2 MARCH 1994: RICHARD RAXWORTHY TALKING TO GERALD O’BYRNE, BURWOOD CREDIT UNION, VICTORIA AND VICTORIAN RESERVE BOARD
I will ask you Mr O’Byrne where were your parents living when you were born and what year was that?
GO’B: In Croydon, New South Wales in 1915.
Did you grow up around there?
GO’B: I grew up around there and I was educated in Ashfield.
What school?
GO’B: Firstly at Bethlehem Convent and following De Lasalle College Ashfield.
Any other schools after that or was that the end of your schooling?
GO’B: That was the end of my schooling. Up to the secondary stage of schooling. I finished up with the Leaving Certificate, with matriculation.
What sort of influences do you think there were on you as a child, both from your parents and from teachers?
GO’B: Well my mother really had no influence that I am conscious of because she died when I was only six years old following the birth of my twin brothers in 1920. My father had quite a strong influence, we were very close. Then an aunt, who was a very, very strong personality, came to live with us and to rear the four of us. Prior to my twin brothers being born there was another brother who was born in 1918.
What about school?
GO’B: Well there was a Brother Dominic at De Lasalle College who had a very strong influence on me. He was a marvellous educator both in classics and in the sciences. Yes he certainly strongly influenced my life.
You went straight to work after you finished school?
GO’B: Yes. I finished school in 1933 and it was just coming out of the Depression. It was difficult to find employment and it was six months before I found any. Then I joined a German importer by the name of Herman Junger in Sydney. He was the agents for Leitz in Vitslar in Germany of photographic and scientific equipment. I was with him until the War broke out. He was a confessed Nazi, he didn’t hide the fact at all and he was interned. They picked him up at two o’clock in the morning on 2 September 1939, I remember it well.
Before War was declared.
GO’B: Yes.
It was declared on 3 September.
GO’B: Yes he was picked up the morning before. 2 o’clock in the morning. They had it marvellously organised. They picked up all those they wanted to in Sydney at that same time so that no one could warn the other. Anyway he went to Bathurst Gaol.
Where you still working at his place while he was in Bathurst Gaol?
GO’B: Yes I still worked there and I carried on there for a further two years, eventually to wind up the business and hand over to the Controller of Enemy Property who was situated in Canberra. Then following that I went into the army. I applied for Signals but in true army style they put me in the Pay Corp when they heard that I was an accountant.
You had qualified as an accountant at that time, had you?
GO’B: No I hadn’t qualified. I had done most of the study but I hadn’t taken the exams.
So you were in the army right through the War were you?
GO’B: Yes I was in the army right through the War and for almost twelve months after the surrender in the Pacific. The end of the War in the Pacific was in 1945 and I came out on Easter Saturday in 1946.
With what rank?
GO’B: With the rank of Warrant Officer 2. At that time I was in charge of the Treasury in New Guinea and I handed over to the Bank of New South Wales when they moved in after the War.
What did that entail being in charge of the Treasury in New Guinea?
GO’B: Well we had many currencies, not only Australian currencies. We had certainly Dutch. I even had some Japanese yen and I also had some, it was very interesting as a matter of fact, from Australian currency which had been printed by the Japanese, pounds and ten shilling notes, for when they had taken over Australia. This was to be the legal currency in Australia.
How did you get that?
GO’B: Oh well it was confiscated from the Japs after they surrendered. It came to me in Treasury so I kept a couple of samples which I still have at home. It is worthless of course.
When you came back to Australia what job did you do then? You could hardly go back to a firm that had been confiscated.
GO’B: No that was well and truly closed.
Did he come back out of Bathurst Gaol to take over his business again?
GO’B: They moved him to Berrima Gaol and they finished up there. His wife was with him. No they were both deported back to Germany and both he and his wife died in Germany. But they have a son still living here, he is living in Sydney.
So what did you do when you came out?
GO’B: When I came out in the army, which was in 1946. Perhaps I should go back a little bit. En route to New Guinea I was stationed in Brisbane for about six weeks. I met a lass there at a swimming party that a number of the girls had organised mainly for interstate boys who were in staging camp. After three weeks we became engaged. Then I had the sixteen months in New Guinea and three weeks after I got back to Australia we married. We were married in Brisbane and moved to Sydney to live. Then I was looking round for some sort of employment, and it was difficult even then to get any employment in those days straight after the War. I joined a firm of Customs Agents and became their Office Manager and Accountant.
How long did you stay there?
