood of St. Laurence, to prepare a report on this and to develop a guidebook. Griffiths was based at the Youth Council of Victoria.

The factors influencing the Victorian Government's interest in co-operatives included:

  • The precedent of a Youth Work Co-operative Program established by the N.S.W. Labor Government in 1979.
  • The inspiration this N.S.W. model provided to local communities and individuals throughout Victoria - particularly in the rural towns of Ballarat, Maryborough and Warrnambool to develop their own co-operatives. The inspiration, however, was the youth focus - not the co-operative model.
  • The emerging view by communities, bureaucracies and politicians that co-operatives could be an appropriate response to unemployment - particularly for unemployed young people. This support, however, did not necessitate a substantive understanding and acceptance of co-operative philosophy and principles.
  • The Government's establishment of a Victorian Employment Committee to develop initiatives in response to unemployment and the unemployed.
  • The support of the Co-operative Federation of Victoria Ltd or, more accurately, lack of opposition.

In developing his report, Griffiths visited NSW to examine the Work Co-operative Program and interviewed participants in pre-co-operative groups and co-operatives throughout N.S.W. and Victoria. He subsequently recommended in a September 1980 report the establishment of a Co-operative Development Program and this was accepted by the Victorian Employment Committee. It should be noted that the report was inspired by the potential of co-operatives without a complete understanding of co-operative philosophy and practice. The report had not, for example, discussed how to respond to the inherent contradiction of co-operative development being dependent on a Government agency.

The first time the report was considered by the VEC the Committee was ambivalent. Roux proposed, therefore, that Griffiths meet individually with members of the VEC, establish their specific concerns, redraft the recommendation to address these concerns and in a report to the next meeting of the VEC identify the concerns and how they had been addressed. This was done and the VEC endorsed the establishment of the Co-operative Development Program.

Subsequent to the completion of the report the Co-operative Federation of Victoria Ltd had organised a meeting with the Premier, the Hon. R.J.Hamer, on 23 December 1980 to seek Government support for the co-operatives. The delegation was lead by the CFV's Executive Officer, W.W.Rawlinson, and co-operatives represented were from Ballarat, Brunswick and Maryborough.

Youth, Sport and Recreation Minister Brian Dixon proceeded to establish the Program after discussions with Premier Rupert Hamer and Treasurer Lindsay Thompson. The issue of the Program's establishment was not referred to the Cabinet. This was not unusual for Liberal Governments in the period 1955-1982.

A Funding Committee was established from the Program's inception to establish independence in the funding process. The initial Funding Committee comprised eight representatives from:

Ministry of Employment and Training 2
Co-operative Federation of Victoria Ltd - including two representatives of funded co-operatives 3
Registrar of Co-operative Societies 1
Small Business Development Corporation 1
Department of Labour & Industry 1

The initial objectives of the Program were stated as being to:
1. Establish viable, new small-scale business enterprises, or employment generating modifications to existing businesses through work co-operative ventures;
2. Enhance the effective integration of the training and social resources required to provide for the long-term viability of work co-operatives; and through these ventures to -
3. Improve the economic well-being and social conditions of those unemployed or facing difficulties in entering or re-entering employment;
4. Make use of unused or underutilised community resources; and
5. Enhance the employability of participants in the program.

By July 1981 the following co-operatives were being funded under the Program:
Ø Ballarat Employment
Ø Brunswick Work
Ø Bootstrap Trading (Maryborough)
Ø Box Hill Workforce
Ø Loch Ard (Warrnambool)

These were all community co-operatives - defined as co-operatives established, owned and controlled by disparate members of the local community to create employment opportunities for the unemployed. Few workers were employed by the co-operatives and even fewer were members. A majority of the members and directors of all the co-operatives were employed individuals who had a genuine interest in assisting the unemployed but not a genuine interest in the co-operatives as being for their use and benefit.

Absent Traditional Rationale

The traditional rationale of a co-operative being formed by individuals to meet their needs by mutual action was not, however, present. This absence of an active interest in the co-operatives by a majority of the members and directors was subsequently proven to be fatal to the historical development of these co-operatives. The importance of this issue was not initially recognised by the CDP - that co-operatives must be created by individuals and their communities for their use and benefit.

The Co-operative Federation of Victoria Ltd was also funded for the provision of co-operative education and training resources for the co-operatives. While the CFV had not been significantly involved in the conception and design of the CDP, it was actively supporting the community co-operatives that were being established and had organised the deputation to the Premier. The early involvement of the CFV, however, was perceived by the CDP to be important to the Program and provide a basis for networking the emerging co-operatives with the established co-operatives.

