Mutuals and co-ops resilient in challenging economic times

Agribusinesses, motoring and financial services co-operatives and mutuals bounced back strongly during 2020-21, but health insurers struggled, a new report finds.

BCCM chief executive Melina Morrison: ‘It is pleasing to see the sector rebound strongly despite the challenges posed by Covid-19 as well as recent climate-related disasters such as bushfires and flooding.’ Picture: Jane Dempster

Australia’s big co-operative and mutual enterprises grew strongly through the heart of the Covid pandemic and in the wake of natural disasters including bushfires and floods, with revenue up 10 per cent to $34.4bn in 2020-21.

The top 100 businesses in the CME sector recorded average annual growth of 28.7 per cent in pre-tax earnings over a five-year period, with agribusiness, motoring and financial services the top performers, a new study shows.

Grain company CBH was the biggest co-op by turnover in 2020-21, at $3.9bn, with Queensland’s Great Southern Bank the largest by gross assets at $16.3bn, the 2022 National Mutual Economy Report reveals.

The annual report, published by the Business Council of Co-operatives and Mutuals, concludes the sector, which reinvests profits into the business on behalf of members, has broadly bounced back after a difficult, Covid-affected 2019-20, with some exceptions.

“The combined turnover of the top 100 CMEs was $34.38bn, representing a 10 per cent increase in revenue over the previous year,” it says.

“Significant increases in profitability for agribusiness co-operatives, mobility mutuals and financial services are juxtaposed by the performance of health insurance mutuals still experiencing volatility after two years of the ongoing health crisis,” it says.

BCCM chief executive Melina Morrison said overall the CME sector had shown its resilience in recent challenging years, and was putting money back into the community.

“It is pleasing to see the sector rebound strongly despite the challenges posed by Covid-19 as well as recent climate-related disasters such as bushfires and flooding,” Ms Morrison said.

“Time and again throughout recent crises, we have seen co-operatives and mutuals use their local knowledge and networks to find solutions that put members first, investing capital wisely to ensure the best outcomes for the communities they serve.”

Co-operatives and mutuals are a significant component of the broader economy, with the 1832 enterprises having more than 31 million memberships, generating over $200bn in revenue and managing almost $1.3 trillion in assets.

More than 73,000 people are employed in the sector.

A series of mergers and consolidations in recent years has seen the overall number of enterprises decline while the sector itself has continued to grow.

Health insurers and motoring groups dominate the top 10 CMEs by turnover, with HCF, HBF, Australian Unity and Teachers Federation Health all in the list. So too are RACQ, RACV and RAC WA.

NRMA and AustralianSuper are the two largest CMEs by membership, with 2.72 million and 2.47 million members respectively. Banks dominate among the largest CMEs by assets, with Great Southern Bank, Heritage Bank, Bank Australia and Teachers Mutual Bank all in the top 10.

The NME report also used data from 67 of the major CMEs to gauge their contributions back into communities, finding 9.4 per cent of after-tax profits were reinvested into community projects such as education, health and welfare.

“Co-ops and mutuals make vital contributions by investing in their communities every day and this often goes unheralded,” Ms Morrison said.

The report also notes that 17 per cent of the top 100 co-ops and mutuals had a female chief executive, up from just three per cent in 2016. Just five per cent of ASX200 companies currently have a female CEO, a percentage unchanged across the same time frame.