GO’B: I was there about four years. Then I saw an advertisement for an international company of merchants, Thomas Etty and Son Proprietary Limited, which was the subsidiary company of a big Dutch organisation with headquarters in the Hague, Jacoobson Vandenberg. At that time they had very wide interests in Indonesia and Singapore. Up until the time of independence in Indonesia when they were all kicked out. I was with them from 1949 to 1965. I left them mainly because the Dutch influence was very, very strong. I had risen to the position of Secretary and Associate Director but I couldn’t see any real future with the company. The Dutch nationals were getting all the plum jobs so I decided it was time to get out.
So where did you go next?
GO’B: Then I went to Cairns Proprietary Limited which was a women’s fashion store in Melbourne. I was with them as Secretary and Office Manager from 1965 up until 1969. In the meantime, during that period, I became very interested in the credit union movement.
How did you become interested? Who first introduced you to credit unions?
GO’B: Well back in 1967 my wife and I had joined a group called the Catholic Family Movement. It was a type of discussion group and there were eight families involved in it. We held a number of meetings and discussions on all sorts of various matters. The spiritual adviser to that group was a young priest in St Benedict’s Burwood in Victoria by the name of Father Vince Corbett. At the end of our period, I think it ran over three or four months this group on various discussions, he said, ‘Well we have been doing a lot of talking. What can we do in some practical way to put our ideas and so on into some sort of action?’ Well in the group was a chap by the name of Kevin Crowe who was at that time the Managing Director of Vulcan Industries. He had been, for eight years, secretary of the Mitcham Credit Union. Someone had suggested a credit union in the group and he virtually turned us off at that time because he said, ‘Look there is a tremendous amount of work involved. It is all on a voluntary basis and I don’t think anyone here really has the time to do anything about it at this stage.’ So nothing happened. Then about twelve months later I had a friend call who was a member of the group, who was a widow. A Mrs Francie Brannigan who subsequently, after her husband had died, later in life married Sir Murray McInernie, who was a Supreme Court judge. She rang me up one night. She was trying to rear a family of six on her own. She said, ‘Let’s do something about this credit union.’ So we started to look into it and I rang Don Harris at that time who was involved with the Box Hill, I am trying to think of the parish, anyway a parish credit union in North Box Hill. I said, ‘We are looking into this, can you help us?’ He said, ‘Yes. Well if you would like to set up a meeting of any people who are interested I will come out. I will get a couple more to come out and talk to you.’ So did that at Francie Brannigan’s home. We called a meeting of interested parties and we got hold of Don Harris, Jack Bretherton, who at that time was Chairman of Bentmore Credit Union, and Vin Barker who was a Director of Bentmore. They came out and they talked to us and they got us really interested. Then we took it from there. A few months later we got it going in Burwood. I should say by the way that a young man and his wife had moved into the parish, David Mengivianna, and he had been very actively involved in the Bentmore Credit Union. So we twisted his arm to become our first Secretary. I called a formation meeting and we approached Father Dillon, by the way the parish priest at that time who has since died, to see if he would be prepared to provide the facilities for us to work and open on a Sunday morning. Although at the very start I didn’t want it to become specifically identified with the parish, I wanted it to be a true community credit union. In fact we appointed a non-Catholic as one of our first Board members. So that is the way the Burwood Credit Union has now developed. But Father Dillon provided the facilities in the school room to open on a Sunday morning to take deposits, look at loan applications and so on, just purely on a volunteer basis. Then a few years later, of course, we bought our own building, our own office and opened a branch in East Burwood.
You were the Foundation Chairman?
GO’B: I was the Foundation Chairman of that, yes.
Who was the first permanent Manager that you had?
GO’B: The first permanent Manager was a chap by the name of John Hermann. Prior to his appointment we had amalgamated with a credit union which had started three years early in the parish of Bennetswood, St Scholastica’s in Bennetswood, it was a neighbouring parish. Both of us were too small at that time to be able to employ a Manager so we amalgamated and became the Burwood District Credit Co-operative Limited and then John Hermann was appointed as our first Manager.
You were on the Board there as Chairman for quite a while?
GO’B: Yes, I was Chairman there 1968 to 1976. Then I had a break. I had retired eventually from my current employment at that time in 1980, when I turned sixty-five. My wife and I went overseas for twelve months. Knowing I would be away for that time I gave up the direct interest in Burwood. When I came back they asked me if I would rejoin the Board, they had a vacancy there. So I came back onto the Board and remained there most of the time as Chairman until I resigned due to conflict of interest with my position as Chairman of the Reserve Board in Victoria.
