ANSWCU 73 : 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER WHO WAS PRESIDENT AND A DIRECTOR OF THE LEAGUE FOR A NUMBER OF YEARS.
I will not go right back to your childhood because that has been done on the Transport Credit Union tapes, but I will ask you about the Transport Credit Union, how you first came into credit unions at Transport?
KM: Well, I think because my history is recorded on the Transport tapes, there really is no need to go back. But very briefly, I think, some mention should be made because it leads into my subsequent involvement with the League. The Transport Credit Union was formed in 1953 and at that time we were the first industrial credit union that had been formed. Therefore, we were the trail blazer for a number of developments that took place in that particular area. I was not a Foundation Director of Transport but I came onto the Board in 1954. Whilst there and during my stay in office until about 1972, I occupied all positions of Director right through to Chairman, Secretary, Treasurer, what have you. In those days the credit union was a totally volunteer operation and so Directors had to do all the administration and all the accounting work as well as the promotion and development of that credit union. We were innovative to introduce a few things. One was, because we were the first, we were trying to encourage other institutions, particularly within the State public service to form credit unions for their employees. The result was we became in great demand for assistance and advice as to how to go about this. Also, too, a member of the original Transport Employees Credit Union was Beresford Calverley. That Transport department split round about 1954 and the Motor Transport Employees Credit Union continued, but Beresford Calverley was instrumental in starting another credit union which was the Government Transport Employees Credit Union, so we split from there. Also from there, other credit unions developed in other public service institutions. We were called upon to give a lot of advice and the best way to do this, as these requests were quite numerous, was not to necessarily handle them one by one, but to call meetings of interested parties from other departments so things could be discussed in that sort of an area. So as the credit unions grew and the novice Directors took up their roles with their concerns about how they were to run a financial institution and what criteria they should apply to borrowing and investing and the whole lot, so it became regularised that there were meetings of credit unions in Sydney, mainly industrial. We used to meet roughly on a monthly basis and because Motor Transport Employees Credit Union had the facilities, we were located in the offices at Rosebery and as the Senior Officers of the Department supported the credit union, we had available to us the auditorium that was out there plus the facilities of the canteen, so we could cater and also look after the crowds. So these earlier meetings in the main were held within the Transport premises, but some were held on the premises of the Water Board when they started their credit union, Maritime Services Board when they started theirs in about 1956. This was really the beginning of a group of people who wanted to form something which eventually became the League. Now, although the League was formed in 1956 and Beresford Calverley was also one who was very useful in the formation of the League, the Transport Credit Union didn’t actually join the League until somewhere in 1959, 1960, mainly because we were all too preoccupied in looking at the growth of our own institution and we just didn’t have the time to take on another burden. But although we weren’t part of the League we were part of the Movement and we were referred to on occasions and we knew all the people who were involved in the formation of that League. So that is the beginning as to how we came there.
What about Kevin Yates’ part in the formation of the League?
KM: My view is that Kevin Yates didn’t do very much for the credit union movement, although he is regarded as being the father of the Credit Union Movement and certainly he deserves the credit for bringing the idea from Canada to Australia and in the early stages encouraging other people to start to look at this and formation.
How much was he involved with the ‘Movement’ do you know, during his speeches around the place encouraged by Dr Paddy Ryan?
KM: I can’t give you much information there, because quite frankly I don’t know. I never met Dr Paddy Ryan, I knew of his existence but I never met him. In those early years Kevin Yates certainly was, I suppose, a theorist and he was the one who spoke about credit unions at meetings, and he did this very effectively and he deserves the credit for that, but in the actual formation and hard work of running an organisation, he did very little.
Fair enough. What about his formation of Universal?
KM: Again, I can’t say, because Universal was formed around about 1946, 1947 and that was an active credit union at the time I first became involved. Of course I only came across them through these meetings, these groupings that I was talking about. That is how I got to know the personnel. But in those early years of operation, no we didn’t have much contact with them. Have in mind in what largely was a parish or community-type operation and of course their needs at that time were quite different from what industrial credit union needs were, so I never had a personal interest at that early stage.
Of course Beresford Calverley was the second President of the League.
KM: Yes, he was the second President. I don’t know whether any other speakers would have mentioned this to you, the first President, Jack Ward, was the General Manager of St George Building Society. Now he came to be involved because the St George Building Society and the United Building Society were two that had credit unions attached to their operations. Now the Co-operation Act limited what functions they could carry out and of course what they were trying to do was to provide a total financial solution to home buyers. They could provide the finance to purchase a home through a building society and then to equip the home they started these small credit unions, which with their show were limited to borrowers in the building society. So Jack Ward was a co-operator and in those early years, as I say, he was the first Chairman of the League.
That is much the sort of thing as they have got in Newcastle with the Greater Newcastle, the twelve different organisations under one umbrella.
KM: Pretty much the same, yes. But then of course Beresford was second President. To my mind the one who deserves the credit for the formation of the League was Keith Young. Keith Young was Secretary and did all the work in my view. I know this because he kept on constantly chasing me to see if our credit union would join.
I just happened to notice though that Keith Young wasn’t the first Secretary. Although he was supposed to be the first Secretary, something happened. Can you remember about that?
KM: No. I wasn’t part of it. I never had that intimate knowledge until we actually came into the League ourselves. But certainly whatever did happen there, and whoever was named as the Secretary, it was Keith Young who was doing all the work.
Yes, I think at the time of the actual inaugural meeting he was not available for some reason or other and somebody else took the job for the first year, I think it was Bill Egan.
KM: Again, I didn’t have a lot of contact with Bill Egan, so I can’t comment on his role.
So when did you first become involved with the League, even the Chapters? Do you remember when they started, the Chapters?
KM: Well I think the Chapters started as I said round about 1954, 1955, on an informal basis. When the League was commenced then of course an official part of the League was the Chapters. We were still part and still running, very much involved in Chapters even though we were not members of the League in those early days. But I would say Chapters formally came up around about 1960 when through the League we established a Charter for their operation. The first formal Chapter was the City of Sydney Chapter and then after that there was another one which developed which was the South-West Chapter of Sydney. Then there were others formed in other different regional areas throughout New South Wales and they ran for quite a number of years.
Who were the leading people in organising those Chapters?
KM: To my mind, the ones most involved, certainly I was involved myself, were Ron Birch and Kevin Gleeson. Ron Birch was a Director of the Sydney Water Board Credit Union, now the SWB Family Credit Union, I don’t know if he was the Chairman of the credit union at this time, I think he was still only a Director of that credit union. Kevin Gleeson was involved with the Baulkham Hills Credit Union, and he eventually came on to the League too in the early 1960s. But I would say the credit for the operation I would give to those two gentlemen, although there were a number of others involved of course. It wasn’t quite a one or two man show, there were a number of participants.
What about the South-West Chapter?
KM: Again, not too much to say on that. Memory is a bad thing. It formed and some of the people who were part of the City of Sydney Chapter, but it was more convenient for them to be located in the south-west, broke away. I think Bankstown Credit Union was one that did this and I know that they were very actively involved, I think. Some of the City of Sydney Chapter then eventually became the South-West Chapter.
I did see a photograph in the Bankstown Annual Report of a Chapter Meeting and I see Clarrie Murphy, Don Harvey, Kevin Gleeson, Lee Nash sitting there.
KM: Well they would all have been sitting there because they were League Directors rather than because of a particular involvement in the Chapter. All these Chapters required the approval of the League and they had a Charter to which they had to stick. The League for many years nominated Directors who should attend these Chapters because they were of course always asked to speak to spread the news of what the League was doing and what developments there were in the Movement.
Were you involved when a Chapter called Nation Development Committee set up Chapters around various places including country areas, or tried to?
KM: Yes, I think that was back to the time when I was President of the League. But I personally was not involved in that at all. It was part of the League function. So while I was there I didn’t do anything.
So what was your first actual involvement with the League?
KM: As I mentioned we joined the League in about 1960 and having joined the League it then became the obligation to attend meetings of the League, its Annual Meeting. I certainly did this as a delegate. I was also co-opted in a number of areas before I came onto the Board. The one that comes to mind mostly is a committee was formed to establish or review the dues structure for the League at the time. I think that was just about my only official function before I actually came on to the League Board.
Were there any problems with the dues structure in those early days?
KM: there were always problems with the dues structure. It is a hardy perennial that comes up at every Annual Meeting of the League where dues are discussed then there is a problem. It is a debate which will never be resolved. There are two points of view on this. One is that the dues should be structured on the basis of credit union membership and the other one is that it should be structured on the basis of credit union assets. The membership one probably has some weaknesses and it is a view that a large membership does not necessarily give any authority over another credit union with a smaller membership. On the other side those who propose that it should be based on assets, the argument against that is, well the argument for that rather, is that their credit union have got up off their tail and got out and actually collected money shouldn’t be unduly penalised because they are the more efficient. So really it comes down to what has been stabilised pretty much now as a combination between the two and the formula that has been worked out.
So what were the first problems that you remember when you were first involved in the League? I mean there were problems of expansion but there were also problems of getting proper insurance and things like this.
KM: I don’t believe there was a problem in expansion. By this time, by the early 1960s, Stan Arneil had come on to the Board of the credit union. A tremendous activist, a tremendous speaker, he had a marvellous charisma and he was a very persuasive individual. He could be a very personable but also a very dominating figure. Stan during his early years took it upon himself to develop credit unions and he developed a technique of doing this, so much so that for instance he had the paperwork that was necessary for a mission statement and all this typed out so that you only had to fill in the name of the organisation and sign it. He used all the contacts he could through the Labor Party, he was a member of the Labor Party, he worked for the ABC and the contacts he developed there and I think Stan claims to have started over one hundred credit unions on his own. The unfortunate part about this, as I say, probably 85 per cent of them didn’t last. I think this was largely due to the way they were started. Stan was inclined to more or less, if I can use the term, force feed. He would sell the idea and then having got them to sign on the bottom line and apply for registration of a credit union there was no follow-up. Now at that rate of forming credit unions obviously Stan himself couldn’t do all the follow-up, but the system wasn’t there through the League to give the back-up to look after these and carry them forward. The result was that in two or three years most of them had had it. But the formation wasn’t a problem. People out there were thirsty for information on credit unions and how to start them and it was probably simple to get them going, all it needed was time, time and energy and Stan had both of these.
Did he arrange to get himself appointed as Development Officer at the Registrar’s Office, or was he invited by somebody else?
KM: No, I would say knowing Stan that he arranged to get himself appointed. In the formation of these credit unions he would be actively involved with the Registry because he would have been liaising for the new groups who were forming with the Registry so he became quite well known. The Registrar of the day was obviously encouraging the development of credit unions. That was Bert Crosky I think in those days. So Stan was getting on fairly well with them at that level. Then it came about, I would say, that Stan persuaded the Registrar that he could do a better job if he was employed by the Registry with the job of forming credit unions as a Liaison Officer. He was able to persuade the Registrar that that was the way it should be so he resigned from the ABC and went to work for the Registry.
Do you remember, at that time he was President of the League, do you remember that some people didn’t think it was a good idea to have the President of the League at the same time as working for the Registry as a Development Officer?
KM: Well, in my view, I think the only people who didn’t think it was a good idea were the Registrar and the Registry Officers.
What about Don Harvey, he reckons he didn’t think it was a good idea? He stood against him and got the Presidency.
KM: Well I don’t know that he stood against him just on that particular ground. I am quite neutral in that. I never had any personal feelings against it, but I wasn’t particularly surprised when that particular appointment was terminated. It was terminated because the Registrar insisted that Stan could not carry out a senior elected position and also work for the Government at the same time. Stan stood on his principles and said, ‘Well if I have got to choose between one or the other, I will choose the volunteer side.’ So they parted company not on very good terms.
Do you know if Mr Crosky is still available to be interviewed?
KM: No, I don’t. I haven’t heard about Crosky for many many years. I never had much to do with him actually. It was the subsequent Registrars that I became involved with. At that time I wasn’t on the League Board, so I never had that contact. My contact from Transport was with the Registry Inspection Office.
Do you think Registrars of Co-operatives, who were responsible for the Credit Union Movement at that time, should be interviewed for this project?
KM: It certainly would be helpful. You would get quite diverse views I would think. Crosky was followed by Geoff Boreham who was followed by, fancy me forgetting the name of the bloke.
There was one named Horton.