Subsequently, in July 1981 a Co-operative Business Unit was established at the Federation with Brian Greer appointed as the Co-operative Business Advisor.

Funded co-operatives were required to join and maintain membership of the Co-operative Federation of Victoria Ltd. This was an attempt to structure familiarisation, knowledge and understanding of the co-operative movement. The co-operatives were also required to attend meetings of the community employment co-operative group of the Federation.

Requiring compulsory membership of the CFV was inconsistent with co-operative philosophy and principles. The CFV, however, did not formally object to the CDP.

The CDP Unit understood the importance of co-operative education and, therefore, funds were provided for The Co-operative Review - a publication for the Program's co-operatives. The Brunswick Work Co-operative Ltd was invited and agreed to publish The Co-operative Review. There was no editorial control from the CDP Unit other than the expectation that contributions from the Unit would be published.

The Program Re-launched

In August 1981 the CDP was relaunched with revised objectives because a Deputy Director of the Ministry wanted to rewrite the objectives. The development of new objectives was an opportunity for the CDP Unit dissatisfied with the original objectives as being loose and vague to develop more robust objectives. The two primary aims were now:

  • To establish viable, new small-scale business enterprises or employment-generating modifications to existing businesses, through work co-operative ventures.
  • To enhance the effective integration of the training and social resources required to provide for the longer term viability of work co-operatives.

While an improvement on the original objectives, the new objectives continued to reflect a muddled compromise between two competing ideas - co-operative business enterprises and job creation for the unemployed.

Labor and the Program

With the election of the Labor Government in March 1982, the CDP was retained while other Liberal initiated programs in the Ministry of Employment and Training were discarded:
Ø NOW - New Opportunities for Work
Ø GREAT - Grants for Regional Employment and Training
Ø GIANT - Grants for Innovation and Training

The retention of the Co-operative Development Program was due to a number of factors but primarily there were key individuals in the Minister's office and the bureaucracy who tolerated the CDP, the Minister was neutral, there was the precedent of the NSW Labor Government Program and, unlike the other abandoned programs, it was already established and was not image-burdened by a name that connotated a washing detergent. The CDP had been slowly developing without provoking significant controversy about its nature and direction. The Labour Government's Small Business policy had also foreshadowed support for co-operatives.

Without Commitment

The Program continued, therefore, but without a specific and detailed policy commitment. While the Program survived until 1985 and lingered into 1986, a specific and detailed policy commitment was never developed and this was also critical to the eventual closure of the CDP.

By March 1982 the CDP had four staff and was operating with an annual budget of $1 million. With the new Government, the CDP management seized the opportunity to further develop clearer, coherent and sensible objectives for the Program and replace the conceptually crippling waffle and ambiguity of the original objectives.

For this the CDP Unit by-passed its own management and sought and obtained the support of the Minister's staff and, then, management in the bureaucracy agreed. The objectives were now changed to provide technical and/or financial assistance for proposed, new or established co-operative business enterprises which:
1. Demonstrate actual and/or potential economic viability within a reasonable time period
2. Apply co-operative principles in practice consistent with 1
3. Demonstrate a commitment to the democratisation of workplaces consistent with 1
4. Create and/or maintain jobs in supported co-operatives consistent with 1

Co-operative Education and Training

The CDP Unit had always recognised the importance of co-operative education and was concerned to develop an appropriate initiative beyond support for The Co-operative Review.

Consideration was given to whether the co-operative education initiative should be based at the Co-operative Federation of Victoria Ltd or elsewhere. The advice of the Co-operative Business Adviser was sought.

In June 1982 a Co-operative Education and Training Unit was established at the Vocational Orientation Centre to support the Co-operative Business Adviser at the Co-operative Federation of Victoria Ltd.The demand for co-operative education and training was thought by the CDP to be diverting the Co-operative Business Adviser from business counselling to co-operative education and the CDP Unit was interested in mainstreaming co-operative education and training - a continuing interest of the Co-operative Federation of Victoria Ltd.

With the establishment of the Co-operative Education and Training Unit it was also decided to transfer responsibility for publishing The Co-operative Review from the Brunswick Work Co-operative Ltd to the Unit. Publication had been irregular.

Up until 1982 grants only were made to co-operatives. The State Treasury would not initially allow the CDP to provide loans. In 1982 loans were introduced - primarily because of the realisation that the Australian Taxation Office treated grants used for fixed and current assets as taxable income. The provision of loans, should have been built-into the CDP from its inception/ Subsequently, some co-operatives expected that their loans would eventually be converted into grants and some co-operatives argued that it had been indicated that this would occur- despite funding agreements which clearly specified grant and loan funds and the period of repayment at what interest rate.