Did you have any reverses with the credit union or was it plain sailing right the way through? Did you have real problems in the first instance when you were doing everything as volunteers?
GO’B: No.
Any amusing incidents or tragic ones?
GO’B: No, I can’t recall anything specific in that regard. It was reasonably plain sailing although it was difficult with the volunteers. They were quite happy to give their time and so on but the accounting side when we got to a certain size became a little bit of a problem for volunteers. This was probably what really led us to seek amalgamation with the neighbouring one as we were both approximately the same size, to enable us to employ staff to handle it. We did feel perhaps the loan situation could possibly get out of hand without proper follow-up of delinquency and so on. Fortunately no real problems developed and I feel that we moved sufficiently quickly to stall off any problems that might have been there.
Did you involve yourself at all in helping other credit unions to start?
GO’B: Not that I can recall specifically.
Did you have anything to do with Ted Long who was developing credit unions generally? The YCW?
GO’B: I knew Ted Long quite well, but no I didn’t work with him on any of his particular projects. Mainly because in 1969, I did see an advertisement in the paper for the position of Manager of what was then the PTTA, that is the Postal Technicians and Telecommunication Association, Credit Union. They wanted to appoint a full-time Manager there. I saw that advertisement and I had a word with my wife about and she said, ‘Well look you are so heavily involved now with Burwood why not go boots and all and apply for the position,’ which I did. I was with them from 1969 until I retired as General Manager in 1977. They become the Telecom Employees’ Credit Union in Victoria.
When you became Manager there what stage were they at? I mean did they have anybody as Manager before you or had they been doing it as volunteers?
GO’B: No they did have a Manager but he had been appointed from the technician ranks of the Commission, or the old Post Office as it was then, so he really didn’t have any financial expertise. He recognised the fact that it had just got beyond his capabilities and they were looking for someone with some sort of financial backing to be able to come in and take it over. They had over $300,000 in assets then. I think when I left them in 1977 as General Manager they were about $15 million, something like that. So I saw very rapid and very great development. Of course those were the developing years of credit unions in Victoria.
Were any of the credit unions you were involved with, both Burwood as a Chairman and Director and later at the Telecom credit union as a Manager, were they members of the VCCA or the forerunning body of the Association of Catholic Credit Unions?
GO’B: They weren’t members of the forerunning body but certainly members of the VCCA. They remained members the whole time that I was associated with them.
But you never had anything to do with the VCCA?
GO’B: No. I must confess I kept well away from the political machinations that go on in credit unions. I kept well out of that.
When you first started Burwood what accounting methods were you using? Were you using a two card system? Did you have any form of mechanisation? How did the Burwood Credit Union develop? Afterwards how did the one that you managed develop in methods of record keeping?
GO’B: Well initially with Burwood it was all just purely manual. We operated a passbook system for members.
What did you have in the office? Did you have one or two cards?
GO’B: Membership cards?
No I mean ledger cards.
GO’B: I don’t know. I didn’t handle the accounting side. We appointed a chap as Treasurer and he handled all that.
Did you have a Supervisory Committee?
GO’B: Had a Supervisory Committee, yes certainly. We kept ledger cards, ledger cards for members. One ledger card for the deposits, one for loans.
So you had two cards then.
GO’B: Yes and the members had their own passbooks. That’s right.
A good standard principle.
GO’B: When I joined the PTTA they did have a mechanised system of accounting, the old manual accounting machine. I forget what the name of it was now.
With a handle on the side? Or was it electrified?
GO’B: It was electrified with a keyboard. A keyboard machine with ledger cards. Then it developed from there. I think we had one of the first visible record computers I think they called themselves.
A Burroughs Sensamatic, or something like that?
GO’B: It wasn’t a Burroughs. I just forget what the make of it was now.
One of the NCR ones?
GO’B: Yes, it was a NCR, that’s right. That developed on.
Was that punch card or was it magnetic ink?
GO’B: No a punch card machine.
Well that led on to the computers in the IBM field didn’t it.
GO’B: Well exactly. Then of course they went on from their and got their computer system. That all developed after I had left.
Some of those punch card systems are still around.
GO’B: I suppose they are. I was also an adviser to another fairly big credit union at that time too. It was looking to get moved from the old mechanised system into some form of computer and that was IT Credit. I got to know Alan Parry and Dorothy Sennet. This was before Phillip Doughy joined them. Dorothy Sennet was the Manager of the show and I spoke to the Board on a number of occasions. They came and looked at our system then they adopted what we had before they, once again, moved into a more sophisticated system on computers when they became readily available.