KM: Dave Horton, that’s it. Because I had a lot to do with David you know. They each had different approaches and they brought a different attitude to that particular job. Crosky I think was a typical public servant, a bureaucrat in his operations. Geoff Boreham was a nice guy who had a keen interest in credit unions and also, as far as he possibly could, whilst retaining some regulatory control over the operations had a more benign attitude to their operations than what Crosky did. Then Horton came along. He more or less came from outside. I don’t know what his antecedents were, he was a solicitor. But he in the first instance tended towards deregulation, if I can use that term. We achieved a lot under David Horton. All Registrars are bad, I think by reputation we say they weren’t doing a good job, but I think in fact that wasn’t the case. I think we were very fortunate along the way with the three Registrars that were there during my particular time.
I note that Registrars were trying to start credit unions in Australia since the First World War.
KM: Were they, yes.
According to the records.
KM: Well you have beat me on that one, because I don’t think the Co-operation Act was formed until, what, 1923.
Yes, well there are two reports before that leaning towards the formation of credit unions, or savings and loans societies as they were called then.
KM: None of this was of any great interest to me. I have never had a philosophical bent in this direction. My actions may deny it, but I still maintain I never had a philosophical bent. All I was concerned about was what concerned Ken Miller at the time that he got involved in the different areas. So historically I don’t know anything back then.
So what did you get involved in next?
KM: Well certainly I attended the Newport Schools. The City of Sydney Chapter ran the first credit union School in Australia.
Who were actually the people who organised it?
KM: The other two I mentioned. It was Kevin Gleeson, Ron Birch and myself. We put together the program which was based on the question answer type of thing. The experience that we were seeing of new Directors, the type of questions they were asking and what their concerns were. We ran it over a weekend. It only stands up as being the first. It wasn’t deep in any form. It was a matter of bringing members of the Chapter together and it was successful as far as it went, but over the short time we couldn’t do too much planning in the School.
No Room 19?
KM: No Room 19 on this one, this was a more moderate operation. But by the same token the League were also developing the idea of running a School. That was enthusiastically supported by all credit unions and the main motivators for that were CUNA Mutual without a doubt. In the early ’60s we started to have visitors from the States both from CUNA, which is the Credit Union National Association, and CUNA Mutual which was then the insurance arm. The visits mainly came from those employed by CUNA Mutual. They came out to talk and see what they could do about introducing their own branch of insurance into Australia. In the process of this, too, part of their policy was the development of credit unions and so they encouraged the League to run a School and in fact provided a lot of the capital for this to take place. So that School was run. The speakers at that one were Carlos Matos, who was the Vice-President of the International Division of CUNA Mutual, Charles Compton and from Fiji Joane Naisara who at that time was the Chairman of the Fijian League. They were the three outside speakers. Stan Arneil had a lot to do with the operation of this and as I say Stan was a great organiser at that level, a good planner providing there were other people to carry it through. The School was very, very successful. From memory I would say it was attended by about eighty people.
Was that the week long School was it?
KM: That was the week long School. It was called ‘Seven Lively Days’, the first one.
Was Father Ganey there?
KM: Yes, he was there.
Was Room 19 operating?
KM: Yes, Room 19. I can remember a couple of incidents there, I remember one apart from Room 19. For part of the time I took my family down there, I don’t know whether it was the beginning or the end of it. My young son acted as a server for a Mass they held down there with Father Ganey and he still recalls that, he has never forgotten that. My youngest daughter at the time got herself locked in the toilet and they had to break a door down somewhere and I think it was Charles Compton who was the one who heard the screams or squeals or something and went and rescued her out of the toilet. Room 19, quite frankly whilst we are talking about its reputation it was very unsavoury. I did visit Room 19 but it wasn’t my cup of tea and generally didn’t stay there. The City Council Credit Union with their over-enthusiastic Board of Directors, who gave great support (and I don’t think the support they gave to the League of New South Wales will ever be fully appreciated), they gave tremendous support both of themselves and the contacts they had, but they arrived down and took over the biggest room in the place which was going to be their meeting room as well as a bedroom for Dermot Ryan. Of course they brought down all their luggage which consisted of a couple of handkerchiefs and about two ton of grog and they set themselves up in there. What they did was to make this School available to all their Directors and all the members of their Supervisory Committee, so probably only one or two of them stayed the full week. What the others did was to come down for one or two day stints at a time and whilst you can’t live at a high pace for a week, you can for one or two days see. This is what they did and they virtually slept and ate and did everything in that particular room. Of course it established that reputation. I suppose most people then who went to the School visited Room 19 but also to the reports which flowed off that probably also did a far amount of damage to the image of that particular School. Not me, but there were a number of people from that start who looked at City Council with some reservations.
Some people say that in spite of that a lot of the discussions they had unofficially up there were more helpful in starting and running credit unions than the in-house lectures and such like.
KM: That was very true. But all the important discussions didn’t take place in Room 19. The Mona Vale Hotel was across the road from the motel where we were staying, so there were all sorts of opportunities for groups to form. Because this was something totally new the conversation was probably restricted to credit unions and credit union development. I certainly wouldn’t give the credit to Room 19. But I would say the interaction between the participants, and that included the interstate participants as well, stood us very well in the development of future relationships. It was one of the highlights, I think, of the Credit Union Movement, particularly that first year.
End Tape 1A
ANSWCU 73 : 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER
There was one more thing about Newport, Merv Callaghan from Queensland had mentioned that there were some discussions at one of the Newport Schools about the possibility of forming AFCUL.
KM: I think that came up at one of the later ones. I think there were about three Newport Schools held. Certainly, seeing that AFCUL was formed in about 1970.
No, it was formed in 1965. The first Annual General Meeting was 1966.
KM: I felt it was much later than that. I that case I take that back, maybe discussion did take place at the first one. It was most probably developed at the second one in 1966. I didn’t think AFCUL was formed until 1970.
There is a proclamation around that Stan Arneil made at a meeting and it was during 1965 that this actually happened. It wasn’t at Newport.
KM: Well I’d better research this a bit. Maybe they informally did something but it wasn’t registered until later on.
No it was registered and there were only two States in it at the start, New South Wales and Queensland.
KM: Yes, that’s right. I was on the Executive of it. That is why I am thinking it was later than 1966, but still.
I have got the first Annual Report.
KM: Well that is fair enough, I won’t argue with that.
I have got a photograph of them all on it.
KM: Maybe I am thinking of the Foundation may have been formed as an off-shoot in 1970. That might be the way. OK.
So you don’t remember the discussions in 1965, anyway.
KM: No, I wasn’t part of the League. I went to the School and I was there and I knew everybody there and I was very active in lots of ways, but no. I have just got a few notes here, without going into much detail I have a couple of dates which may or may not be recorded there. Some of the things that we have discussed is that the name of the first organisation was changed in 1958 to the Credit Union League, before they were the Savings and Loans Association, which I think probably should be recorded. The City of Sydney Chapter was first officially formed in 1959, right. Dermot Ryan was elected to the Board of the League in 1960 and he was elected to fill a casual vacancy.
Now, this business of his being a member of the Board in 1960, was there any controversy between him and Father Gallagher about the Lidcombe Credit Union being on the League anyway?
KM: Without going into detail, I would say yes because there was always controversy between Dermot Ryan and Father Gallagher. Dermot was a member of the Lidcombe Credit Union where Father Gallagher was domiciled. He would have come onto the Board I think as a representative from that particular credit union. There were certainly philosophical differences between the League Directors and those of Father Gallagher. Father Gallagher had an all-embracing social economic solution to people’s needs and that went past just the provision of financial facilities. It went into other areas of something like the Hibernian Society, seeing a sort of full retail store in operation, medical resources and the whole lot. Whereas the League operations were quite narrow and in that it concerned itself directly as a financial institution. So I would think knowing this, Dermot and Father Gallagher would have disagreed at that level . At the time when I think Dermot resigned from the Lidcombe Credit Union that was the time that meant that he also had to resign from the League Board. I think that was the situation.
That was the same year.
KM: Yes, the same year. He came back later on, about 1962 or something like that.
I think it was 1963 when the City Council was formed. I think he wasn’t actually a Director until 1965.
KM: Wasn’t he, yes. Anyway that was the first time Dermot got involved with the League in 1960. It didn’t last very long. It was also the time when we arranged our first loan protection insurance cover. That was our first dabble into insurance and that was with the MLC.
Who was responsible for that?
KM: I don’t know at the time, I would say it would probably have been those who were involved, I would say probably Keith Young, Clarrie Murphy in that area they would have done that. There was nothing wrong with that particular policy except that it was something entirely new, even to MLC, and the conditions on it were fairly restrictive. But at least there was something there in place, but it wasn’t very good let’s put it that way. Stan Arneil came and was on the Board but he was elected Chairman in 1961. It was during this time that he started to develop all the credit unions and also then ran foul of the Registry when he went to work for them and left. Another important time there was that Jack Lange was appointed as Honorary Solicitor in 1962. Jack Lange was a friend of Stan’s. They lived near each other. He was persuaded by Stan to give his services. Jack had been through the forces and then I think after the War he did his study and became a solicitor and so he was just starting to practice about this time. Anyway he was conned into becoming the League Solicitor and didn’t get too much out of it by way of remuneration, but still he was League Solicitor. The League office at that time was established in Devonshire Street, that was the office of the Universal Credit Union as you know.
It is up for lease at the present moment and people are eyeing it up.
KM: At that time, 1962, Clarrie Murphy was appointed League Manager.
Were you anything to do with that?
KM: No, not at all. That was before my time. Keith Young resigned around about that time, solely because of a dispute he had with Stan Arneil. If you have interviewed Keith I think you will know the type of person he is and he was chalk and cheese as far as Arneil was concerned. There was no way you could put those two in the same room and expect them to get on.
Both of them only had good to say about each other.
KM: Well I would say they are both lying. Seriously, that may have been the case, but Stan was so dominating, he really could be a very dominating individual if you let him get away with it. Keith Young’s involvement was all altruistic and philosophical, he wanted to do the right thing by his fellow man. I think his own very strong religious beliefs supported this and quite frankly I think Stan just dominated him to such an extent that he felt his own position was insufferable and resigned.
Don’t you think Stan Arneil was also very strong in religious and philosophical principles?
KM: Yes, but in a different way, they were expressed differently. Where one would express his own religious beliefs in his own quiet personal way, Stan’s would be part of his natural character. So it just didn’t work and Keith Young got out. Personally I was very sorry to see him go because I thought he was very badly treated. That was the time that Clarrie Murphy got appointed as League Manager. The only comment I’ve got to say about that time, during that event I have mentioned earlier I was part of the Dues Committee and did attend one meeting as a member of the committee where Stan Arneil attacked Clarrie Murphy, at a time when Clarrie was the Manager, for his inefficiency and failure to do certain things. At that time I thought that was a bit out of court and that was my own feeling at the time. But it would have been my first contact on that sort of level that I had with Clarrie Murphy or Stan Arneil.
Do you remember an amusing incident when they bought a National Cash Register accounting machine and then couldn’t get it up the stairs?
KM: No, I don’t. I wasn’t part of the League at that time, so I don’t. We mentioned too at the time that the first School was held. Incidentally in 1964 Don Harvey was elected President. Don Harvey only lasted one year.
I think it was two actually. He said the reason he stood was because he didn’t agree that Stan should be President and also working at the Registrar’s Office.
KM: I wouldn’t know. Stan was such a charismatic character that he made just as many enemies as he made friends, that was part of his nature. I think when it came to the ballot for that particular position, probably he had offended so many people along the way that he got out-voted.
But he was still Vice-President.
KM: Well of course the Directors would elect the President, not the membership, so it would be the members of the Board who elected Don Harvey. Running through that, of course, Calverley was elected President in 1965. He was there at the time I was there. My own involvement really took place at the very end of 1966 or beginning of 1967 when Stan Arneil persuaded me to accept a casual vacancy on the League Board. At the time there were two vacancies. I don’t know who we were replacing but there were two casual vacancies. Beside myself there was also a Director of the Commonwealth Taxation Department, ComTax Credit Union, and we were invited to fill these vacancies, which we did.
That wasn’t Vince Martin, was it?
KM: No, it wasn’t Vince Martin. I don’t know whether Vince was on the Board at that time. Although Vince Martin worked for the Taxation Department, I don’t think he was representing the Taxation Department. I think he belonged to another credit union. I think it was a community one. I don’t think he mentioned that. It was the ComTax Credit Union he was in, he was a Director. Then he became a Member of Parliament and that was when he was involved with the taxation, with Dermot.
KM: Well that is the feeling that I have, that Vince Martin came from a community credit union.
I have interviewed him and I don’t think he mentioned it.
