by Ian Reid, Executive Director of New Zealand Co-operatives Association

It appears that Australians prefer government (state or federal) intervention and legislation to control matters considered to be in the best interest of the wider community.

Two thousand kilometres of ocean seem to evoke a different approach. In New Zealand there is a preference for less regulation and greater freedom of choice. An issue like 'stopping demutualisation,' is unlikely to get any political traction here. Establishment, and for that matter, disbanding of co-operatives would be regarded as the choice of the owners at the time. It would be up to the owners and those advising them, to argue the merits of demutualising the business. For keen supporters of the co-operative business model, it might be considered sacrilege to 'allow' a co-operative to be demutualised, but if that is the will of the owners and it meets the legal requirements, then so be it.

I can already hear the cries of 'what about the intergenerational transfer of wealth that will be sacrificed' in the event of demutualisation. In my opinion, if the current owners of a co-operative that has been operating for many years decide to demutualise the business, then it should happen. Co-operatives should not be forced, against their will, to continue to operate.

This situation suggests that the co-operative did not clearly articulate the benefits and merits of its co-operative status among its owners, to foster belief in, and commitment to, co-operative principles and values. Unless the special characteristics of a co-operative business are continually nurtured and promoted across generations, then there is a real risk that this form of business could disappear.

Co-operatives that do not pass on their knowledge and encourage the next generation to take on responsibilities are more likely to be face demutualisation. Directors, who hold their positions for too long deny, sometimes unwittingly, the introduction of 'new blood', and may harm the long-term prospects of the co-operative.

A push for new and younger co-operative directors must be matched by ongoing education programs to help them understand and appreciate the co-operative principles and values, and how they apply to running a co-operative business.

I believe that an educational approach towards co-operatives would work better and be more acceptable than any regulated solution. Prohibitions rarely work, and often result in frustration and denigration of the activity that was to have been protected.

A regulatory approach to stop demutualisation on this side of the Tasman would be regarded as unnecessary and an interference with the rights of co-operative owners.

NB: The views expressed in this article are Ian Reid's personal views and may not necessarily be the views of the association.