Worker and Community Co-operatives

In 1981-82 $600,000 in grants was paid out to 19 groups - 13 operational co-operatives and 6 feasibility studies. Of the 13 operational co-operatives eight could be described as community-based and five as worker-based:

Worker-based Community-based
Brunswick Italo-Australian Goldfields Community Radio (Castlemaine)
Sybylla Press (Fitzroy) Loch Ard (Warrnambool)
Brunswick Work Open Channel (Fitzroy)
Ballarat Employment Maryborough Bootstrap
Correct Line Graphics (Fitzroy) Frankston Motor Cycle Park
Public Images (Williamstown)  
Hodja Educational Resources (Richmond)  

Worker-based co-operatives were co-operatives that had the goal of creating a co-operative owned and controlled by the worker members in the co-operative or creating work for workers. A worker-based co-operative, therefore, needs to be distinguished from a worker co-operative - a co-operative in which the members were workers and the workers members. With the worker-based co-operatives, however, the membership was broader than the workers in the co-operative although not as diffuse as in the community-based co-operatives and it was uncertain in most if the co-operatives would eventually transform from being worker-based to worker co-operatives.

The membership of the worker-based co-operatives was diverse. Existing co-operative legislation created a framework for the development of worker-based rather than worker co-operatives. The legislation did not provide for co-operatives whose only members were the workers in the co-operative.

The nature of the community-based co-operatives has already been discussed. But, the earlier foreshadowing of the eventual problems that these co-operatives would experience from their diffuse membership was not applicable to newer co-operatives in the CDP such as the Frankston Motor Cycle Park, Goldfields Community Radio (Castlemaine) and Open Channel (Fitzroy). The viability of these co-operatives was based partly on the voluntary participation of their members and not dependent on their workforce.

In other community co-operatives non-worker members dominated boards and their involvement in operations was minimal. In general, this was because the non-worker members were focussed on creating employment - rather than a business. The other community-based co-operatives, however, did experience another problem - conflicts between the worker and community members.These conflicts emerged at worker meetings, board/committee meetings and annual general meetings of the co-operatives. The emergence of these conflicts did not of themselves discredit the viability of the co-operatives. Conflict is only undesirable if the co-operatives are unable and unwilling to resolve the issues and the ongoing economic viability is not threatened by the ongoing conflict. Eventually, the Brunswick Work and Hodja Educational Resources co-operatives were unable to move from their establishment phases because of the irresolution of these issues.

In December 1982 the Funding Committee was increased from nine to 10 members when representatives from the funded co-operatives sought and were granted increased representation from two to three with the three drawn from a panel of five approved nominees - rather than two nominees of the Co-operative Federation of Victoria Ltd. Co-operative representation on the Funding Committee, therefore, increased from 33.33% to 40%.

Cruickshank Review

While the Program had been established for two years, by 1983 it had not achieved economic or political credibility. It was decided in 1983, therefore, to commission an independent review of the Program - with a particular emphasis on the economic viability of funded co-operatives and the appropriateness of the Program's structure. If economic credibility was achieved through this review, then, political credibility might follow.

Cruickshank Management Resources Pty Ltd studied the Program and reported in May 1983 concluding that of the funded co-operatives studied 75% could or would become financially viable:
Ø 2 Now above break-even
Ø 3 Break-even achievable under 18 months on current CDP and Co-op policies
Ø 5 Co-operative's expectations of break-even beyond 18 months, not seriously questioned on current evidence
Ø 4 Co-operatives with expectations of break-even of more than 18 months and considered to be over-optimistic as sales turnover does not cover cost of sales
Ø 4 Not operating in CDP long enough to judge. No track record to go on.

It was a positive assessment, therefore, of the business viability of the supported co-operatives. Cruickshank also recommended, however, the phasing out of the CDP and the establishment of a Worker Co-operative Development Agency and a Common Ownership Fund - modeled on then current developments in New South Wales. Cruickshank was also critical of the co-operative business service at the Co-operative Federation of Victoria Ltd and the co-operative education service at the Vocational Orientation Centre. These were fatal recommendations and criticisms.

While there was no specific outcome of the Cruickshank report, it did create a hiatus in the further development of the Co-operative Development Program - despite subsequent changes to the Program's infrastructure. The NSW model was not universally regarded in Victoria as desirable by the Ministry's CDP Unit and this was reinforced by the changing nature of the model.