KM: A parish one. I can’t recall the name of the fellow who came with me to fill the casual vacancies, because he only lasted that one night. I don’t know how if he ever got himself on to the record. We attended the meetings and I think they were down in Devonshire Street, like babes in the wood we sat at the meeting. Stan Arneil had been away promoting credit unions somewhere in the country and he was late arriving. There had been a contentious issue and I think it was running around dues, that is always a good subject to pick on if you don’t know what the contention was about. Stan came in and immediately there was a cross-table exchange between himself and Lee Nash which developed more seriously to the stage where they both got up and were throwing punches at each other across the table. The table was too wide so they couldn’t reach each other, but that is the way it was. The meeting was bedlam for quite some time.
Who was chairing it?
KM: Berry Calverley. They did settle down, but it was quite apparent right from the start there were very strong feelings between these two. There was an animosity there that existed in all their relationships over all the years. Well at that meeting the chap who had come down with me to fill a casual vacancy said there was no way he was going to be involved with a mob that went on like this and he promptly resigned. I think largely the impression that was created for him partially led to the Tax Department resigning from the League. That was when I came on to the League Board to fill a casual vacancy.
Do you remember whether those Board meetings were held in the League office above the Universal Credit Union or whether some of them were held in the Irish Club, the Gaelic Club?
KM: I think the one I mentioned was held in Devonshire Street. Very shortly after that we moved further down Devonshire Street to the Irish Club.
How long were they held in the Irish Club?
KM: Oh, it must have been a couple of years.
Do you remember why?
KM: Mainly because it was good, cheap accommodation. I don’t know if they made the rooms available to us without cost, or what it was.
Was it licensed at that time?
KM: I don’t think so. There was a hotel virtually next door and so that was where all the socialising went on one way or the other.
Did they caucus in those days in the pub before and after the meeting?
KM: Oh yes, that went on all the time. Whether you would say it was an official caucus or whether it was just meeting in the hotel before they went, while they were waiting for late arrivals to get there at the scheduled time of the meeting and of course if the meeting finished early enough they would adjourn down there for a drink afterwards.
They weren’t separate factions?
KM: Not really. It was whoever turned up in that hotel. There was a story going around that may have been recorded somewhere else that I wasn’t actually privy to, where they said that Stan Arneil got Kevin Gleeson down the hotel and told him if he didn’t vote a certain way he would knock his head off, and that type of thing. Gleeson did vote that way and that went Stan’s way. But there was no official caucusing as far as I am aware. Whoever got there first would try and persuade the others to a particular viewpoint before they went to the meeting.
There were stories about the City Council Credit Union, people having the odd stoush about voting. Did you ever hear about that?
KM: No and I would say that is not true. One of the things with the City Council Directors, they were in everything and they were all big fellows. They were all fifteen and sixteen, seventeen and eighteen stoners. So you would say they were an enforcement squad if you saw them walking in together. But I am not aware under any circumstances where there was any sort of pressure put on anybody on any vote on any issue.
If you had a number of them facing you when you were backing on to a balcony which was rather high up, would you say you were being heavied?
KM: I would be looking for a way out. I suppose you come from a different era. I always, and I still regard them all as my friends and I got on with them. Also, too, my comments about Arneil are observations because I also got on very well with Stan. Because remember he was the one who kept on chasing me to come on the League Board. I had no problems with Stan Arneil until later events. But certainly I was among my own crowd as far as the City Council Credit Union was concerned because of my own background in that I lived in the Ultimo Pyrmont area, where a number of these people had come back to. At one time I had pretensions about working on the City Council and I had some very close friends who did work for the City Council. I never had any problems in that direction. They most certainly never tried to intimidate me.
Did you ever meet the King of Ultimo?
KM: Who was that?
It was Charlie Hackett.
KM: Oh, Charlie Hackett, yes I knew him quite well. I think I have something recorded on the Transport tape. Yes Charlie Hackett was the King of Ultimo and he was on the City Council and he also worked for the City Council. He was the king-maker in that if you got Charlie Hackett on side he was the one who got you employed by the City Council. As a matter of fact Charlie in my time was the Chairman of the Phillip Dennison Branch of the Labor Party and at one point there I was his Vice-Chairman and at this stage I was only about seventeen because in this environment this was the only political party there. Nobody else would walk into this area, it was a Labor vicinity and that was it.
Did you get your Chairman skills from Charlie Hackett by any chance?
KM: I don’t have any Chairman skills and that is part of my interesting story as we come along.
Well Stan Arneil reckoned that was one of the main reasons why he wanted you in the League.
KM: Well to my mind I have no Chairman skills. I think Stan’s memory would be fading a bit about that. I think he probably wanted me because I had been around a long time and I was well-known to most people in the Credit Union Movement. In some form I had been involved in their own development along the way with Chapter meetings and what have you. So I was a well-known person. That was the reason Stan was looking to me. Also, too, most of our views were compatible. So he was looking for somebody and it is not always easy to get volunteers in this sort of situation and that is why I think he chose me. Anyway, I came on to the League Board and I suppose this is where I started to have some effect, some involvement on the League. In my view, I think 1967 was the most significant year of development of credit unions in Australia. I think largely again in my view this was because Dermot Ryan, Stan Arneil, Dermot Ryan mainly, and myself came together, followed very shortly about that time by Les Robinson. I think some of the things that we put in place have been effective right through. I think that was really the corner stone of credit union development. I have got to say that in all modesty, because I think that is what really happened and there are a lot of stories developing off this. As you can appreciate it was certainly the most dynamic and dramatic year that I put in the credit unions, because we did so many things. I was on the Board, I had attended a few meetings and even though I came on as a casual vacancy, I was well-known to probably everybody in the Credit Union Movement at the time and I think I must have been fairly well regarded. There had been a practice since the early 1960s for delegates from New South Wales League to attend meetings of CUNA, which was the Credit Union National Association of America. CUNA itself, in its development of credit unionism and the propagation of credit unions, called a section of their meetings, they established what was known as CUNA International. In other words it was the national association but they broadened themselves out so they could accept people from other parts of the world to join that association and also attend their meetings, so they became CUNA International. The invitation was given because in this case New South Wales was the strong State, firstly for New South Wales League to join CUNA International and this entitled two Directors to attend meetings in America. Eventually this developed as other States also joined and they also had their delegates. So through the ’60s there had been people coming from New South Wales to attend these International meetings. It covered most of them. I think it covered Murphy and Keith Young and Stan Arneil and Beresford Calverley and what have you. Come 1967, the two who were elected to attend were Dermot Ryan and myself. In my view, and certainly in Dermot’s view because I think we were both activists, most of the others had made that trip for the ride. They never went with any particular program or ambition to achieve anything. They never were doing any sort of research and bringing back what they saw. They attended meetings as delegates and I’ve got no problems about that.
George McCready wrote a report when he got back.
KM: Well George went with me. He went in 1967, I think. Anyway it was certainly our view that the previous National Directors who had gone had not brought back anything apart from their own experience and I wouldn’t exclude anybody from this. Dermot and I were determined that what we were going to do was to carry out some research and hopefully bring back different services which we felt were necessary for the League and which we knew we could get some insight into in America. These included areas like property insurance programs, a stabilisation fund or savings protection fund, another one was more or less a stores or a stationery supply company, debt collection. A number of things like this that we were going to have a look at and that is what we set out to do.
Don Harvey did bring back a report which led to the central bank.
KM: That would be true, but I am generalising here.
Tom of course was keen on banking from a co-operative point of view.
KM: Yes, well we will talk about Tom separately. But generally nothing came out of what they did. Except for what Don Harvey did of course because eventually Les Robinson developed that system and we got off with that one. But that was our view and we were also determined that we were going to stay in the US and we were going to make a long trip of it. In fact, I think we were away about seven weeks altogether. The other members of the party at the time, there were others who come from other States, there was Jack Ross who was a Chairman of the Queensland League at the time, the other one was Don Closs, who was the Chairman of the Tasmanian League at the time. It was interesting the way that party came together. Jack Ross as the senior man we appointed to be the leader of the group. Jack Ross also had had a leg amputated so he had some difficulty, he wasn’t terribly mobile, getting around so there was a certain amount of attention given to Jack to assist him. Don Closs, quite frankly, was a light-weight politically. He had a very good singing voice and he was an ABC announcer, he was a sportscaster for the ABC. So we set off as a group and it more or less settled itself down that the two who had the highest profile among this fairly large contingent of Australians who came was Jack Ross, because we said he was the leader, and Don Closs because he could sing so he was in great demand at all the social functions. In fact the actual work was done by Dermot and I. Because people left us alone, we were able to go and do things and research things without too much notice being taken of what we did. Anyway, so off we went on that and it is recorded there that we brought back a number of reports. We also ran into our first problem with insurance, as far as CUNA Mutual was concerned.
End Tape 1B
ANSWCU 74 : 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER
We were just starting to talk about insurance.
KM: Because insurance has now been mentioned, I would like to divert and talk about insurance in Australia from its beginning because I think the insurance has such a great influence on a lot of subsequent happenings. I would at least like to get my version recorded on historically how CUNA Mutual fitted into the position in Australia. To do that I have to go back to the ’50s. In 1957 there was seen to be a need for a proper form of insurance for credit unions. The Co-operation Act provided that credit unions and co-operatives had to take out some form of insurance to cover things like defalcation and what have you. In this regard the League of the day approached the National Co-operative Insurance Society which was as the name implies a co-operative insurance society based in Newcastle. They were approached to see if the League could become an agent for that particular society in the selling of insurance to all credit unions. That didn’t happen as such, but from that point on National Co-operative Insurance provided the fidelity and insurance that was necessary for most credit unions. There is a record of the first fidelity insurance cover on the Secretary of the League being approved for the sum of one hundred pounds. A couple of things though, first that any sort of fidelity insurance they were prepared to give us and secondly they were a co-operative company so therefore there was a relationship with credit unions. They were the insurers for a number of years, but by the same token because of information that we had received from the States we were aware that there existed in America and insurance company which was run by CUNA International and that was CUNA Mutual Insurance. Going back to its beginnings, when the Credit Union National Association was formed in 1934 they also formed an insurance company which was called CUNA Mutual. At the time, both these organisations had a common Board of Directors. Unfortunately in succeeding years they changed this to allow for separate Boards, so you had the Board of elected people for CUNA International and a separate Board for CUNA Mutual Insurance. There was probably some pressures exerted on to them by the Insurance Commissioners of the day in America to get some expertise into that insurance area. But the real problem was that the two organisations started to drift apart and eventually, to a large extent, became competitors. Now we had approached CUNA Mutual to see if they would come and write loan protection insurance for us in Australia because of the difficulties we were having getting it here. They advised us they couldn’t do it because their charter at the time provided that they could only ensure those credit unions who were members of CUNA and they couldn’t carry any insurance outside the States. This eventually changed. Because of this the New South Wales League then arranged its own protection insurance with MLC Insurance Company. In 1962 the League was able to organise a blanket fidelity insurance policy with the National Co-operative Insurance Society.
By that time was it still a co-operative, or was it by that time a company?
KM: In 1962 it was still a co-operative. Now we ran through the first League School in 1965, as was mentioned, and to this one we had a couple of speakers, the two prominent speakers, coming from CUNA Mutual because they were subsidising the School. A large part of the content of that School was devoted to insurance as one might expect. It was a very important area and we were very keen on our own protection insurance concept and also there was a need for proper insurance on fidelity, burglary, fire and what have you. At that moment we were being serviced on the one hand by MLC and the other by the National Co-operative Insurance company, but we were not totally satisfied by either of them. In my view the National Co-operative was well-meaning but not very efficient and we felt their rates were fairly high for what we were getting out of it. The MLC, of course a commercial operation, was providing a service, selling insurance like any other company, and they never had any really philosophical approach towards credit unions. So we were looking for something better, something which we could see CUNA Mutual could provide, on one hand with their loan protection insurance and on the other hand through a subsidiary company, CUMIS, a separate company but not a life company which provided the other general insurances for us. So that is the way that we lent. Now after this School in 1965 the New South Wales League invited CUNA Mutual to come and write an insurance for Australian credit unions. There were some changes taking place at this time and apparently under their charter of operations in the States they were able to start writing insurance in other parts of the world, which they were doing. Round about this time, after Stan Arneil had left his own employment in the ABC and become the Development Officer for the Registry of Co-operatives, after that employment was terminated, he was then appointed as the CUNA Mutual representative in Australia. He was the CUNA Mutual representative in Australia at the time when he was still a Director of the League and there was no problem about this, as a matter of fact we supported it. Again, because of Stan’s work here, the impetus to start insurance in Australia was stepped up. The Insurance Commissioner, the Life Insurance Commissioner, was being difficult in that he wanted certain undertakings and certain bonds lodged before he would allow them to operate CUNA Mutual in Australia. One of these was the lodging of a very substantial amount of money, I just can’t recall what figure but probably something in the order of half a million dollars, it was very, very substantial. The negotiations which took place on this went over a couple of years and so we never got CUNA Mutual up and running.
