Launch and Seminar Successful

The research report: Laughing all the Way to the Credit Union -The CreditCare Experience in 'No Bank' Towns - 1995 to 2000 by Dr Gary Lewis was launched on 3 December 2001, at UTS, Haymarket Campus. The CreditCare program, which was managed by the Credit Union Foundation of Australia, was a Federal Government funded program for resolving the problem of withdrawal of banking services from rural communities. Dr Lewis undertook research on the program as commissioned by ACCORD.

A summary of Dr Lewis' speech notes follows.

CreditCare

CreditCare was an initiative of the Commonwealth Government, who contacted the Credit Union Services Corporation (Australia) Limited (CUSCAL) to manage the project. Funding was also provided by CUSCAL, on behalf of the Australian Credit Union movement and by the New South Wales Government. The program, which operated between 1995 and 2000, was established to address the problems caused to rural communities by bank closures. In the six years to June 1999, nearly 1800 bank branches were closed across Australia, over 600 were in rural areas! Research showed that closures led to an overall decline in economic turnover and symbolised a lack of confidence in the local economy, which had far-reaching social and emotional implications for residents.

CUSCAL was contracted by the government to manage the program, which was designed to help communities help themselves re-establish financial services, by attracting a 'host' institution, generally a credit union branch or agency, to the town. In its short life CreditCare helped to create approximately sixty credit union branches, serving approximately 40,000 people. In so doing, it created eighty new jobs. 14,000 members joined the credit unions created through CreditCare, depositing $83 million and borrowing over $46.4 million, a remarkable achievement considering the small populations of towns where CreditCare operated. This was achieved for a small total outlay of approximately $6 million, which included New South Wales Government funds.

Field Officers and Methodology

None of this could have been achieved without CreditCare's team of gifted and dedicated field officers. Essentially, they were commissioned to encourage and assist communities create financial institutions by 'brokering' new relationships. The field officers had a credit union background and were passionate about 'self-help' methods. Their methodology was people-centred and the style was facilitative. It was all about communities influencing outcomes; fighting back; doing it themselves.

The field officers began by researching 'no bank' towns with populations between 200 and 5,000. They found that 600 were experiencing financial services problems. They invited the participation of local government, particularly town mayors, drawing on the example of the nineteenth century German mayor and credit union pioneer, Frederich Raiffeisen.

Typically, field officers would work with the local council to establish a task force and to gather information on community resources and needs, particularly with regard to business prospects. They made contact with community leaders to discuss the situation. By employing high-level liaison skills, field officers encouraged the innovative use of local infrastructure and conducted detailed surveys to inform the prospective host. Operating on the 'not one size fits all' principle, field officers were careful to ensure that the needs of all groups in the community, including the elderly and children, were not overlooked.

CreditCare's maxim was that it was in a community not to help but to help a community help itself. The method evolved heuristically while officers were 'running on adrenaline' in the early stages, but it was always squarely targeted upon commercial viability and people. Ultimately, a credit union is a business and if it is not viable and goes out of business it can serve no one.

Community Investments

Many communities were cautious at first about CreditCare's intervention; accustomed to 'losing' to outside forces and made cynical by bitter experience with outsiders 'bearing gifts'. Typically, this would convert to enthusiasm once it was realised that CreditCare was going to do something practical to assist and trust grew, essential to securing community investments.

Alliances

The team brokered co-operative partnerships involving credit unions and more than twenty local councils. They forged alliances and productive working relationships with business, farmer and professional groups; parents and citizens; tourist and progress associations; local development authorities; other non-bank financial institutions and even banks.

Factors for Success

It was sometimes difficult to 'spot' a town where a CreditCare institution might be applicable and viable in the long term. Over time, field officers developed a 'sixth sense' in discerning factors for success, which, in addition to a supportive council, included:

The 'revenge' factor

Credit unions were seen as caring institutions focused on people; friendly 'champions' who cared about people first and profits second; member-owned organisations, which did not covet high profits demanded by bank shareholders. Many rural communities were familiar with co-operatives, which were seen as a part of the local culture and identity. In some communities, even where credit unions were unknown, the institutions were seen as part of a traditional 'country' way of pulling together to overcome adversity. Others, not so concerned with 'philosophy' or 'culture', were simply impressed by the ability of credit unions to get the job done and their willingness to help.

A Mutual Educative Process

CreditCare linked urban and rural communities across cultural and geographic divides, a remarkable achievement, considering the distances and tiny size of some towns involved and that most 'host' institutions had their roots in urban or industrial settings and little experience in small towns.

These new relationships involved a sort of 'mutual educative process', with rural community educating urban institution on service needs and local norms and institution educating community on commercial reality and the responsibilities of membership. Each moulded the behaviour of the other, with CreditCare field officers the human 'glue' bonding new social capital.

A union of democratic bodies

A kind of 'democratic union' underpinned the government-credit union-local council alliance, co-operating in the CreditCare program. All primary stakeholders were 'not for profit' organisations answerable to constituencies on a one person-one vote basis: commonwealth and state governments to electorates; local councils to ratepayers; CUSCAL to affiliates, and credit unions to members. CreditCare was the conduit through which these bodies co-operated with communities to return essential financial services.

Cocking a snoop at economic rationalism

Not all management decisions were, strictly speaking, 'rational'. This was only possible, one manager said, because a credit union is a democratic institution whose primary purpose is service to member-owners, not profit in pursuit of self-interest. Another manager observed that credit unions are about self-help while banks are about self-interest and that, while both are legitimate pursuits, each has its place. A credit union is not a place where self-interest reigns.