What about your credit union that you were managing, when did you move into computers?
GO’B: Well I haven’t really been directly associated with the modern computers at all. That all developed after I had left.
What were your relations like with your Board when you were the Manager of the credit union?
GO’B: Mixed relations as quite often Managers have. But overall we did got on quite well. Probably one of the greatest difficulties that I did have initially was on the question of salaries.
Yours or other peoples?
GO’B: No mine. As far as the staff were concerned I had an overall budget and I set the salaries of staff. I didn’t allow the Board to interfere there. But naturally it was their responsibility to set my salary. These were all union members and they were all mainly on the technical side of the old Post Office which subsequently became the Telecom Commission. They tried to set the salary of a credit union Manager on the basis of a technician’s salary. There is no relationship between the two of someone running a financial organisation and someone doing work in a telephone exchange. So I had a bit of a battle on that but I won it in the end. No generally we got on well.
What about your involvement with what became AICUM? In the first instance you were involved as a foundation member with one of the predecessor bodies weren’t you?
GO’B: Yes that was with Ralph Lewis. We talked about it and decided it was time to set up some form of Managers’ Association in Victoria, there was nothing there. Then we formed what became known as the Credit Union Managers’ Association of Victoria, CUMAV. That eventually joined with the Australian branch of CUES. Then of course it became AICUM. I have had continuous membership right from the start. Ralph became the first Chairman of CUMAV and I was his Deputy. I can’t remember just how many members, probably thirty or forty members in CUMAV.
When did you join up with the New South Wales people?
GO’B: CUES first, we became associated with New South Wales in CUES.
What about CUES from America, were you involved in that in the first place?
GO’B: No, I wasn’t involved with CUES from America no. I never became a member there.
Was there an official CUES in Australia, apart from the American one?
GO’B: Yes there was. As I recall it was an off-shoot. It did have affiliations with CUES in America, it did get a lot of material from them and so on.
I have interviewed Graham Humphreys and he talked about CUES in Australia. Now I have talked to Lloyd Hawkins quite a bit about CUES in America. They don’t seem to be the same bodies at all that they were talking about.
GO’B: They had affiliations, but they were completely autonomous. The Australian CUES was autonomous.
I know Lloyd is still quite heavily involved with the American CUES.
GO’B: Yes, I could well believe that.
All right, so what was your next move? Did you retire from management of the credit union or were you appointed to the Reserve Board? Which happened first?
GO’B: I was with the Telecom Credit Union as General Manager from 1969 up until 1977. By that time I had turned 62 in 1977. I felt it was probably time for a younger man to take over and their Board was agreeable to this move. We did appoint another General Manager and I moved sideways. For the next three years, up until my final retirement in 1980. I was an adviser to the Board, a financial adviser to the members and I was appointed to what had been formed some years earlier, the Australian Association of Telecom and Postal Credit Unions. That had a membership of about nine credit unions, the prime bond of membership of which was employees of the Postal and Telecommunications Commissions. They were fairly big and substantial credit unions in all States of Australia and we used to meet annually, an annual meeting. But the main reason they appointed me as Executive Officer, when I had more free time to be able to take it on, was that the headquarters of both Commissions were in Melbourne. We had a fair bit of contact with them as a national body so it was logical then for the Executive Officer to be stationed in Melbourne so that he could contact them. Bill Pollock at the time was General Manager at Telecom, I had quite a close association with him on several matters. We got great support from Telecom Commission.
That organisation of credit unions, when had it been founded have you any idea? Where?
GO’B: Yes, it was founded in about 1968 or 1969, I would say just about the time I came in initially. There were only two or three credit unions members there but it gradually developed from there. I fancy it was formed first in Melbourne, but I am not sure about that. Brisbane I know was fairly closely involved at that time in the initial stages.
Did you come across Len Hedger up there?
GO’B: Oh yes, I knew Len well. I have just met him for the first time for some years here in Albury yesterday.
He is here?
GO’B: Yes, Len is here.
I will have to look him up. What about the other side there, Neil McCrystal and people like that?
GO’B: Oh yes. I had a very great admiration for Neil. As a matter of fact Neil and I shared a room at that Newport School I attended back in about 1971. We had great rapport. I had a great admiration for Neil.
They became thoroughly competitive in the field of credit unions didn’t they?
GO’B: Yes they did, subsequently.
No love lost between them now.