Do you know if CUNA Mutual was the first overseas insurance company that was permitted to operate, life insurance company that was permitted to operate, in Australia?
KM: I wouldn’t say so. I wouldn’t think this at all.
No, there would be the Pearl and Prudential and all those ones.
KM: There would have been many. But it was certainly the first one that came in for the purpose of offering insurance to credit unions, that is for sure. So we were working with them, we were encouraging them to come over here, so we were very much pro-CUNA Mutual, particularly when Stan Arneil also became their representative here. But with CUMIS, the general insurance, it was a different. I don’t know if it was the same Insurance Commissioner but there wasn’t the same control on here and CUMIS was allowed to register and operate in Australia. So CUMIS commenced operations in 1967. Because of our readings and some of the research we had done in this area, it was always the policy of the League that we were going to keep control of the insurance in the League and as far as possible not allow insurance to be written separately for credit unions. This was the way with MLC and loan protection insurance. We had a master policy with MLC so all the insurance was written by the League as agent for all the credit unions. Now this suited the insurance company and it also suited our administration and was a good happy arrangement all around. There was, on this an arrangement an insurance rebate which were based on the claims experience, so there was some money rebatable and we had that money rebated to the League. The amounts were not terribly significant.
Didn’t you have such a master policy with CUNA Mutual?
KM: I am coming up to that. This is what we insisted take place when CUNA Mutual operated in Australia, and this was contrary to their normal operating policy and they resisted this tremendously. But we said this was the only way it was going to work and we advanced good reasons in the savings of administrative costs and what have you that they should operate through a master policy and they agreed to do that.
In writing?
KM: There probably would have been in terms of letters yes. It would have been in writing in terms of letters but no contract.
Well I understand from Les Robinson that there wasn’t anything in writing, it was all verbal.
KM: Well he was the General Manager of the League at the time and I don’t doubt him on that. I would have thought there would have been somewhere in the exchange of correspondence, this would have been mentioned, because we were insisting upon it. Put it this way, we were insisting on it and we would have certainly insisted on it in writing. If there was nothing to say no this wouldn’t happen perhaps that is the evidence I am saying that that was agreeable to them, you know.
Well Les actually said that this is probably one of his greatest mistakes.
KM: Well that might have been too. Have in mind that we were very close to these people, we were working with them. Carlos Matos and Compton were coming out here every year. They were close friends and they still are, if I see them I still regard those two as good friends of mine, and that existed over the years, so I think it was one of those things you took for granted. Also negotiations had been going on since 1960. So by this time you are probably not looking for the written word, you know what the understanding is so you accepted it.
The problem now is that different people have different views of what was said.
KM: Oh for sure and what I am doing is giving you my view and that is as far as I can go on that. But that certainly was my understanding and I believe, in fact I know that we stated on many occasions to CUNA Mutual in writing that we wanted a master policy and this was one of the conditions of operation. I would accept what Les Robinson has to say because he was the General Manager that there was nothing in writing back the other way confirming this. Anyway CUNA started to operate in 1967 and around about this time we had a change in that Les Robinson was appointed General Manager of the League. Up to this point Clarrie Murphy had been acting as Manager.
Were you involved in the appointment of Les Robinson?
KM: I think it was through my insistence that he was appointed, yes. There was a committee, an appointments committee of three, I can’t remember who the other two were at this time. I think by this time I was President of the League. There were a number of candidates and we went through one of the head-hunting firms and Les wasn’t the favoured candidate, as a matter of fact he was the number three recommendation on the list of applicants.
Why was it thought that Clarrie Murphy wasn’t suitable for the post?
KM: It was generally agreed that he never had the competence to take the job in the directions in which we saw the League was going. As simple as that, no other reason. OK with the employment of Les Robinson as General Manager, Clarrie Murphy resigned. As a matter of fact he took his non-appointment quite badly. Certainly after that he went to work for the National Co-operative Insurance Company as their insurance agent selling insurance to credit unions, perpetuating the policies that were already in existence. You can see that immediately there became a conflict between he pushing National Co-operative Insurance on one hand and Stan Arneil pushing CUNA Mutual and CUMIS on the other. This is where really the public differences started to come. But to my mind Clarrie Murphy was quite bitter, mainly because, I think, of my role as the President of the League and the subsequent actions that went on by way of insurance and certainly, probably rightly so, he held me partly responsible for his own non-appointment and our support of CUNA Mutual. He also became one of my antagonists and unfortunately sought to attack me on every occasion that he could from thereon, until very recent times. Unfortunately we had a man here who was philosophically tied with credit unions who had done a lot of work for credit unions, but in our view the role had simply outgrown him and he was very hurt by it and that was unfortunate.
Is it correct to say that Clarrie was very effective as a Development Officer as well, in that he had been in there forming credit unions?.
KM: Oh yes, Clarrie had been and of course he was very well-known to credit unions and so he was an ideal choice for National Co-operative Insurance to appoint onto their staff. It was some time after this, not very long after this that the National Co-operative was taken over by the Co-operative Insurance Company of Australia, another insurance co-operative and they have been providing us with non-life insurance for many, many years.
How long was it before they become a company?
KM: Oh the company only happened in the last couple of years. We stayed with them and they were very effective and supportive because they were a co-operative. It was only, well I have been retired three years, so it would be about four years ago. Round about the time I stood down anyway that they became a company and they were bought out by private interests and they have changed from there of course. Anyway CUNA Mutual eventually became licensed in life insurance in Australia in 1969. I would like now to go back to the trip that we made to the US in 1967. I have said up to this stage that the Australian credit unions were anxious for CUNA Mutual to come and operate in Australia and CUNA Mutual had been very supportive by making personnel and funds available to us for our Schools. We had developed a very close relationship with the two main people coming, being Carlos Matos and Charles Compton. That was the case with both Dermot and I. We went to the meetings. On the way we had called in to Fiji and had a look at the Fijian situation over there, we had also called in on Hawaii and there had spoken to the Hawaiians, the Hawaiian Board on two areas. One was that we were seeing that probably the time was coming when the Credit Union Movement should be looking at properly establishing a worldwide movement, an international movement, other than it being an off-shoot of the American national operations. We were looking to pursue that line and talking to Hawaiian Directors we had some sympathy from them in that they felt that yes the time was coming that something like this should happen. We also got our first insight of their dissatisfaction with CUNA Mutual, because the Hawaiian League felt that they were being held to ransom. CUNA Mutual was so deeply embedded into their operations that they virtually had to take what was offered to them. That was our first insight from Hawaii. We took this on board, but it didn’t make any different to our own views. We got finally to the meetings of CUNA International. Again, I have to divert and say that in the transition from CUNA, Credit Union National Association, to the CUNA International, they changed their rules to provide that overseas countries could send delegates to their meetings and have a vote. I think that was quite ridiculous, but that was what they did. The result was that as delegates we went to these meetings and we were voting on essentially what were American domestic issues which we had some concerns about. By the time we got there in 1967, the numbers of the international group, if I can use that term for delegates outside America, was somewhere round about forty-eight. Now if you got this as a block vote, this represented quite a significant influence on any decisions that were taken. We are seeing all this first up. We went into the meetings of this international group who were known as the District Twelve, CUNA was broken up into a number Districts, geographical Districts, and District Twelve was the overseas contingent. There were previous meetings before the main meetings, so we had had meetings of the District Twelve and here we came to meet the motley crew who represented District Twelve from all the countries around the world. The Fijians were there, the South Americans, the West Indians, the Africans, they were all there. I suppose certainly because we were western and also too I think because of the effectiveness of our own presence, we seemed to have adopted a leadership role in this District Twelve, this sort of came about naturally. The fact that we could speak English probably had something to do with it too. We related to these people, quite frankly. We got on very well with them and whilst they had their own capable officers that were elected for this particular group, the Australians did carry an influence in the decision-making process. So coming before this particular meeting we had the notices of motion that are going up before the main meeting were considered and decisions were taken which ones our particular group would support. We had opted to support a couple of resolutions, again because they appeared perfectly innocuous, so as a whole group we were going to give a block vote to support these couple of resolutions. After this particular meeting and before the main meeting, CUNA Mutual employees, mainly Carlos Matos and Compton, approached us and said that what we were doing was supporting a deliberate attempt to lessen the influence of CUNA Mutual and the adoption of these two resolutions would virtually cut CUNA Mutual out of any sort of major role in the affairs of CUNA International. This was explained to us and we agreed that we were being set up as patsies to use our influence with the block vote of the overseas delegates, to support a motion that had been put up by CUNA table officers which was going to have an effect on the influence of CUNA Mutual. First up we didn’t like being conned, that was the first thing. We knew that we had been persuaded to support this and if we had cast our vote in that particular form we would have done so without full knowledge if we hadn’t been informed what the true situation was. So we took this and we pondered it and we decided finally that it was important that we not get involved in what we saw at that time to be a domestic issue in the States and the best way we could handle this was to retain the status quo, and certainly of course we didn’t like being conned. So Dermot and I persuaded them by talking at a special meeting of this District Twelve group, we persuaded them to change their votes. We went on the floor of the National meeting and a block of about forty-eight delegates in the vote, because it was close, the two resolutions were defeated. Again there was a fair amount of ignorance in what we were doing, except the fact that we were not going to be part of it. It was very underhand, nobody had come to us and said this is what they were trying to achieve. If they had it might have been a different story. So everyone in the US said that Dermot Ryan and Ken Miller had destroyed these two motions. I really hadn’t met the table officers of CUNA at this stage. So the meeting was finished and so Dermot and I decided we had to find out a bit more about this. So we found out as you do that there is always these hospitality rooms and the Directors of CUNA always had their own suites and we found this out along the line. CUNA Mutual had their suites for entertainment and involvement. So Dermot and I decided that we would go and visit the table officers of CUNA after the meeting. We walked into the room and there was a deathly silence. There must have been about fifty there and they were having their post-mortem how these bastards had killed it and in we walked. We went straight over to the Chairman, who was Rod Glenn a Canadian and also Orin Shipe who was the Managing Director of CUNA and introduced ourselves, ‘How are you and just thought we would come up and have a friendly drink with you before we go off’,’ you know. I think they were as polite as they could be and they did talk to us. Then of course the others started to talk to us too and we told them straight out that we had been conned, we were not political idiots. If they had come to us and told us the story we would have used our best judgement as what was best for the movement but they chose not to do that, they chose to take an underhand course. We said that was the only reason we went against them. I am going to divert again and go back into a bit of history now. In the split between CUNA and CUNA Mutual there was a growing feeling of antagonism on the part of the CUNA elected officers. What you finally had there to a large extent was the tail wagging the dog. The CUNA officers were elected by comprehensive ballot from all the various Leagues all through the United States, a big election, and they elected twelve people and they were the Directors for the time. Now these people were elected and in the main they were Managers of credit unions because the work that was involved and the time away precluded, in the main, volunteers from taking this role. There were some volunteers in this area. But whilst they were being paid as Managers everything they did on the National basis was as a volunteer. They were not getting paid anything for it, just their hotel bill paid. They were getting moderated travel, second class, third class travel, economy class travel, second class hotels. In other words anything to keep down cost in the carriage of the operations of the meetings. CUNA Mutual on the other hand, running the insurance company and being very flash and very healthy financially, provided their Directors, who incidentally got to be Directors through a form of ballot that it was the sort of ballot where the existing Directors came out with a very strong endorsement for Jo Blow to be the new Director to fill his vacancy. Then there was a vote taken for it and all their own people voted for the person who was nominated by the existing Board, so it was self-perpetuating who they got on to their Board. Even delegates who they invited who were involved in their insurance programs and policy holder representatives and the whole lot were treated very royally. So they had five star accommodation, first class travel and everything that went with it, you know. You can see the aggravation which built up between the two groups of people, both coming from the same base credit union. Some were coming to the national meetings of CUNA Mutual which were being held at the same time as the National meetings. Of course the influence of the CUNA Mutual supporters ran into the National meetings of CUNA. Another thing that upset the CUNA people was that the CUNA Mutual people set up their own programs ostensibly in the name of development of credit unions, and to some extent that was quite true, but also in perpetuating their insurance half.
End Tape 2A.