More significantly, however, there was no significant support for co-operatives and this meant that the development of autonomous co-operative development and financing agencies were not realistic. But, then, this perception may have unfairly reflected on N.S.W's political necessity for survival and changes dictated by experience. But, then, even if the CDP Unit had supported the establishment of a Worker Co-operative Development Agency it was unlikely to receive significant bureaucratic and political support.

New Support Infrastructure

In a further initiative, in August 1983 it was decided to develop a new support service infrastructure for the Co-operative Development Program:

Pre August 1983 Post August 1983
Co-operative Business Unit, Co-operative Federation of Victoria Ltd Small Business Department, Preston TAFE
Co-operative Education and Training Unit, Vocational Orientation Centre Ballarat CAE
  Collingwood-Richmond-Fitzroy Credit Co-operative
  RMIT School of Business,

The rationale for the new support service was explained as follows: "It has been decided that more cost-effective and extensive business and education support services need to be created which will be appropriate for the short and long-term needs of the Program - to establish and develop support services based on the maximum utilisation of existing resources, the decentralisation of resource delivery and an in-built capacity to expand if and when appropriate."

Under the new arrangements, Preston TAFE provided business counseling and developed two innovative co-operative courses:
Ø An 18 hour Cooperative Intenders course for individuals and groups interested in determining the pros and cons of establishing a co-operative business.
Ø A 78 hour Co-operative Enterprise Course over a three month period during which groups received formal education and training while undertaking feasibility studies and preparing business plans.

The Preston TAFE courses included trade union segments - trade union membership, industrial relations, occupational health and safety and industrial democracy. A Course Committee was established to advise on the development of the courses.

The School of Business at the Ballarat College of Advanced Education was also funded to provide business counseling and education and training programs if there was sufficient demand.

Through Preston and Ballarat a pool of approximately 15 counselors/consultants were available and each co-operative under the CDP was guaranteed 50 hours of counseling/consultancy work for each 12 month funded period. Additional hours would be subject to negotiation and possibly a fee payment.

The credit co-operative was commissioned to provide bookeeping assessments for co-operatives and to investigate the feasibility and desirability of credit co-operatives undertaking the provision of financial services for other forms of co-operatives.

At the same time it was also decided to entrust responsibility for The Co-operative Review to the Gay Publications Co-operative Ltd. This was necessary because the Vocational Orientation Centre had ceased its involvement in the Program. Under the Gay Publications Co-operative Ltd, The Co-operative Review was renamed The Co-operator.

Each support services was required to develop service contracts with each co-operative that specified the terms and conditions for the provision of the service. The CDP prepared guidelines for the co-operatives and the support services. The CDP emphasised that the onus would be on individual co-operatives to appropriately utilise the service.

This redevelopment of support services was an attempt by the CDP Unit and the Minister's office to re-invigorate and re-establish the CDP following the hiatus created by the Cruickshank review. The Vocational Orientation Centre had already reported that it did not wish to continue with the Co-operative Education and Training Unit. The Co-operative Federation of Victoria Ltd, however, did wish to continue with the Co-operative Business Unit but on an expanded basis to include co-operative education. This was difficult to support within the Ministry given the criticisms of the Co-operative Business Unit by the Cruickshank Report and the dependence of the CDP on individuals at the bureaucratic and political level who were unlikely to support strengthening the Federation's involvement.

There was informal consultation with the Co-operative Business Adviser but this was the only consultationt with the Co-operative Federation of Victoria Ltd. The decision was made and the Federation was informed and subsequent attempts by the Federation to have the decision reviewed were rebuffed. The CFV's attempt to secure a review did not create any demand within the Ministry to justify the decision - the initial rationale for the change was accepted and no substantial explanation was provided to the Federation.

In 1983 it was also decided that the requirement that funded co-operatives be members of the Co-operative Federation of Victoria Ltd would no longer be compulsory. This was not an implied criticism of the Federation but was motivated by three considerations. First, voluntary membership was more consistent with co-operative philosophy. Second, the essence of co-operation is volunteerism and this was being negated by a provision for compulsory membership of the federation. Third, it was believed that between 1981 and 1983 the Federation had had sufficient time to convince its compulsory members of the benefits of voluntary membership.

The TNC/LRC Report

Despite the redevelopment of the CDP, the hiatus continued until 1984 with another new initiative when the N.S.W. Government decided to commission a review of its worker co-operative program and the responsible Minister, the Hon F. Walker, M.P. approached Victoria's Minister for Employment and Training, the Hon. J. Simmonds, M.P. and proposed a joint review of both Government programs. This proposal was accepted, the costs shared between the two Governments and the review undertaken by TNC in N.S.W. and the LRC in Victoria.