GO’B: No I would say not. I haven’t heard of Neil for years. I don’t know whether he is still involved or not.
I think he is retired from credit unions generally, but I recorded him for the Queensland League some years ago, three or four years ago. Len as well. Though not together of course. We are coming to the end of this tape, so I will turn it over.
End Tape 1B: 4118 Words: 1 hour 40 minutes.
2 MARCH 1994: RICHARD RAXWORTHY TALKING TO GERALD O’BYRNE
We have just got to the point where you became Chairman of the Credit Union Reserve Board of Victoria. How did this come about?
GO’B One of the predecessors to the Reserve Board was the Credit Societies Advisory Committee. This was in 1980 and it was Chaired at that time by the Registrar, Warren Jungworth. I met him in the street one day, in Collins Street, Melbourne, this was in early 1980. He said, ‘What are you going to do when you retire?’ I said, ‘Well look my wife and I are going overseas for twelve months.’ He was Chairman of the Committee and he said, ‘I would like you to come on to the Committee with me.’ I said, ‘Well I will be away for twelve months.’ He said, ‘That doesn’t matter, we will cover for you during that time, if you would agree to join.’ So I joined. I finally retired on 27 August 1980. On 4 September we were on a plane to London and we were away, we stayed overseas for nine months. Then we came back to Melbourne and went up to North Queensland, where our son and daughter-in-law and family are living, and spent a bit of time with them. Spent a bit of time in Sydney and eventually came back to Melbourne after twelve months. I came back on to the Advisory Committee as it was then. Due to changes in legislation and so on it became the Credit Societies Guarantee Fund and then in 1981, when new legislation was introduced, they used the worlds Credit Co-operatives Reserve Board. This was of course the Reserve Board of Victoria. Then in 1983 the Board itself was empowered, under the new legislation, to appoint its own Chairman within its members and I was asked to take on that position in 1983. I remained there as Chairman until I finally retired from the Board in 1991.
Quite a long of changes during that period.
GO’B Yes, tremendous changes. I wasn’t sorry to leave it then, with the new legislation and so on and getting on a little bit in years. I just didn’t feel that I wanted to keep with it. I did have a short stint as Chairman of the Advisory Committee subsequent to the appointment of a new Board under the new legislation which came into force on 1 July 1992, I think it was.
You weren’t involved when the VCCA had their financial problems, were you?
GO’B No. The Reserve Board didn’t have any direct control on VCCA matters. We were mainly concerned with credit unions. We had a few problems there which we had to sort out.
There was a famous meeting there, although I think it might have caused some resentment, when various people, including Reg Elliott, came down from New South Wales to try and assist. They ended up going guarantor but they didn’t have to use. You didn’t hear anything about any of that?
GO’B No we weren’t involved in any of that at all.
I asked Ian Larsson about it. Jubilee Lake and the various other problems they had.
GO’B Well I was aware of all those things that were going on, but I wasn’t directly involved. Just probably to carry on a little bit on the Reserve Board side of things, in 1984 Jack Paterson, who had been for thirty-three years with CSIRO, decided to retire. He couldn’t go any further within CSIRO. He would have had to move to Canberra to go any further and for family reasons he preferred to remain in Melbourne. So when the Reserve Board advertised for a Chief Executive, he was one of the applicants and by far the best applicant. I think it was about 1976 Jack had been awarded an MBE for administration in science. I suppose I worked with Jack then from 1984 until we both finally finished up, he as Chief Executive myself as Chairman of the Reserve Board, for a period of about eight years inclusive. He was probably the best, I can quite safely say this, the best administrator that I had ever struck in my working life. We had a very good and close working relationship. I feel that Jack was the best thing that could have happened to the credit union movement in Victoria during his years as Chief Executive. Tremendous capacity for work.
So how did the Reserve Board progress during your period, in a positive side? I know one tends with the Reserve Board particularly to look at the failures around the place which you have to deal with, but what about the positive side?
GO’B Well on the positive side the Reserve Board developed a very definite policy that it was there not only to supervise and to control the reserve fund, but also to assist credit unions as far as it possibly could in whatever assistance they needed. We held quite a few seminars for Directors. We developed a series of training sessions for Directors and we were always as very open as we could be within the Secrecy Provisions of the Co-operation Act. We were quite open with the members. We used to hold annual information meetings following the publication of our Annual Reports. Credit union people could ask whatever questions they wanted about our operations and so on. We operated on a fairly rigid budget with a fairly low staff, but over the years they developed a very highly sophisticated computer system which greatly assisted in the operations there. A system which was subsequently adopted by the Reserve Board in New South Wales. Jack and his team were mainly responsible for the development of that. Yes overall I would say, with very, very few exceptions, the Reserve Board both as Directors and Officers had the respect of credit unions. There were few problems really from that respect, from the communications side between the two. Credit union people felt that they had free access to the Reserve Board when ever the need arose. We were there ready to respond, or the staff was anyway. The main contact with the credit union people was through the Executive Officer, Chief Executive Officer.