ANSWCU 74 : 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER
KM: CUNA also had their field officers, or advisory officers, who rendered assistance and advice to the Leagues throughout the US and there were quite a number of people involved in this area. CUNA Mutual also had their field or advisory officers who ostensibly went amongst the same credit unions giving them advice and training on their insurance products.
Did they have policy holders committees in America?
KM: They had policy holders committees which they had established in either concert with or in opposition to, if I can use that term with the meetings that were being held in the various Leagues in the States. Of course CUNA Mutual was not the only insurance company writing insurance for credit unions, but they had by far the majority. I couldn’t put a figure but probably 90 per cent, of loan protection insurance and general insurance was written by CUNA Mutual for credit unions in the United States.
Did they have any head policies with the League?
KM: Yes, at various stages they did. But these head policies in the main were not what we considered to be master policies as we knew them, they were agreements. They were agreements that we will subsidise or support your credit union development but it is our officers who are doing the developing, that type of thing, you know. Over the years they had built up a tremendous influence over the Leagues. So when it came to a National meeting of CUNA a lot of the delegates who were going there were from Leagues who were being fairly heavily sponsored or subsidised by CUNA Mutual and therefore they could expect to get their votes.
But were they also dealing directly with credit unions?
KM: That was part of their condition, that they would deal directly with credit unions and therefore they were taking their influence directly to credit unions, which in the area of insurance was OK. But what was happening was that they were also directing some of their attention in development according to what they saw were the needs of the Movement, not according to what the elected officers of CUNA saw as the needs of the Movement and this is where the conflict was. Another thing which I think was that the Directors who were ‘elected,’ to the Board of CUNA Mutual were handsomely rewarded. They were given emoluments, that was the term they used, which extended anything from six thousand up to fifty thousand dollars a year for just being Directors of the organisation, depending on their involvement. You can see the reason why it was attractive to be with CUNA Mutual, on their Board. Also in some cases, I think, in these positions they bought the loyalty of individuals by these very means. But by the same token there were very many people who were involved closely with CUNA Mutual who were straight up and down and had no cause to have any problems. They really believed in what CUNA Mutual had in their policies and they worked towards that in the interest of credit unions as they saw it. So this was the condition. But table officers of CUNA got to the stage where they brought up these two resolutions at this 1967 meeting which would have emasculated CUNA Mutual as far as its influence. I can’t even give you the terms, the terms themselves were so innocuous but it was the hidden affect of them that was the problem. So all in all we weren’t very popular with CUNA people when they found that we had been directly responsible for the defeating of the motions. But as I say we fronted them and we told them what our position was. That meeting was held in Dallas and from there we continued on our way and went to Maddison. We were doing then the second part of what we had set out to do and that was to explore ways and means and get some process in which we could introduce services back into Australia as part of our charter. To do this we spent a considerable time with both CUNA Mutual and with CUNA. I had a fairly strong knowledge of the operations of CUNA Mutual, because running off that second Newport School I participated in a correspondence course with CUNA Mutual which lasted for a couple of years and in which all aspects of the insurances they offered were made known to me, so I could converse with them. We spent a lot of time with CUNA Mutual and the queries that we had, because by this time CUNA had told us what their problems were, we made a very searching analysis of what was going on in CUNA Mutual and what their policies were and they elaborated some of their policies. We told them that when they started to operate in Australia the only way that we would consider them would be to operate through a master policy with the League and that the League would then deal with the credit unions. This was savoured and acknowledged as being said to them as far as we were concerned. We also said other things that in our view the appointment of their own field officers to visit credit unions was just duplication, that the structured Movement was providing all the assistance by way of advisory officers and we saw this as an unnecessary expense and also involving credit unions in paying higher cost of insurance that was necessary to support a duplicate system.
Did you also discuss the possibility of who was going to control any development pool?
KM: Oh yes. We said in that case it was going to Australia, it was going to be the Australian credit unions.
Was it agreed that the pool would be in Australia?
KM: It was agreed. We also said that we felt that we should be establishing an Australian pool and not tied in with any other pool of funds, because again we felt, certainly in the initial stages, the money that was created in this pool was being spent by CUNA Mutual in development of credit unions in countries around the world. We felt that the Australian institution should stand on its own at least in the short term and that was one of the conditions we were insisting on. A master policy through the League, through our national body, that there be no replicate CUNA Mutual field representatives established, that our own representatives or advisory officers could do that because the sale of insurance was so simple with credit unions being given a packaged deal, you know. All the investigations and all the negotiations would be done by the League at a national level and also too that the League should not be subsidised and CUNA Mutual should not subsidise any particular portion of the Movement. All forms of subsidies and assistance should come through the League, through the national movement. So this was accepted.
Was any of it put in writing?
KM: No. It was accepted in those discussions and those discussions took place with all the senior officers of CUNA Mutual. Charles Eickel who was the Managing Director of CUNA Mutual, who everybody was scared of (except us). We were virtually the only ones, I think, in the US who were game enough to call him Charlie or Chikka. Dermot and I used to call him Chikka Eickel. But anybody else who had shown that sort of disrespect to him would have seen the door. He was an absolute tyrant as far as running his operation was concerned. We also got to know the members of the Board of CUNA Mutual too, you know. They were Managers of Chairman of their Leagues of what have you. We knew them all and they were all good fellows. As a matter of fact I have made the comment many times, broadly I found I had more affinity with the people with CUNA Mutual than what I had with the people from CUNA. Anyway CUNA Mutual had no problems at all about showing the whole of their operation. We had a look at their accounts, we had a look at all their various pooling arrangements, the money that was spent along the way. We said, This is all fine but when you come to Australia it will be different. We want our own Australian pool and the whole lot.’ I said, ‘When we get around to operating down there we will think about this.’ But it was laid on the line right from that point. Coming back, something that we were not ourselves aware of back in Australia, this division between CUNA and CUNA Mutual had been going on for quite a number of years. CUNA had decided that it had to some way try and counter the influence that CUNA Mutual was exerting among overseas people as it was being reflected in many ways but seen through District Twelve operations, because they had generally been pro-CUNA Mutual. So they had decided that they were going to appoint their own overseas representatives. They had approached the League in New South Wales and other Leagues too I presume before I was on the Board, that they were going to appoint overseas representatives. The Australians, themselves, had discussed this at different levels and said that if anything like this was to be done, then the person would need to have the approval of the Australian Credit Unions. Very easily they could appoint the wrong person. It was agreed and acknowledged in writing that CUNA before they made any appointment would consult with the Australian League. One of the things that I saw when I was over in 1967, when we were with CUNA, was correspondence that I think was shown to me not by Orin Shipe, the Managing Director, but by one of his off-siders, which clearly indicated that in spite of that decision taken by the New South Wales League, that Berry Calverley as Chairman of the League had entered into private negotiations with CUNA for the appointment of an individual and he, as the President, would welcome and accept him in the name of the Australian credit unions. That was quite contrary to the decision that had been taken by New South Wales. One of the things I did when I got back to Australia and at the first meeting we had in New South Wales of the Board, I challenged Calverley on this particular item and moved a vote of no confidence in him as a Chairman. He acknowledged what he had done, a vote of no confidence was carried and he was removed from the Chair. One of the lessons I learnt at that time was that once this happened, the person who got to point the bone all the eyes turn on him to fill the vacancy he has created. So with some difficulty in accepting I found myself the President of the New South Wales League on the same night which meant, and I think I have said this on the Transport tapes, here was I who had never been elected as a Director of the New South Wales League, suddenly found myself the President, never having to face an election from the membership. I think that is fairly unique.
How did Berry Calverley react to all this?
KM: He was very good about it. Berry and I had a good relationship over the years. Because I have known Berry for a long time, right back to 1953. I had to do what I did because what he did quite frankly, he had his own views and he took a course of action which was supporting CUNA, and I saw he had quite deliberately taken a course which was contrary to what had been decided by way of policy from his own organisation. So I had no course but to take the action I did.
The problem was, that the person who was appointed wasn’t a member of the League, their credit union wasn’t a member of the League.
KM: That was the problem. That eventually came out. Also then, all of my actions up to date I think were a matter of record would seem to have been supportive of CUNA Mutual. Even my subsequent actions because the person they were going to appoint to this particular position was Tom Ryan, who himself was a very good credit union person, he was the Manager of the Commonwealth Bank Credit Union, and it wasn’t his fault that that credit union resigned from the League. He himself was very philosophical, I had a lot of regard for him, I had served with him on committees, but the point was we were not going to have somebody coming out here who was not acceptable to the affiliated credit unions in Australia. That emerged subsequently in the meeting of 1968 where again they went ahead and made that appointment, again at a time when I was attending as a delegate from New South Wales in 1968. The word was given to me by Merv Callaghan that there was to be an announcement of the appointment and in fact Tom Ryan was being flown over from Australia to be present at the National meeting when this was going to come about. I wont dwell a lot on this, Dermot wasn’t with me on this particular occasion, but we got the word before the meeting that this was going to happen quite contrary to what would happen in Australia so what we did then was to engineer responses from Australia, going back to Dermot to get him to start to organise it because he was Vice-President of the League and I was President and I was over in the US. He organised for telegrams and what have you to be sent from all the Leagues saying that they would not accept Tom Ryan as being the representative in Australia. Now that was all very hard on Tom Ryan of course. So we were doing this. Tom Kelly was with me on that one.
That was the following year 1968.
KM: Yes 1968, Tom Kelly was there. That was one time where I admired Tom because he didn’t agree with us in the opposition to Tom Ryan because Tom was also a very good acquaintance of his, he had known him for a very long time. But by the same token on the basis of the principle and the decision they had taken, he supported us. I give Tom a lot of credit for that, it was a very hard decision for him to come to, to stand up and be counted with our numbers on something he personally didn’t believe in. We knew that Tom Ryan was being flown over, he was going to arrive in time for part of the meeting. He was going to be introduced as the Australian representative. Once this happened and he was accepted at that particular meeting, what would we do about it. I didn’t know what to do about it, I was still fairly raw. I thought the best thing I could do was to go and consult with another Irish man.
Dermot Ryan?
KM: No, Dermot wasn’t there so I had to find another one. The one I took this problem to was John Hume who was leading the Irish delegation. John Hume is the local member in Ulster for the region at the top of Ireland where all the problems are. He’s been walking a very fine line as a politician, he is a very straight person himself, over all these years and it is a wonder he hasn’t been shot. Again a good acquaintance and he said, ‘The only way you can handle this is to preempt them.’ He said, ‘Why don’t you get up there and make your statement before he arrives.’ So I said, ‘Well how do you do this.’ We thrashed it around. One of the things we did do, was all of the countries had the opportunity to make a brief report on what was happening in their own country. It all went into a book and it was all there. But the opportunity was given as a formality to allow a representative to get up and add a few words, to add to the written report they had put in. He said, ‘Why don’t you use that. He said, ‘You are now talking about the subject of international representation, why don’t you get up then.’ So I did. In front of two thousand people I got up and told them that the CUNA representative that had been appointed was not acceptable to Australia, flourished all the telegrams I had from all the States in Australia and said, ‘In no way will this man be accepted in Australia if you go ahead and make the appointment.’ Of course all hell broke loose. But anyway they went ahead and made the appointment and poor Tom came into that room afterwards and it was destroyed they couldn’t go through the process of introducing him after that, he was just there. It was also interesting too, that odd people used to turn up to those meetings, unaffliates used to turn up. QANTAS regularly sent people over to attend the affiliated meeting and yet they are not part of it. One of the chaps who was coming through was John Phillips.
Didn’t some of these credit unions actually become affiliates of CUNA?
KM: No, they couldn’t. They had to affiliate through Australia. That was always what galled them. John Phillips was the Chairman of the Commonwealth Bank Credit Union, another good friend of mine. I served on a Credit Union Advisory Committee with him. He was coming through and the General Manager of CUNA heard this Mr Phillips was coming through who he thought was the Governor of the Australian Reserve Bank. It just happened that there was another Phillips who was the Governor of the Reserve Bank. They put out the red carpet and they were doing all sorts of things. So here this bloody Miller got up in the presence of the Governor of the Reserve Bank and crucified one of the employees of the Commonwealth Bank Credit Union, but it was a different Phillips, you see. John Phillips now, incidentally, is the Deputy Governor of the Reserve Bank. All these things were happening. The personal turmoil, the personal inclination, it was terrible, it really was. You were stuck over there on your own and you are not even sure that the other person you’ve got here is going with you. They all did of course.
Owen Jones, Tom Kelly.