New Needs - New Models 1997-2000

New models of rural banking became more readily available after 1998 and community banks were becoming popular. The rationale for CreditCare in its established form was becoming unclear. Field officers understood that the answer for many small communities lay in combining financial services with other services - an aggregated services' model - and led developments along these lines. Indeed, in late 1998 the Commonwealth Government announced the Rural Transaction Centres Program (RTC), employing the aggregated services' delivery model.

CreditCare is Concluded

The CreditCare team quickly adjusted to the new situation, assisting communities apply for RTC funds and proposing a support co-operative company, 'RuralCARE', to assist implement the program. The Commonwealth Government ignored the proposal. In June 2000, the CreditCare program was concluded. It was never meant to last indefinitely and had simply outgrown the institutional confines of the movement from which it emerged.

The CreditCare Legacy

• solved the problem of no financial services in many 'no bank' towns.
• demonstrated how small rural communities achieve economic development through 'grass roots' action where a suitable methodology, trained facilitators, targeted funding and relevant community resources exist.
• illustrated how a 'self-help' philosophy enables communities to overcome problems themselves.
• showed how a facilitative process enables communities to believe in themselves.
• introduced new services.
• increased economic activity.
• retained money in the local area.
• stimulated new businesses.
• attracted new services.
• removed anomalies in the payments system.
• produced intangible positive spin off effects such as pride and self-confidence.
• functioned as a 'social entrepreneur' at arm's length from government.
• illustrated the valuable role co-operatives can play in revitalising communities as an alternative to 'top down' programs.
• exemplified the importance for co-operative development and community development of skilled, experienced and motivated officers in situ.
• spoke to a community's need for a 'voice' through the community-centred, consultative approach it adopted.
• illustrated how co-operation is bigger than co-operatives.
• showed the value of encouraging co-operation to achieve vital underpinning relationships.
• showed that process is as important as forms outcomes may take.
• demonstrated that an enabling process is as important as the institutional 'scaffolding' upon which a program is constructed.
• reminds us that for business structures philosophy may be more enduring than form.
• adapted the development model pragmatically to include non co-operative organisational structures evolved through a co-operative process.
• offered the potential of democratic participation, albeit consummated more in the breach than the observation.
• presented as a model of co-operation between democratic institutions in a period of galloping competition policy.
• offered an action plan blending community values and economic imperatives,
• underlined the vulnerability of even the most excellent program to a piecemeal approach to community development funding.

A tiny, trim co-operative vessel, CreditCare sailed determinedly against the prevailing wind in the five years to 2000. That one crew member, the Commonwealth Government, should be such a champion of competition, makes the voyage seem even more remarkable.

Perhaps one of the most important lessons for policy makers to emerge from the experience is that co-operative development and developing co-operation are natural partners and that the former achieves a fuller potential in an environment where the latter prevails and where skilled field workers are on the ground.

Garry Cronan, Mark Lyons and Gary Lewis discussing the report

In outlining the lessons from Creditcare, Garry Cronan, Senior Research Fellow from ACCORD made the following points:

• Brett Fairbairn a Canadian researcher notes, while co-operatives arise to address needs, they do not spring organically or automatically from need. As he puts it, co-operatives emerge where someone, some group invests the time and effort to organise them. The CreditCare fieldworkers have demonstrated how true this is in the Australian context. It is important to invest in capacity building, in the form of experienced staff who can then assist communities to assist themselves
• The CreditCare program was about partnerships. CUSCAL with the Commonwealth and State Governments. CreditCare with local government, local communities and businesses, often local small businesses. Credit Unions and co-operatives are the logical partners of government when it seeks to connect to communities and assist them meet their needs.
• The contribution of CUSCAL probably represented the largest recent contribution by the movement to on the ground co-operative development
• The CreditCare experience has been among the most innovative approaches to community development using the co-operative model yet developed in Australia. Its methodology included:
• community consultation
• encouragement of an inclusive leadership
• systematic and independently assessment of community needs
• working only with communities where a credit union or RTC would prove viable
• Focus on local needs
• Fieldwork team acted as broker of opportunities and connected communities with other relevant resources and organisations
• Focus on process and outcome not only on form
• Ongoing support provided after establishment of facility
• Provision of technical support
• Program demonstrated importance of retaining finances within local regions
• The program taped into sites of local innovation
• Program offered great value for money

Jenny Onyx and Margaret Lester snapped by our photographer Suzanne Henderson

The key points made by Margaret Lester, Development Manager, Credit Union Foundation of Australia were:

• CreditCare Commitment
• The effect of the bank closure on the community
• The personal communication method
• The economic affect on the towns business, individuals and community
• Indigenous development - First Nations National Credit Union
• Rural Transaction Centre sites and modeling
• Aggregated Services Model
• CreditCare Achievements - 59 sites opened, 20,000 new members, $100mil in deposits, $50mil in loans, over 1000 media stories, finalist in 1997 Prime Ministers awards
• CreditCare Legacies - First Nations National Credit Union and the facilitation for the Barwon Darling Credit Union CreditCare Milestones - Developed an aggregated services model, formed a communication channel between regional areas and the Government, built strategic alliances with banks, building societies, councils and Governments.

Natalie Armstrong and Jo Barraket

• Population decline and rural downturn
• Bank closure and the effect on Delegate
• CreditCare involvement
• Community support
• Public meetings
• Credit Union opening
• Rural Transaction Centre funding approval
• Community felt empowered to help themselves and apply for other funding
• Fostered community development - A new hospital, the old hospital refurbished now housing a private softwood company and a Community Art Centre
• Thanked CreditCare for restarting the community.