Now what system did you operate under at the Reserve Board? I mean, for instance, were you responsible for putting credit unions under direction if you felt that they weren’t performing right?
GO’B Yes. Following the new Act in 1981 the Reserve Board was given very wide responsibilities in that regard. They could place them under direction, which we had to do on a number of occasions. Then release them from direction once they become viable again. We could dismiss Boards and appoint Administrators.
Did you have to do that?
GO’B Yes in a number of instances we had to do that. We could dismiss and appoint auditors. We also had that power which is a fairly drastic one. I don’t recall that we ever had to exercise that. But certainly we did have to appoint Administrators. Probably one of the greatest disasters we had was the Murray Credit Union which went down with a loss of about $10 million. But the Reserve Board was able to sustain that loss, prop it up. But we had to impose a levy on the credit unions at that time which was a rather sad thing, but that is what we were there for.
I believe that in Victoria that members never lost any money.
GO’B No that is quite true.
It did happen in New South Wales before the Reserve Boards started there. There was Kurri and SDA.
GO’B No, no credit union member has lost a cent of their money in Victoria. Then following the Pyramid collapse of course when there was a*
Were you involved in that? What year was that?
GO’B Indirectly. That was 1990. Following the Pyramid collapse, which came on top of the Murray disaster, there was a run out of funds in Victoria from credit unions, from all non-bank financial institutions, they all suffered. But we were able to stem that flow and once again I must compliment Jack Paterson in that regard. He took a very, very high profile at that time. He spoke on radio, he appeared on television, he had a number of short editorial articles in the newspapers and so on, just pointing out that credit unions had their own reserve fund there which was there to protect deposits within credit unions and that no member would lose a cent of their deposits. So that did stem the run eventually, but I can tell you we had a few anxious days. I think about $100 million, could have even been more, ran out of credit unions at that time.
Pyramid, I am not quite clear as to the structure of their organisation which differed from other States or other places, or even other organisations. How exactly were they set up? They weren’t a true co-operative were they?
GO’B The Pyramid Building Society was the original one. That was in the Farrow group of companies.
So it wasn’t a true co-operative at all.
GO’B Wasn’t a true co-operative at all, no.
So how did it come under a building society?
GO’B Well I am not sure of that Richard. I was interested in the credit union side because that Farrow group did run a credit union, as a matter of fact. The Commercial Credit Union it was called, and we were always a little bit concerned about their operation because the activities of the group seemed to be so closely interwoven. We were never sure of that was going on in the credit union itself. We did try to have it closed down at one stage, but the Registrar wouldn’t agree to do that. So this credit union, Commercial Credit Union, was still in existence at the time of the collapse and there was quite a deal of money invested in it.
Was it a true co-operative?
GO’B Yes, that was. Fortunately we were able to extract that from the group, merge it with the Ford Credit Union. Once again even though there was tremendous losses of course in Pyramid, as you well know, for depositors there, not a single cent was lost by the members of that credit union.
There were losses by the building society.
GO’B Losses by the building society. Of course there would have been very much more substantial losses only it was propped up by the Government. Depositors were promised that they wouldn’t lose their money. I think they are still paying them out. I don’t know what has happened subsequent to that. But the credit union was extracted from the group with a great deal of work on the part of the Reserve Board staff. Of course as I say their documentation was closely interwoven with the other activities of the group. It took quite a deal of work to extract the necessary loans documents and so on, identify them.
There were different sort of problems with St George when they changed over from being a co-operative and became not a building society but a bank. At one stage they were nearly taken over by Brian Brierly. I don’t understand exactly how. Was there any of that sort of thing in Victoria, apart from Pyramid, where other sort of groups where interwoven with co-operatives?
GO’B No, I am not aware of any, just off hand I can’t say I am aware of any.
It was an unusual situation that Pyramid organisation.
GO’B It was. One of the difficulties too was the Treasurer of the day, Rob Jolley, this was back in February 1990, some months before made a public statement that there were no problems with Pyramid and that depositor’s money was quite safe there. Depositors continued to put money there almost up until the day before its collapse. So that was why the Government, I suppose, felt they had some obligation to step in later, following the collapse, and say that the money would be refunded to them. Of course it is costing the tax-payer.