KM: Owen Jones from City Council was right with me. So we carried that one through and made an impact. But again it came out that here it is that Miller and all these others are in the pockets of CUNA Mutual so it didn’t do CUNA relations any good, as you can imagine. They did go ahead and appoint Tom Ryan again. It is a sad part of history but he was given the task of being the CUNA representative in Australia and the South Pacific. He wasn’t accepted in Australia by any of the Leagues and the appointment didn’t last very long and he went back to the Commonwealth Bank Credit Union. He died shortly after that. It was a sad part of our history.
We aren’t getting far with this insurance, but that is the sort of scene that was set up until 1967. Well why not finish off the story about those two trips while you are at it and then go back to the other insurance split afterwards. If you would like.
KM: Well back to the 1967 trip, Dermot and I spent seven weeks over there altogether. In that time we did look at what they called their Stabilisation Fund, which in fact was a reserve fund, our Savings Protection Fund as we initially called it. It was just a voluntary contribution basis arrangement. We had a look at their debt collection procedures and what they did in that particular area. We looked at what they were doing by way of their supplies, the Supply Department. All these things we felt were needed in Australia, but certainly needed in New South Wales. So we wrote reports on some of these and we brought back these ideas for development in Australia and that is the way we went. A lot of other things we picked up along the way too. There is nothing else to say about that apart from the fact that we had all these opportunities to see, and it was worth it, the Chairman of the CUNA Supply who became a good friend of mine who I’ve corresponded with over many years and we made some very good acquaintances. But I think the acquaintances we made simply because we came under public notice. Normally, when you’ve got two thousand delegates, it is pretty hard to be noticed. We could easily have gone over there and come back as so many previous delegates without making any contacts. As it was we made a lot of contacts. We were surprised at the number of people who came to us from different Leagues so we pretty well had it sorted out who was pro-CUNA Mutual and who was against CUNA Mutual by the time we left because so many people came to talk to us. There was a very strong body of feeling against CUNA Mutual up in Canada because they were entrenched in there and they felt they were being ripped off. So without going into it too deeply, I suppose you can’t put everything on tape, but certain relationships that Dermot and I made, all of this I have said before, we fought like cat and dog the first time we had been thrown together, and whilst we both had the same ideals down at the roots, our own personalities were so different that we drank each other under the table and we fought each other under the table. What it did do, was to bring us so closely together that we knew the things we were not going to agree on. We kept nothing back from each other. We abused each other. We could be totally open with each other on any problems and that served us both well in future years. So that was the good thing about that trip. A lot happened on that, but that was a bit of the start when the split came with CUNA Mutual.
What was your part in the restructuring of CUNA International?
KM: That, I think, is only complementary to the history of the New South Wales League. But we did play a large part in that. We were starting to sow seeds. We found that the people in the area were responsive. They ??????????? were scandalised to think that we, two individuals, were able to persuade forty-six other people to vote en-bloc on an issue which was largely domestic. You know the insurance issue was domestic. Whilst we were successful, we were very concerned that it could happen and we felt the international group should not be able to vote on domestic issues of American credit unions. International people ought not be involved and there ought to be a separate organisation which would be worldwide and which could not be totally dominated by the USA, it should be worldwide in its own right. We started to talk about this and we found there were many people who were responsive to it and agreed with it. I think people were very surprised that we were so highly critical of CUNA that they did allow a situation where a block of outsiders could come in and divert the course of the meeting. So that happened in general talk in 1967. When I went back in 1968 we decided we would do something a bit more positive about that and so I wrote a bit of a paper which we took over and we circulated among all the delegates to the 1968 meeting giving the reasons we saw that there should be an international organisation. Not solely because of that paper but there were other people who had started to think along those lines themselves and that developed towards the World Council of Credit Unions.
Do you have a copy of that paper that we might photocopy or something?
KM: Yes I will somewhere along the line I can dig it up.
End Tape 2B
ANSWCU 75: 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER
I will ask you to just finish off your involvement with the World Council in order to clear it out of the way, so to speak.
KM: The issue of a World Council and the debate towards this took place in 1969. There was a meeting which because of illness I couldn’t attend, but the vote was taken at that CUNA meeting in 1969 that they would go ahead and form a World Council and it came into being in 1970. At the time we had then delegates from our various Leagues in Australia, but with the creation of The World Council, the world was broken down into different confederations and the proposal was that there be an Australian confederation, because it itself was of sufficient size with a number of Leagues to stand alone as a confederation. Whereas, for example, there was an African confederation which took in all the countries in Africa under one heading. Graham Benson was the Chairman of AFCUL at the time and just by general agreement, I think as much as anything else, because in 1970 I had just resigned from Transport and taken up the role of General Manager of the Teachers’ Credit Union with a fair amount on my plate, it was agreed that he be the Australian representative initially. So Graham Benson became the first Australian representative on the World Council as against a League representative in previous years. So he attended those meetings. Graham stayed until 1973 and he resigned and I was appointed the Australian representative on the World Council and it was a position I held until I resigned in 1980. During that time I held the position of table officers, of Secretary for two years and subsequently Vice-President. I was Senior Vice-President at the time the International Meeting was held in Australian in 1979, so I had that role. Just briefly, in the time of attending the World Council meetings and visiting other parts of the country, I had a good chance to visit Leagues and credit unions, particularly in Canada and America, and observe the problems that they were having in the developing field of electronics with their computers. The mistakes they were making were so apparent that it was of some concern to me that we were starting to move down the same path and I felt there was an obligation to try and avoid some of these mistakes. So I started to have an interest in this. In 1979 the New South Wales League went into partnership with a computer firm called GCS who had produced a credit union account program which we thought was pretty good. We finally formed a joint venture with them which was called FCS, Financial Computing Services Limited. I was a Director together with Reg Elliott, we were Directors on the first Board, as was Brian Charlton.
What about the arrangement that Les Robinson had with FCS before that?
KM: I will come to that in a minute. We were appointed the first Directors together with three from GCS and from that first meeting I was appointed Chairman and I have been Chairman of FCS right up to this date. That is one of the proud things I can say.
Coming back to the correction of Les Robinson’s involvement. Les was out of the League by this time, he had retired through ill-health. Now the recollection I have was that a special meeting was called, management asked that we call a Special Meeting of the League Board, which was held off the usual night, on a Monday night, and there it was mentioned to us, mainly by McManus who was the Assistant General Manager, that the previous Friday they had been approached by GCS principals asking if the League would be interested in going into a joint venture company to promote the FCS software in credit unions around Australia. The impact that this software was having was already well known. It had been introduced into a couple of credit unions, the first one I think was the State Works with Helen McIntyre. The program was standing up on reputation as being extremely good. The New South Wales League was in a very difficult situation in that the current arrangements that were being made by credit unions as far as their computer services were concerned were very much in jeopardy at that time. There had to be a solution and this appeared to be it. So at that Special Meeting on the basis that as far as the Board and the League was concerned we knew GCS had made an offer for a joint venture and a decision had to be taken immediately and we made a decision that night. On that point the venture went ahead. It was only subsequent to this that I found that there had been some approach made either by Les Robinson or GCS to Les that he get himself involved in promoting and selling this software to credit unions. Myself, and I would say the rest of the Board of the New South Wales League, had no knowledge that these discussions had been going on with him and we only subsequently found out. I know Les was very concerned about that and he felt he had been let down very badly by the League.
According to him he had actually taken up an interest himself in the arrangement by that time when he was no longer required so to speak.
KM: But the Board had no knowledge of that. Now whether McManus or Elliott, who was the General Manager at the time did I don’t know, but we certainly didn’t. I was quite disturbed when I found out that it appeared that we had gone under his guard. It was never mentioned by the GCS partners, that they had entered into any sort of arrangement or why it fell through, I don’t know why it fell through, or why didn’t they take that choice. Obviously I think they thought they would do better through the League as an organisation rather than through an individual.
Les Robinson didn’t mention GCS very much. It maybe that he had a separate arrangement with FCS?
KM: FCS wasn’t in existence. FCS only came into existence as a result of this meeting.
Oh, I see, I thought he had the arrangement with the people who had the software?
KM: That was GCS.
Wasn’t this originated in Western Australia?
KM: Yes, the software was written in Western Australia by that particular company. They had three principals, there were three people involved in that. The software was terrific, no question about that, it was a wonderful system they put together. But we had no idea that there was any negotiations going on, it was never mentioned to us. It was only through a comment that Les made at a later stage when I was talking to him that I even became aware that he was the slightest bit interested. He said then that he felt the League had let him down and I didn’t know what he was talking about and I don’t think any other Director did either.
Well you said that the Canadians had made a number of mistakes in the computerisation field, do you know what they were?
KM: Not only the Canadians, the Americans too. They had set out with the grand plan of producing a computer program or system which was going to be national, it was going to tie everybody in. CUNA did the same thing. They in fact developed their own branch which they called CUNA Data, which was a subsidiary company, again to develop a program which could co-ordinate all the credit unions and Leagues into one system so you’ve got a national network. They made so many mistakes and it was costing so much money and they took so long to do this, that the Leagues ran out of patience and they broke off and started to do their own things. By the time the Americans got CUNA Data going as a company they had lost their main customers, their main customers had gone off and made other arrangements. The same thing happened up in Canada, they developed a national system up there. But then the larger credit unions felt that what was happening here was that they were going to be tied to the lowest common denominator on the software that was developed and that they were going to be held back in their own development and they would be better off on their own. So it became fractured. This is the sort of thing I didn’t want to see happen in Australia and I decided I would try and do something towards this. That was the prime reason when I retired as the World Council Director because I felt there was a need in Australia, a lot of work was needed in Australia, to ensure that we didn’t go off the rails like they did overseas.
So who principally did you work with over here? You worked under the umbrella of both the League and AFCUL.
KM: Oh yes, as far as what happened by way of electronic development is that we had FCS formed as a joint venture company in 1979. What happened there was that they brought the software to the table, we brought the money. So once that was endorsed by New South Wales, and it was a New South Wales company that developed this, of course with the League endorsement the program developed very rapidly and it was adopted right around Australia. Substantially that software is used in most credit unions in Australia. Following shortly on that we could also see programs, things that were necessary in the area of communications, for instance the ATMs were starting to come onto the market. We knew that no bank was going to give our members access to their ATMs so if we wanted to stay at that level of service to compete with these institutions, we had to develop our own system. So we developed our own ATM operations. Now here, unfortunately, there was a national committee set up to recommend development. This was done through AFCUL. We in New South Wales through the League wanted to establish ATMs. When we came down to a close examination of the recommendations from the report of this national committee, we quite quickly determined that there were weaknesses in it and it was going to lead us up a blind alley. So we rejected the recommendations in that report and went ahead and established our own company.
So what year was that, was that before or after the period when the Queensland Teachers’ were wanting to start their own one in 1977, 1978?
KM: Oh that was after that, this was into the ’80s. Queensland Teachers’ were then operating their own ATM network. So we had them operating on their own. They were the first in Australia operating ATMs. They apparently only had a few of them but they were operating. What we did in New South Wales was to call together a meeting of credit unions and after some research we did, we put the proposal that if there was sufficient support from credit unions to finance the establishment of another company we would formulate the company which would provide ATMs using the Readicard which was a national card. Now the development the League wanted to move in was contrary to the national report, but I think it was subsequently proven that the national report that came out was wrong in fact in a lot of detail. We already had Queensland Teachers’ doing their own thing. We had need in New South Wales, it was one thing that we couldn’t come together in national terms on this and so we developed our own system. Now having got ATMs you then have to have a means of communication, of message switching. Forming AFS, which was Automated Financial Services, which was the New South Wales company which ran the ATMs, our vision was the electronics needed a national operation. There wasn’t much point in having a plastic card that you could only use in New South Wales. People were going to travel and they wanted the convenience of being able to use their card wherever they went. So we had to get a communications system which was going to allow the use of these cards anywhere by linking a network. To do this we found we had to start our own. So out of this company AFS with $1 million dollars we formed Ausnet. For the next few years I was the Chairman of the three of them, because they all inter-linked, they were all tied together; i.e. FCS, AFS and Ausnet (EFTS).
Who were you working with? The individuals who were involved in that setting up?