The subsequent report identified four main themes:
Ø the place of worker co-operatives within employment and industry development policy
Ø the industrial democracy potential of worker co-operatives
Ø the relationship of worker co-operatives to the broader labour movement and their commitment to labour movement principles
Ø the aims and forms of public assistance to worker co-operatives.

The Report provided the rationale for the Program shifting towards worker co-operatives. Subsequently, in Workplace Democracy: The Co-operative Way it was stated that "The Ministry's priorities for funding are directed to worker, conversion and unionised co-operatives."

The report, however, continued the hiatus by arguing that the continuation of the CDP depended on achieving what was not achievable - securing the integrated support of trade unions.

The Program's objectives were further revised to state that the Ministry provided technical and/or financial assistance for proposed, new or established co-operative business enterprises which:

  1. demonstrate actual and/or potential economic viability within a reasonable time period.
  2. apply co-operative principles in practice consistent with 1
  3. demonstrate a commitment to the democratisation of workplaces consistent with 1
  4. create and/or maintain jobs in supported co-operatives consistent with 1

It was also decided in 1984 that for the first time a majority of the members of the Program's Funding Committee were to come from the co-operative movement. The decision was aimed at co-operatisation of the Funding Committee. It was also recognised by the CDP Unit this was a risky decision for up until this decision the majority of co-operative members of the Committee had been unreliable in their attendance, rotated their representation and reluctantly participated in the questioning of applications. The exception to the majority was the Executive Officer of the Co-operative Federation of Victoria Ltd, Mr. W.W.Rawlinson. At meeting after meeting, the most rigorous and persistent questioning came from members of the Funding Committee drawn from the Co-operative Federation of Victoria Ltd, the Registry of Co-operatives and the Small Business Development Corporation. The change, therefore, was a leap of faith - that responsibility would come with majority representation.

A Continuing Hiatus

While the TNC and LRC Report provided the rationale for these changes in objectives and emphasis, it created a new hiatus for the Program in arguing: "This Review has argued that the effective development of worker co-operatives requires a reasonably high degree of collaboration between government-sponsored support agencies, the worker co-operative sector and the union movement. The programme support structure should aim to reflect and advance this coalition at all levels."

This high degree of collaboration envisaged in the TNC and LRC Report was not achievable. In Victoria there was no significant recognition of a commonality of interest between the co-operative and trade union movements.There was a precent for this collaboration in N.S.W. but even this was at a low level. While the collaboration did not exist in Victoria, it could possibly have been facilitated. But, then, this would depend on another observation in the TNC and LRC Report when it suggested that the continuation of the CDP within the Ministry of Employment and Training depended on: "The Ministry's commitment to adequately staff and resource the internal Co-operative Development Programme unit. This commitment needs to be expressed and implemented at both the political and bureaucratic levels."

But, then, the reality was that political and bureaucratic support for the CDP had always been individualised at both the political and bureaucratic levels. Key individuals were responsible for and able to protect the CDP for a while. There was no system-wide political or bureaucratic acceptance of the CDP. There had never been this support and it was unlikely to develop. Yet, this support would be necessary to achieve the collaboration envisaged in the TNC and LRC Report. In an article in the June 1986 issue of The Co-operator, The Co-operative Development Program, Joe Burke, a former Ministerial Adviser to Jim Simmonds, argued: " A second constraint on the CDP was its low position within the bureaucracy. There were recurrent problems with staffing. Funding decisions were often protracted and the program was in constant competition with a range of other employment programs for funds and attention."

The TNC and LRC report did not address these realities.

Ongoing Initiatives But

In March 1985 there was a State Election and in a February 1985 election policy document , Economics - the Next Four Years, in Part 4: Employment and Training, there was this promise and commitment : (a) "improving technical and support for businesses wishing to convert to a co-operative structure" and (b) "helping disadvantaged groups develop further employment opportunities through co-operative business enterprises and other activities."

Twenty eight words were an improvement on previous election policy but they did not constitute a developed and coherent policy based on the experience of the CDP under the Government. Rather, they were indicative of ambivalence about co-operatives and the CDP. Furthermore, a policy statement for an election is not automatically converted into a subsequent Government decision.

During 1985 eight co-operative case studies were commissioned and five leaflets planned - affirmative employment and co-operatives, trade unions and co-operatives, occupational health and safety and co-operatives and industrial issues and trade unions. These leaflets were based on focusing on issues of common concern to trade unions and co-operatives - creating an image with trade unions of the Program's understanding and commitment to union issues.