What about the co-ordination between the Reserve Board and the Registrar? How did that carry through it you were going to appoint an Administrator or dismiss a Board, things like that? Did you liaise together to undertake things like this?
GO’B Well under the Act the Registrar was a member of the Board so he knew what was going on.
Did they come on as savage as had happened in New South Wales where they turned up on a Friday and changed the locks and dismissed the staff and started up afresh on the Monday?
GO’B Yes, that has happened within my experience to credit unions. Yes. You had to move very quickly. You can’t let a thing like that drift once you are aware of major problems.
There would invariably be some resentment by the Board if they were dismissed.
GO’B Very much so. We had a big battle with the Murray people. I don’t know whether you saw an article that was written subsequently in the Good Weekend I think it was.
Yes I say that, Ben Hills’ article.
GO’B Ben Hills wrote that. Like most journalists who report in that way, he played it up a bit. But his facts were reasonably right. Substantially right.
That worried me, because I know personally the people involved. I knew Laurie Watt and I knew Bernie Hansford and a number of the others. It worried me what happened.
GO’B Well it was an on-going saga. I don’t know what position it has reached now and even if I did I wouldn’t be able to comment. Could be a possible court action involved.
What even yet?
GO’B Oh yes, it is not over yet by any means.
Oh, I thought it would be.
GO’B No, it is still an on-going saga there.
Well were there any other ones that you remember particularly, apart from Pyramid and Murray?
GO’B Well Pyramid of course was a building society and only had an indirect effect as far as credit unions were concerned, an impact on the deposits. Not any really that I would comment on.
Fair enough. Not what were some of the other involvements that you took on while you were Chairman of the Board?
GO’B Well it involved a tremendous amount of time as Chairman. Some people think that a Chairman’s job is an easy one. But Jack and I had a very close relationship and I suppose hardly a day passed that we weren’t in touch with one another by telephone at least. I must probably pay tribute here to my wife really, because during the whole of my involvement in credit unions, and that goes over now some twenty-five, twenty-six years, I spent a lot of time and a lot of time was given purely in a voluntary capacity too. Without the support of your wife and family you just wouldn’t be able to do it. I suppose that is true of any people who work in credit unions because it certainly is not a nine to five sort of operation, as you well know. It has involved me in being away from home on a lot of occasions at seminars, conferences. With the Reserve Board I was overseas four times in Canada and the United States.
Can you tell us a bit about those trips?
GO’B Yes well we were invited to go over there to a meeting of credit union regulators that was held in Halifax in Nova Scotia in 1986. Jack and I went over representing the Victorian Reserve Board. We were there primarily as observers but we were invited to speak at the meeting just to give some impressions and so on. Just cover briefly Reserve Board operations in Australia, which we were able to do. So it was really an interchange of information there too.
Were any of the other Australian Reserve Boards represented at that first occasion?
GO’B Yes New South Wales were represented there by John McIntyre and Keith Mannix, no this was before Keith, Brian Sharpe, who subsequently died. Brian and John attended that one.
Did any of the other States have Reserve Boards at that time?
GO’B South Australia was the only other one at that stage.
Where was the next meeting?
GO’B Well at that time, in 1986, we also took the opportunity to go to Washington DC to meet the National Credit Union Administration there, which was our counterpart for federally-insured credit unions in the United States. We were lucky enough to build up a very good rapport with the Chairman, who was a Senator Jepson and he is still currently Chairman as far as I know of the NCOA in the United States. Also with the staff there, a Don Johnson who was an Honorary Member of the RSL here and very proud of the badge that he wore. A chap by the name of Mike Riley, who was in charge of one section of the administration there mainly dealing with examinations and so on. Subsequent to that visit we have kept in touch and we have obtained quite a deal of information from them. It resulted in the development of what we called the Camel System of Examination and Reporting on Credit Unions. I don’t know whether the present Reserve Board is carrying out that type of examination, whether it has continued with it or not. But we found it of great assistance.
What method do they use?
GO’B Well it was based mainly on Capital Adequacy, Assets, M for Management, E for Equity, L I just forget now. Anyhow, C-A-M-E-L. It meant going into credit unions with a particular type of program and then rating credit unions on the scale of one to five. It worked quite successfully as a matter of fact. We at that time were reporting back to credit unions on their ratings and explaining why they were so-rated. Where their strengths were, where their deficiencies were and advising them how they could overcome some of their deficiencies.