KM: Well as far as the FCS was concerned, there was a New South Wales League 51 per cent shareholding in FCS. That eventually, in latter years, became a national company. We encouraged other States to buy into it that company as did Victoria and South Australia so that is now a national company. AFS, Automated Financial Services, again was run through the League, it was established as a separate company which was financed in the first instance by twenty-one credit unions who put up very substantial amounts of money. In fact New South Wales Teachers’ Credit Union put up somewhere around $650,000, initially, with no promise that they were going to get anything back but to establish this, as did other credit unions. We needed and we got a fund of around about $3 million, a million of which went off to set up Ausnet. But working through that, there was an elected Board, no that is wrong it wasn’t an elected Board it was an appointed Board because again I think in some of my wisdom because I had seen the problems over in the US. When it was suggested and agreed that credit unions would put money into a common fund to establish this, I was able to persuade the meeting that what they should do was to make the New South Wales League Board the trustee for this particular fund and this company and the League Board appoint the Board of Directors to run this separate company. That is what the League Board did. They were wise enough to select the General Managers of generally the largest credit unions that had their money in the pool, so you had representatives. There was myself, there was originally Helen McIntyre from State Works but she resigned and John McIntyre of Metropolitan came on there, Brian Mackey from the south coast what was AIS but which is now City-Coast Credit Union. Ken May eventually finished up, although he was representing Sydney County Council at that time, Keith Delaney from SWB Credit Union, all people who very much had an active interest in that operation. There was also the General Manager of the League at the time and there was also a Director. The work was done by employing people. Whilst we operated as a separate entity we were really under the control for purposes of administration of the League. Darrel Chipperfield eventually finished up being the General Manager of that particular company. Now as far as Ausnet was concerned, when we realised we had to break off on this one, Terry McManus was then the Assistant General Manager to Reg Elliott and he was deputised, or given the job of setting up this particular company. Now in the first instance that company was funded by getting Perth Building Society representatives to come in with us, again on a joint venture, because they found that they had some trouble with their communications and their contacts through the building society industry were not giving them the results they wanted for their communications and they decided they would do better coming in with us rather than going off and doing their own thing. That is how we developed Ausnet. So it grew from there. We eventually persuaded some managed investment companies to put up some capital to develop the system and the technology that we had there in the hope that they would get a good return when we flogged the stuff off overseas. But that is another story. But you can see that I was very much involved in all those things, which was the prime reason I gave away the World Council representation.
Well you covered rather a lot in that short period. What shall we go back to now. Your Presidency and the insurance, 1967.
KM: A number of things happened in 1967, as I have mentioned. We brought back the seeds for all these ideas for expanded services for the League. There was an official New South Wales branch of CUMIS in Australia and I was the bunny who made that public launch and I have the speech made on that occasion, in which I said that we welcomed CUNA Mutual into Australia. That they would only have our endorsement while they did certain things and if they dumped their agreements then they couldn’t expect any better treatment or anything else. I have that on paper. So we were setting the scene, but the official endorsement was there. Another thing that happened, too, was that the first issue of Quest was established in 1967.
Whose decision was that to set it up?
KM: That was Tom Kelly’s baby.
But whose decision, who was pushing for it?
KM: Tom Kelly, Kevin Yates, those of a philosophical mind. It was something which had been running along before I even came on the Board. These ideas take a while to germinate and come through, but the first issue only came out in November 1967. I was League President by that time so I was the one who had to make the speech and write the first editorial. I didn’t have any problems with Quest, but it created an awful lot of problems for me. With what it was trying to achieve I had no problems, I said that we never had much access to any sort of copy in the daily papers and we were starting to grow in membership and I couldn’t see anything too wrong with that philosophical voice, looking to develop the interests of people generally.
Les Robinson was saying that he was rather against it and he thought that some people who were writing it, particularly, were developing their own interests like consumer affairs and ecology.
KM: That was where my problem came in. I think it was one of these things where I think I was more involved than what Les was. Les was the General Manager, he was the Executive but he was also the paid employee of the organisation and it was the Board of Directors who over a time who had said, ‘Yes, we will do this.’ Then of course when it got going all the critics came out. Now it was my view that that paper had to have an independent stance. For instance I think when the first issue came out, it was the first or second issue, there was an advert in there that was put in by St George Building Society. There were all sorts of complaints about accepting advertising material from our competitors. This sort of nonsense was going on. There were a lot of critics about some of the advertisements, we accepted advertisements from car dealers, ‘What were we taking advertisements from that mob for, they were a whole lot of sharks and they were going to take down our members and we don’t like them’, you know. There were some radical views of some of the writers and I felt, as the Chairman, because I must admit I had an influence on this, Kelly was the editor, but he actually wasn’t the editor I suppose because there was an Editorial Committee which comprised, he, Kevin Yates and I think there was one other on it. That was fair enough, they decided what should go into the paper but as far as using the term of editor of writing a lot of the banner headlines over different articles and collating it and putting it together, we employed freelance journos to do that.
They were all employees of the Herald, the Sun Herald, by the look of it.
KM: Yes, most of them were. After about a year or so we ran into some contention there because we had Simon Townsend. Simon Townsend was a contentious character because he had gone to jail because he wouldn’t accept a draft to Vietnam and here we were employing him to work on the paper, that was heresy almost.
Incidentally, he reported on the meeting of the insurance split at Kensington.
KM: Yes, he might have. But Simon did a good job, an excellent job on that. His other beliefs never came through on that particular one. But there were other radical views expressed and we were inviting comment, provided they were views which were acceptable, in other words they weren’t salacious, etc. This gave members the opportunity to express their views. I defended the policy and I got myself into a lot of trouble in defending some of these because I had to justify it at a lot of Chapter meetings. It was a bloody pain in the neck as far as I was concerned, fighting these battles to get this independent thing going. Then the time came when the views changed and Kelly and Yates then started to publish things which were in direct contradiction to the policy of the League Board and that was the time I had to do something.
What were these things?
KM: The main one was the co-operative bank. See Tom’s other pet, apart from the newspaper, was the establishment of a co-operative bank. Now none of us had any opposition to the concept of a co-operative bank, it was just we saw, the League Board, we never had the resources to move into this area at that stage of our development, it was a long way down the track. We should not be diverted from our real goals which were to develop an expansion and strengthening of credit unions. Tom and Kevin Yates didn’t have that view, they wanted to push this bank and of course in this they were joined by David Nelson coming out of Universal. They had some other supporters too. Clarrie Murphy also hopped on that particular band wagon. So there then started to be a fair amount of criticisms that were being made either covertly or quite directly out of Quest. Now that was the point when I stepped in and said ‘No more’. That then led to the question of editorial licence and really whether it was the plaything of the League where they could only support the League view and that sort of philosophical argument developed. But Quest finally packed up because of the cost of running it. It became a very expensive exercise. Postal regulations were such that individuals had to pay their own subscriptions to get postal rates. This meant that the credit unions had to set up a mechanism where they were collecting this money for the cost of Quest from all their members and the cost of the item went up and finally it was decided that we couldn’t keep it going, so it folded after a couple of years.
That was the time of the insurance split and of course the Sun Herald Credit Union was on the other side in that, so they would have lost a lot of their writers too.
KM: The Sun, I don’t know that they were on the other side on there. No the material kept on coming in generally. We were putting out four times a years and I think at one stage it went to once a month or something like that. But it was almost impossible to keep up. The Sun Herald, their particular hobby horse was a building society. They wanted the Credit Union Movement to start its own building society and so it wasn’t hard for them to fall into the same camp as the co-operative bank. But strangely enough the people who were involved at the Sun Herald, Clarrie Stewart was a very close friend of Stan Arneil’s, there was no way you could imagine him getting into bed with Tom Kelly, you know. So there was this conflict that was going on all the time. In the middle of all this we are trying to run a League and an organisation and check all these other ideas we were bringing back from the United States, you know. So things got very, very difficult. I suppose this might be now time that we come back to the insurance issue. In 1968 we had Clarrie Murphy in the wings who was working for the Co-operative Insurance Company. He was taking very positive opposition to bringing CUNA Mutual into the country.
End of Tape 3A
KM: Here I mentioned the things that were happening in 1967. We had come back with ideas. We were looking at stabilisation funds and bank supply departments and debt collecting agencies etc. and we were trying to get them off the ground. Quest was running and the contentious issues that came up there. There was the Sun-Herald Credit Union also starting to push for a building society. There was the co-operative bank concept. They were the things that were intrusive as far as the running of the League was concerned, from my view as the poor old Chairman.
Not to mention Dermot Ryan stirring the pot about the stabilisation fund and how they were going to finance it.
KM: Yes, they were the sort of things. So much so that of course there were people to say that I could be regarded as the enemy of the movement. So there were a lot of personal attacks which developed. This came about after I had made that public endorsement of CUMIS entering into Australia and also saying we were going to welcome CUNA Mutual to come in. So there formed a group which became known as the Action Committee which never came to the surface, it was an underhand group, but I would think probably two of the main people involved in it would have been Clarrie Murphy and Kevin Yates, although I could never name this. They took the action of issuing pamphlets and bulletins which they sent anonymously to credit unions criticising myself and others and putting their own implications on the motives we had, all done in an underhand way to try and destroy the influence or confidence of the membership in me. So much so that the Annual Meeting of the League in 1968, again as my report as the Chairman I challenged them to produce themselves and come up and make themselves public and debate the issues over which they had some concerns. That had the effect of producing an awful lot of support and sympathy from the membership at that particular meeting and from that point in time. But they were individuals and many of them would snipe at me at every appearance that I made, at every Chapter meeting they would snipe at me and challenge me on certain issues to break me down. That wasn’t a very pleasant time for me.
Do you think there was a formal committee, I mean did they actually meet?
KM: Yes, they did. They obviously had to because of the bulletin that they were putting out. There were some other characters. There is not much point in naming them at this stage they never achieved any consequence to my mind in the movement, but it was there. Quite deliberately because they were concerned about the direction we were looking at. But to my mind it all came back to the issue of insurance and they didn’t want CUNA Mutual because of their other interests, other affiliations, that together with the fact that I wasn’t running along enthusiastically with them about a co-operative bank or a building society, all that sort of thing happened. But there was a committee for sure, a formal committee. Anyway, that went round and I suppose we started to get involved then in the real issues. Coming back to insurance, it was in 1969 that we received rebates that were coming from MLC Insurance, because that was part of the arrangement. Also, too, in 1969 CUNA Mutual started to operate. CUMIS had been operating for quite some time and we were expecting rebates from the credit unions who had been subscribing to CUMIS, none of which were forthcoming. Then Les Robinson was the first one to bring it to my attention. We both were aware of what was going to happen. We both sat down and we debated it privately for quite some time, he pointing out that if we started this fight then we were going to have to carry it through and if we weren’t prepared to carry it through, then not lets start it. We both agreed that it was in the interests of credit unions to do this. The basic problem was the rebate and what was to happen to the rebate in excess of claims experience and the retention of money by CUNA Mutual. Now CUNA Mutual established a policy where they provided a 30 per cent retention for administration costs, running the operations. Now loan protection insurance is the simplest form of insurance in the world to run, there is very little overhead involved with it. The only time you have any administration is when you collect money and put it in the bank and if somebody dies you pay out the loan that that member might owe the credit union. Very low key, very profitable. CUNA Mutual started and we were not too concerned about the level it charged because it was going to come back to us, it was going to be rebated back to the members the unexpended portion then it didn’t matter what the charges were. But CUNA Mutual had this policy of retaining 30 per cent income what may for administration costs. Then out the balance of 70 per cent they paid their claims and the arrangement was that the different then, the surplus, was to be rebated back to credit unions.
So what about the Development Pool?
KM: Well, you are a bit ahead of me on this. This was their general policy. We were going to rebate it back to credit unions, via the League. Now we found that what they were really doing was to also with their own development using these surpluses to support development of credit unions in areas which were going to do them the most good. Now the point was that it became apparent to us in discussions with them that we could not expect a rebate of what the surplus was going to be after they had retained their 30 per cent and after they had paid their claims. We were also well aware that the League would not accept the 30 per cent retention for administration costs, because the scheme we had and we were able to develop in other areas was working on a basis of about 5 per cent retention for administration costs, with other insurance companies. There was an awful amount of difference, it was a lot of money involved. So we said to CUNA Mutual, ‘Well look, we have the understanding as far as loan protection is concerned that we agreed with CUMIS that you were going to refund this. Now the only way we can insure that we are getting a fair shake, first of all we will not accept 30 per cent retention on your part, we think some lesser figure is right because in Australia by using a master policy through the League we are going to be doing all the work for you, therefore you don’t have any administration, you don’t even have to set up an office. You certainly don’t need any representatives out visiting credit unions and you certainly don’t need branches all over Australia. If you are prepared to do this, then a 5 per cent retention or even 10 per cent retention by you is much more realistic. It also means that we are acting in the interests of credit unions in that we are keeping costs as low as we can.’ That was the point. CUNA Mutual dug their toes in and that was the point where the big debate started.