The Trade Union Training Authority (TUTA) had also agreed to organise a three day workshop on trade unions, industrial issues, industrial democracy and co-operatives. Some of the leaflets were piblished and the others remained drafts and the workshop plans were not proceeded with in 1985. Critical to this was that from March 1985 there was a new Minister, Steve Crabb.  with new advisers and, therefore, the CDP had lost any advisers who supported or tolerated the CDP - leaving individual bureaucratic support. But, this bureaucratic support was insufficient to either maintain or reinvent the CDP.

Another Review

The new Minister, the Hon. Steve Crabb, requested a review of the Ministry's employment and training programs and this report condemned the Co-operative Development Program as ineffective and inefficient - recommending that assistance to co-operatives should cease. This was not surprising as the report was undertaken by economists within the Department who were unsympathetic to enterprise and labor market programs.

The review stated: "Worker co-operatives are meant to be economically viable enterprises operating in a market economy and capable of sustaining long term jobs at award wages and conditions. Too much weight has in the past been given by program administrators to the industrial democracy aspects of co-operatives, at the expense of the economic viability criterion. Economic viability must be seen as the fundamental pre-requisite in assessing co-operative proposals. In this context, the Review Team considers that the incorporation in the Co-operation Act of the international Principles of Co-operation as proposed by the Ministerial Advisory Committee on Co-operation in Victoria (MACC Working Papers at p 74) is misplaced and will, in practice, de-emphasise the importance of economic viability as a necessary condition for the business survival of co-operatives."

The Review's criticism of the Co-operative Development Program needs to be seen in the context of Review's criticisms of all employment labour market employment programs within the Department of Labour. The Review also argued that programs concerned with "equity" should cease, assistance to enterprises should end, that programs were insufficiently co-ordinated and that program administrators were ideologically biased.The Review also provided, therefore, the rationale for closing two other programs - the Employment Development Program and the Affirmative Employment Program.

The Review itself, however, made self-evident and self-validating assertions, make a selective misuse of evidence and quotes and was itself ideological and biased. The Review estimated that the cost per job in the CDP was $37,219. But, this calculation was based on a simplistic formula of the total amount of funds expended on the Program divided by the existing number of jobs.

In Beyond MACC: The Co-operative Way - Victoria's Third Sector (9 November 1986) David Griffiths estimated: "Without the opportunity to undertake a sophisticated cost-benefit analysis, my own current crude cost per job for the CDP would be between $20,000-25,000 - instead of $37,000. This would be a 1986 figure and is not, therefore, predictive." Griffiths argued that the Review did not undertake the rigorous cost-benefit analysis undertaken by Cruickshank in 1983 that included consideration of Ministry costs of administration and control, the added value to the earnings capacity of individuals, net increase in income and payroll tax to the Commonwealth Government, the amount by which unemployment benefit payments had been reduced and fixed asset creation. If the point is to justify closure, then, facts are inconvenient.

The report was never published but provided the rationale for the closure of the CDP with no significant individual support at bureaucratic and political levels. The Review itself was ideological.

Subsequently, in a letter dated 7 October 1986 the Department of Industry, Technology and Resources (DITR)offered brief comments on the Ministerial Advisory Committee on Co-operation report, The Co-operative Way: Victoria's Third Sector.

DITR's arguments were a repeat of the Review's criticism of the CDP: "The review concluded that worker co-operatives are meant to be an economically viable enterprises operating in a market economy and capable of sustaining long term jobs at award wages and conditions. However, too much emphasis in the past has been given by program administrators to the industrial democracy aspects of co-operatives at the expense of the economic viability criterion. Economic viability must be seen as the fundamental pre-requisite in assessing co-operative proposals."

These comments need to be considered in the context of DITR's general observation that the focus of the MACC Report is on the "welfare" aspects of co-operatives. Subsequently, of course, DITR was caught in its own controversy about funding non-viable investor-owned enterprises because it did not devote enough attention to economic viability criterion. But, the DITR view of the CDP is an important element in understanding what happened to the CDP.

Hiatus Resolved

By March 1985 the hiatus was in practice resolved - the Co-operative Development Program was inoperative, there was no identified budget for food and worker co-operative development instead there was the Minister's discretionary fund, The Co-operator had ceased being supported but surplus funds enabled two further issues in 1986 including an analysis of the fate of the CDP, the co-operative education and training courses at Preston TAFE were winding-down, there was no ongoing advisory service for co-operatives and experienced and skilled officers within the Department of Labor had been redeployed, seconded or resigned.

An incidental casualty was the winding-up of the Collingwood-Richmond-Fitzroy Credit Co-operative and the inability of the School of Business of the Ballarat College of Advanced Education to provide the contracted support service. It was also in 1986 that funded co-operative Correct Line Graphics was informed that funds under the CDP were not available because of scarce resources and the Victorian Food Co-operative Group was informed that it was no longer appropriate for it to be funded by the Department of Labour. In a June 1986 editorial The Co-operator commented: "Support for co-operatives is at a standstill as the educational and financial support for their development can no longer be guaranteed."

