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Study says co-ops hidden from society -

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Study says co-ops hidden from society
Will Ockenden reported this story on Thursday, October 25, 2012 12:38:00

ELEANOR HALL: A report from the Australia Institute has found that while co-operatives, or co-ops, are common in Australia, many of us don't realise we're members.

The study found that 80 per cent of the population belongs to a co-op, and while the institute is urging Australians to recognise their benefits, others warn that consumers should look carefully before they join.

Will Ockenden reports.

WILL OCKENDEN: Supporters of member-owned co-operatives have long argued their co-ops create jobs and even strengthen economies.

RICHARD DENNISS: We've tried to map the co-operatives in the economy in Australia which is far bigger and more diverse than most people realise.

WILL OCKENDEN: Richard Denniss from the Australia Institute says co-operatives range across the economy from health to finance; agriculture to insurance.

RICHARD DENNISS: We hear from the Treasurer and we hear from people quite regularly that encourage people to shop around and get the best deal. We also heard after the GFC, if only there was an alternative. So we were entrusted by the irony while there was plenty of people who say, I wish there was an alternative to the big banks, millions of Australians are actually members or customers of exactly such an alternative.

WILL OCKENDEN: The study while eight in 10 Australians are members of co-operatives, only about one in 10 know about it.

RICHARD DENNISS: The biggest by far are the NRMA and the RACV and the big roadside assistance organisations. The Co-op Bookshop has one and a half million members, nearly everyone that's gone through university in Australia is probably a member and then yes, there is the default super funds, sorry, the industry super funds. But there is thousands of other small co-ops that perhaps people aren't aware of.

WILL OCKENDEN: The study's findings coincide with this year being named by the United Nations as International Year of Co-operatives.

One of its reports argues if the top 300 co-operatives in the world joined together, the generated revenues would be $US1.6 trillion.

Richard Denniss says there's money to be saved by going co-op, especially for financial products.

RICHARD DENNISS: If an average Australian switched from the big four to a credit union or a mutual bank, they could save themselves around $1,500 a year. That is a big saving especially for a population that is concerned about interest rates and the cost of living.

WILL OCKENDEN: The Australian Bankers Association, which represents the big, small and overseas banks, says there's more to it than simply switching to a co-operative.

Steven Munchenberg is the ABA's chief executive.

STEVEN MUNCHENBERG: People need to look at their circumstances and they need to look at what institutions are offering. I mean we notice that the Australian Institute has compared standard variable rates between the banks and the credit unions. Most people at a bank are paying less than standard variable rates so what they need to look at it is what they are actually paying and they need to look at what other deals are out there if they're not happy.

WILL OCKENDEN: On the day that the ANZ posted a $5.66 billion profit, does that show the perhaps the banks are making too much money and people should swap to co-operatives?

STEVEN MUNCHENBERG: Well, not at all because what ANZ has also reported today is that it's margin have tightened so what they means is the banks are absorbing high funding costs, they are absorbing higher costs that they're not passing full onto customers.

So we're not seeing the banks making bigger margins.

ELEANOR HALL: That is Steven Münchenberg from the Australian Bankers Association, ending Will Ockenden's report.