Was it during the time that you were on the Reserve Board that you became an Adviser to AFCUL and were asked to go on trips to advise Papua New Guinea and New Zealand or was that before or after the Reserve Board time?
GO’B The New Zealand visit was during my time as a member of what was then the Guarantee Fund, prior to the Reserve Board. That while I was a member of that Board. The New Guinea visit, which was the first one back in 1972 of course was when I was still General Manager of the Telecom Credit Union. They were quite prepared to release me for that three weeks that I was required to go over there. It was Dermot Ryan who approached me and asked if I was prepared to undertake it. I asked the Chairman of Telecom Credit Union and he was quite happy for me to go and do that. That was to just have a look at the current operations and to prepare a plan of development and a budget for the PSA Savings and Loans Society which was based in Port Moresby, that is the Public Service Association. I suppose I was approached due to my fairly close association with a similar type of organisation, similar type of credit union in Victoria. In other words, the prime members were public servants the same as in the New Guinea situation. That was the largest credit union in New Guinea, the PSA.
David Loring and a few of the others had been up there for the Reserve Bank at that time hadn’t they?
GO’B Yes. That was where I first met David Loring as a matter of fact, in Port Moresby. We worked together quite a bit while I was there, as a matter of fact. I know we had a very interesting trip up to Seggari, one of our free times. Yes I was very interested to meet David again when he returned to Australia.
He is working at the New South Wales Teachers’ Credit Union now.
GO’B That’s right. That was a very interesting experience as a matter of fact. Before I left I was fortunate enough to be able to acquire the services of a very, very good stenographer. She was a native lass. I was able to dictate the whole of my report and she typed it up and I was able to present it to the Board before I left.
Not in pidgin?
GO’B No, not in pidgin. The members of the Board were very, very high public service people, the indigenous people. The Chairman was Head of the Premier’s Department, a chap by the name of Versos Romney. Also interestingly enough one of the members of the Board was a chap by the name of Vincent Eri, who wrote the Crocodile which was the first novel written by a Papuan-New Guinean. He gave me an autographed copy before I left. Vincent Eri subsequently became Sir Vincent Eri, Governor-General of Papua-New Guinea. But he blotted his copy book unfortunately in latter years, just before he died, and he was dismissed by the Queen due to some Constitutional difficulties which arose. But Vincent Eri was a very able man and he was in charge of education in Papua-New Guinea when I was there, Director of Education.
Now what other credit union things were you involved with before you finally retired? Well you are still involved, you are Returning Officer of AICUM. What about your involvement with AICUM?
GO’B Well I have been Returning Officer with AICUM now for the last fifteen years, fifteen consecutive years. I am sorry, only since they have started to conduct the postal ballot. I have always been a member of AICUM. After retirement I was made a Honorary Member, so I was able to continue as a full member. Their first postal ballot was carried out in 1981 and I was away overseas at that time. But when I returned in 1982 they asked me if I would be Returning Officer and I have been Returning Officer ever since, 1982 to 1994 inclusive. That has always been conducted by postal ballot. That takes a bit of time and I just kept a bit of a log and there was about thirty hours work involved in that overall. But it is very interesting and I am very happy to have that involvement. It is a great forum. I think probably it is the best credit union conference in Australia, the AICUM one, the Albury Conference. But I am still also doing a bit of part-time work with the VTU Credit Union in Victoria. I do a one day a week financial counselling there. I have been doing that now since 1982. I thought initially when they asked me if I would set up this service for the members, which was both advising on the investment side and also some of the problem areas, I thought I would be there for twelve months. But twelve years later I am still there and very happy to do it. I have moved right away from the investment side, that became far too complex to do on a part-time basis. In fairness to the members I felt that I wasn’t competent to handle it. In fact the VTU have now set up a subsidiary company, APPLEVEST Proprietary Limited which gives taxation advice to members and also an investment service. But I handle the problem cases now, people who find difficulty in budgeting. Not only problems but young people come in to see to ask how much they can afford to buy their first home. Looking for finance and so on. I thoroughly enjoy this involvement because I feel that this is probably what credit unions are all about, helping people this way. I get a great deal of satisfaction out of it when I see a person coming into see me virtually crying and it takes me about twenty minutes to settle them down before I can start talking to them and then work through things, show them that it probably not as bad as they first thought, and they go out smiling.
End Tape 1B: 4070 Words: 1 hour 30 minutes.