The benefits and limitations of the CDP could be summarised as follows:

Stimulated the Government's decision in 1984 to establish a Ministerial Advisory Committee on Co-operation. The Committee was established to review the Co-operation Act and mechanisms for developing the co-operative movement. Subsequently, the CDP Unit initiated decisions by the Ministry of Employment and Training to fund the MACC - $150,000 for a Conference, a co-operative education study and a worker co-operative project worker. The CDP strategically recognised the potential for MACC to do what it could not do - position the co-operative movement within overall Government priorities and its relevance to the Government's economic and social policies. MACC did subsequently report but its recommendations were ignored and there was no viable political support. The Ministerial Advisory Committee on Co-operation had minimal impact itself. It was not until 1996 that new co-operative legislation was passed by the Victorian Parliament and the limited co-operative development initiatives undertaken by the Co-operative Development Unit ceased when the Unit was downsized by the Victorian Government. MACC lingered on until 1992 as an increasingly irrelevant advisory group. The strategic potential of MACC was never realised because of the various Ministers it reported to the most influential were the Attorney General Jim Kennan and the Minister for Employment and Industrial Affairs and they were the least sympathetic to co-operatives.
Co-operative education and training received a major impetus through funding of the MACC study "Education for Democracy" and development of the Co-operative Intenders and New Enterprise courses in conjunction with Preston College of TAFE. In recognition of this work the Commonwealth Government provided funds in 1985 ro enable Preston TAFE to further develop these courses for worker co-operatives on the basis of providing these through the TAFE system on a national basis. The impetus for co-operative education only survived, however, for as long as the CDP survived. With the closure of the CDP there were no funds for the continuation of the Co-operative Intenders and New Enterprise courses at Preston College of TAFE and no alternative source of funds. This rendered moot the Commonwealth Government funding to enable Preston TAFE to further develop the courses for worker co-operatives on the basis of providing these through the TAFE system on a national basis.
A body of co-operative literature was developed - program leaflets, issue leaflets, case studies, co-operative monographs and The Cooperator magazine. The body of literature was created but none of the literature is in libraries. The case studies were never published and inquiries by the Co-operative Development Unit about copies were ignored.
The Program was accessible to ethnic groups with pamphlets and courses available in Arabic, Turkish and Spanish. Translations in other languages were being prepared by the Ethnic Affairs Commission when the CDP closed. The accessibility was as temporary as the CDP and the few ethnic-based co-operatives were among the least successful of those co-operatives who received support under the CDP.
Significant food co-operative research was undertaken.The Program facilitated the development of a food co-operative warehouse and resource centre proposal through supporting the Victorian Food Co-operative Study Group. The warehouse and resource centre had been central components of the Government's Anti-Poverty Strategy. While significant food co-operative research was undertaken providing a substantial basis for the development of food co-operatives, unfortunately, the Government was not serious about its Anti-Poverty Strategy and the welfare sector was unable and/or unwilling to engage and take up the issue of food co-operatives.

But, the positive impacts were all short-term that either did not last beyond the closure of the CDP or did not survive for more than a few years beyond the closure. MACC lingered on until 1992 and while it persisted a revitalised Co-operative Development Unit within Attorney General's initiated some useful co-operative development and education initiatives in child care, housing and low income loans and established the Co-operative Directions newsletter. Eventually, however, the Co-operative Development Unit was itself downsized and its ability to continue co-operative development removed. The newsletter was discontinued and publications collected by the Unit donated to the Co-operative Federation of Victoria Ltd.

The concept of a co-operative contradiction is critical to understanding the history of the Co-operative Development Program. A number of contradictions were illustrated such as inappropriate legislative framework, a co-operative development vacuum and the ambiguity of government sponsored co-operative development.

At its inception, the Program suffered from an incomplete rationale. It's knowledge base about co-operation and its theoretical expression of this was vague and imprecise - although decreasingly so over the 1981 - 86 period. Indeed, the more specific and precise the Program became about co-operative development the more precarious was its future because it was government-based. It's emerging philosophical and programmatic clarity was inconsistent with a Government that had no interest in co-operative development and was devoid of significance because its development was outside of and external to the co-operative movement.

The Victorian Government was increasingly de-emphasising the philosophical implications of its policies and programs - opting, instead, for a community consensus of responsible economic managers which invariably resulted in eschewing co-operative philosophy and principles.Furthermore, the Program's philosophy of co-operation was insufficiently linked with the actual experience and philosophy of the established co-operative movement and, instead, there was a tendency to act in isolation and this was exacerbated in the structural changes to the CDP in August 1983.

Co-operative Philosophy and Principles

The Program's attempt to adhere to and enforce co-operative philosophy and principles was in contrast to the realities of funded co-operatives that had a limited adherence to co-operative philosophy and principles. The Program attracted three kinds of co-operatives which contributed to its eventual demise.
Ø Opportunists - individuals and groups who were attracted to the Program because of the possibility of Government funding rather than a commitment to co-operative philosophy, principles and practices.
Ø Minorities - individuals and groups who were attracted to the democratic philosophy of co-operation but who were politically devalued.
Ø Oppositionists - individuals and groups who were actively opposed to co-operative philosophy, principles and practices and who sought to undermine and redefine co-operation.

The Program was challenged, therefore, to educate itself and its client co-operatives. This educational task created its own contradiction - a government program that assumed a capacity to educate an autonomous co-operative movement that was not autonomous because of the dependence on government funding, the varying degrees of submissiveness and insolence towards government funding and the opportunistic relationship by the co-operatives with the CDP. This educational challenge, therefore, was not achievable. Furthermore, the Program under-utilised the established co-operative movement in not understanding and capitalising on its experience. Only the established co-operative movement would be able to provide the necessary co-operative education. In an article in the June 1986 issue of The Co-operator, The Co-operative Development Program, Joe Burke suggested: "The experience of the CDP also highlights the importance of clearly defining the nature of co-operative organisations and maintaining their integrity." Without the central involvement of the established co-operative movement, this was not possible. It is also dependent on the co-operative integrity and commitment of individual co-operatives.

The relationship between the co-operative movement and government is determined by the attitudes and policies of each. There have been historically four different relationships:

  • Indifference and/or hostility
  • Government and co-operative partnership
  • Government sponsored co-operatives
  • Government controlled co-operatives

Indifference and/or hostility. Neither the Government nor the co-operative movement take an interest in each other. There may be specific co-operative legislation.

Government and co-operative partnership. The government and co-operative movement accept the need for government assistance on a short and/or long-term basis.This could include fiscal, economic and co-operative development policies and programs.

Government sponsored co-operatives. The Government plays an active role in organising, controlling and developing co-operatives.

Co-operatives under the CDP were legally autonomous but they were financially dependent on the CDP and they were subject to the direction of the CDP. An extreme example of this was the initial requirement that funded co-operatives must be members of the Co-operative Federation of Victoria Ltd.

Co-operative Federation of Victoria Ltd

Since the CDP's establishment the Co-operative Federation of Victoria Ltd had consistently argued that the Federation was the appropriate body to assist the Victorian Government in its programe of promotion and development of Community Employment Co-operatives. This was not recognised by the Government and the CDP although the involvement of the Federation was considered desirable. But, then, the CDP operated in a hostile environment and political judgments continued the Program for as long as it survived e.g. the two subsequent changes to the Program's objectives, the infrastructure changes and support for the Ministerial Advisory Committee on Co-operation. Neither the Cruickshank Review or the TNC/LRC Report were supportive of the involvement of the Co-operative Federation of Victoria Ltd.

In a 4 October 1984 note to the Ministerial Advisory Committee on Co-operation, the CFV's W.W.Rawlinson commented that its "Board was hindered in exercising its normal full authority over staff and planning by the absolute Government control on the staff employed through the Federation to administer the Programme. The final abrupt withdrawal of funds without any right of appeal or discussion was a most unfortunate state of affairs and, in spite of written requests to Government for reconsideration of the issues involved, none were forthcoming." Mr. Rawlinson was correct - funds were withsrawn, there was no discussion and an unwillingness to reconsider.

Reinventing the CDP

The Labor Government originally endorsed the Program as a job creation response to the needs of the long-term unemployed and as a Government it never endorsed co-operative development. This was not greatly dissimilar to the Liberal Party's interest in establishing the Program. The Labor Government never saw the Program as seriously promoting alternative forms of organising business enterprises. Government priorities also change with the actual and perceived fortunes of Government, the priorities of special interest groups, public opinion and Ministerial whim and preferences.

The CDP constantly reinvented itself to simultaneously develop and survive. It was consistently difficult to both develop and survive. These reinventions, however, were not enough and the CDP developed but did not survive. It did not succeed in entrenching itself and it did not have sufficient internal and external support. The co-operatives that had benefited from the CDP were either unable and/or unwilling to work together for the Program's survival.

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