CUNA Mutual in the person of Stan Arneil, or CUNA Mutual in the person of the American representative?
KM: Both. Both through Stan Arneil, who was very aggressive about this as his character would be, and also with support from America although America was trying to be a bit more diplomatic and saying let’s try and talk this over. Now we go diverting off a little bit. We had the rebate coming from MLC, which was a sum of about twenty thousand pounds, I think, it might be dollars. That was due to be diverted back to credit unions in proportion to the amount of premium they had paid. But also we were looking to develop the movement so the suggestion was made at an Annual Meeting that instead of the amount being split among all the credit unions, it wasn’t going to be very much, why didn’t the League retain this money and use it as the start of a Development Fund where there was cash available to develop the movement in areas that we saw necessary, like computerisation or all these other things we were trying to get going like a debt collecting agency. So why didn’t we put the money into a Development Fund? The meeting agreed to that and so the Development Fund was established. That was the point that Dermot suggested that we had got the Development Fund what better development was there and he started to say a Protection Fund, why shouldn’t it be used in that direction. These were the issues which started to emerge which started to cause conflict. This was the way it went. On top of this we were not getting any money back from CUNA Mutual anyway. They were tardy. They hadn’t paid the rebate that was due to us because they wanted to talk it out. We conveyed in various means back to the US that we were having problems and it seemed to be that Stan was simply following the policy that was set by CUNA Mutual back in the US and we were concerned. There was only one way we were going to deal with CUNA Mutual and that was on the basis of a master policy. So a couple of people came out, Charlie Eickel the Managing Director was one and it would have been Carlos Matos and Compton, to try and talk us over into change. We had persuaded the majority of the League Board, not all but the majority of the Board, that we should be taking this stance because it meant a lot of money to credit unions in the future. So they came out to talk to us and then they suggested that we straighten all this out by talking to us on a national level through AFCUL, why didn’t we get AFCUL representatives to come to Honolulu were we could meet on neutral ground and CUNA Mutual would bring their Board of Directors over and we could talk in Honolulu. In the meantime, CUNA Mutual very actively started to use their largesse in some of the other States. For instance in Tasmania, they went down and said, ‘You are a poor League down here, you are struggling down here, you need some better accommodation, get your office here and we will pay the room and you can employ somebody and we will pay them. This will give you a chance to develop your League.’ They did this in Western Australia and they started to do it in South Australia and they also dealt with some credit unions in Victoria. But it was the old story, as I have mentioned before, of buying their support and to some degree they were successful in it. But certainly New South Wales was hanging out, as was Victoria, Victoria stuck with us on this main issue. Queensland as usual didn’t know what they were doing. But the dog fight really came round New South Wales. But still we agreed that it was a national thing, that insurance wasn’t restricted to one State. We wanted CUNA Mutual in Australia because we liked the idea of policies and cover and it was a credit union operation. But here suddenly are the strongest supporters of CUNA Mutual in Australia over half a dozen years by the names of Miller and Ryan digging their toes in and saying no way. So to my mind this shows a level of impartiality on our part. All of the things they say they do try to buy you off. For instance, I was told fairly obliquely that once we got this question resolved they would probably be offering me a seat on the Board of CUNA Mutual and that meant all the first class travel and emoluments and the whole lot. All this sort of thing goes on. But anyway we dug our toes in and we agreed to have this meeting. We went to the meeting.
We? Who are we?
KM: We meaning it was Graham Benson, myself, Dermot Ryan who were the AFCUL representatives. Because Les Robinson had done most of the hack work in comparison of costs between CUNA Mutual and other companies, the approach we had had from other companies in Australia, we felt that it was desirable that Les Robinson come with us to that meeting. So we invited Les Robinson to come with us and I think the League paid his way.
Was Stan Arneil at that meeting?
KM: Stan Arneil was at that meeting. Of course first of all there was all sorts of opposition to Robinson going because he wasn’t involved and what the hell was he going for, but we insisted on that. One thing I would say here, as part of their largesse is that they invited the wives of the delegates to go to. My wife still rankles in a funny sort of way, but she understands, Les and I would not allow our wives to go. We were not going to be ‘duchessed’ to the extent that we felt obliged in any way, shape or form.
What about Meg, did she go?
KM: Oh yes, Dermot took Meg and Benson took Florence. Jack Lange, I think he went to that meeting too as the Solicitor over there. Certainly Stan was there.
Was his wife there?
KM: Yes, Dorothy was there. That was another thing, the ladies got on very well. Here you are you have got a dog fight on and you’ve got Dorothy Arneil trying to be nice to people who are tearing her husband down and putting his job in jeopardy. It was very, very difficult. It was the reason of course the wives should not have been there, and I think Dermot made a mistake on that. Anyway, thankfully we did the right thing and we didn’t take our wives and I thank God I didn’t too because it would have been thrown up so many times at us. We had a meeting there and in the process of these meetings they sent not the full Board of CUNA Mutual but half a dozen of their senior table officers. They had a situation, by the way, on their Board they don’t elect positions they go by rotation. So you have got a Chairman, a Senior Vice-Chairman, then probably the Secretary and then the Treasurer and then after a term of about two or three years they all move up one and the man on the top comes back to the bottom. So there were about half a dozen of them who were the top people in the structure of CUNA Mutual’s Board.
To make it more difficult they call them President and Vice-President don’t they?
KM: No the Americans in their structure when I have said Chairman that relates to the Board. The Chief Executives in those companies in America are called Presidents. So Charles Eickel was the President of CUNA Mutual, his Assistant General Manager in our terms would be Assistant Vice-President and anybody else is a Vice-President. Vice-President in charge of garbage bins or what have you. But on the Board it was Chairman and that went down to Table Officers. We insisted on the purpose of debate. We had agreed that we were going to meet with the head body there and it was the appointed representatives of AFCUL meeting with the Executive and others of CUNA Mutual and because Stan was getting in the way we were having meetings in closed sessions without him, which didn’t please him I can tell you. But we felt we could achieve more in that direction. Now all sorts of promises were made to us, none of which were kept. We ran through what we saw to be the need about master policy, that they didn’t have their own employees going around canvassing credit unions, limitations on their space and all of this. We were saying this was a waste of money, they would do better by turning this over to us.
Had they started actually selling direct in Australia at that time?
KM: Only in an overt way through Stan Arneil, so not really. They were only just coming in at that time, so nothing we would have any concerns about. But we were concerned that they didn’t start to build up their own establishment to any degree because we felt that money was better placed with credit unions. Another thing too, we wanted an Australian Premium Pool, we didn’t want to be linked with Pools they had established in other parts of the world. All these things they generally agreed with. We went through those meetings and they said, ‘Yes we should be able to come up with all these terms and what we’ll have to do, of course, we have had this exchange and we know you have got to go back and you have got to persuade your Australian people that this is the way to go and we have got to go back and talk to our full Board,’ and all this. After two or three delightful days at the most expensive hotel in the world.
Which one was that?
KM: The one on the point, the Hilton. It really is a fabulous place.
That is in Waikiki, is it?
KM: Yes in Waikiki. It has got everything. It has got its own zoo, own dolphin pool. It was quite out of this world. It must have cost them a fortune. After all this we went back our way and we got back to Australia to find on the following weekend there were adverts in the paper from CUNA Mutual advertising for people to come and work for them as their representatives in Australia. They didn’t wait that long. We telegraphed off to Eickel that this was happening, this was the first breach in the agreement, they had agreed they wouldn’t do this until each party had had a chance to consult with their own principals and worked out something. But they went ahead and did all those things, they didn’t stop, they didn’t change a bit. So the situation just got worse and worse. Then it became a dog fight with Arneil and others trying to gather support in other States of Australia, and we were getting involved in meetings. Of course tied up with all this were all the other things we were trying to achieve. ‘The only reason that we wanted to establish a Savings Protection Fund of any consequence on a mandatory basis was to provide some reason where we could justify holding back the rebates we were going to get from credit unions and all we were doing with CUNA Mutual was trying to screw them so they would give us more money to put into this fund.’ All this sort of thing went on. Of course all of this came to a head in a few memorable meetings that took place in the League over those years of 1970, 1971 and 1972. You said something earlier in the piece about Stan wanting me on the League Board because of my experiences at CUNA. Whilst in 1967 I think I had just become the Chairman of Motor Transport Credit Union, really they were little family affairs those meetings, there were no problems about those. But leaving that aside, I had never chaired a meeting in my life before the 1967 Annual General Meeting and to be suddenly faced with about 450 delegates admittedly on issues that were bread and butter stuff like dues and representation and all these good solid things that meetings always talk about, there were no real problems there. But by the same token I had no experience and I had to learn fast in this direction. By the time 1968 came along there were a few issues floating around then which were going to create some problems and they went on through the years. One of the things I saw in the States that I was attracted to was a system where they appoint a parliamentarian. The role of the parliamentarian is not the same as the role of a lawyer. You can have a lawyer there who will be able to interpret your rules and regulations and the law, that you are doing certain things right. But a parliamentarian was there as a man who is experienced in parliamentary procedure and knows all the rules of debate and as an impartial person can be there to assist the meeting in the right process to follow if there are problems in the conduct of a meeting. So he is there to assist the Chairman. I saw it work in the US and I was fascinated by this so I started to think of a good parliamentarian and Dermot comes up with a beauty, Peter McMahon.
I wondered why he was up there on those meetings.
KM: I invited him. But apart from anything else Peter McMahon was the Secretary at the time of the Municipal Employees’ Union, a man with a good presence who had a lot of experience in debate. I hadn’t known him, I just knew who he was generally. Dermot suggested him and I said, ‘He ought to be great’. So I asked him would he do it and he said yes he would. So I got him there as a parliamentarian. I am bloody glad I did because in the course of these meetings with all these people hacking away at me, and there were many who were trying to tear me down with any opposition that they could, it was good to have somebody and say, Is the procedure I am dictating the right one or not?’ and he would say ‘Yes’ or ‘No’ or ‘I think you should do this,’ so I would vary this. But generally he would say ‘Yes’ so we would come back to the meeting along those lines, according to proper parliamentary procedure.
Was this the sort of thing that Dave Palmer objected to as Chairman of the Supervisory Committee?
KM: Oh yes, but everybody objected to all sorts of things. He was there at my invitation and I made it quite clear, I said, ‘I am the Chairman of this meeting and I will be the Chairman until such time as you carry a vote of no confidence in me and my rulings will stand. But in the process of trying to get fair rulings because of my own inexperience, I have asked this gentleman to assist me to see that I am following the proper correct parliamentary procedure.’
Now, there was a meeting, I have been trying to trace which one it was in the insurance split, at which Jack Bannister proposed a motion of confidence and Morrie Ryan seconded it. That featured on the front page of Quest, reported by Simon Townsend. Now which meeting was that in relation to the insurance split? There was one meeting you had when you first got permission from the meeting to go and look for other insurance at a more competitive rate. That wasn’t actually when the whole thing split was it?
KM: No, there were a few things that happened there. We were doing our own research and sought proposals from insurance companies, all of which were far more favourable that what CUNA Mutual had to offer. Of course we were building up more or less our own record here to justify our stance as far as CUNA Mutual was concerned. CUNA Mutual’s general approach was, ‘That is all very well but these mercenary buggers will only take you for all you want. You know this is your insurance company and you know that whilst up front there the charges might be a bit high, you know all the money we have is going back into the movement and therefore you should have an obligation to support it. We can give better service and you have got better conditions,’ the whole lot. This was all a build up that went over a fair length of time. I mentioned that meeting at Honolulu. That was probably the first real confrontation that we had there. At the time of that meeting we were aware that there were problems. For instance the Hawaiian League was also very concerned about what their conditions were but they reckoned they were locked in. CUNA Mutual was saying that it was not within their policy to give a master policy to any League and they refused to do so and that is when we said that this was one of the things we were going to hang out on. We wanted a master policy if we wanted nothing else. Then they said they would consider this. Then we came back to Australia and we found that they were going ahead with establishing their own offices and their own establishment and employing their own people which were going to go out to our credit unions, selling insurance directly against what we wanted by way of a master policy. So this was where the debate really took effect and we started to build up the case and look at other proposals that we had. I suppose at sometime there was certainly approval given to us by an Annual General Meeting of membership to do this. During the course of that year we again came together with CUNA Mutual in about October of the year to which the Executive of CUNA Mutual came.
End Tape 3B
ANSWCU 76: 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER
KM: I mentioned that after the Conference with CUNA Mutual in Hawaii we had come back and we were satisfied that they had reneged on the agreement that we had reached at that time. Things went from bad to worse, the CUNA Mutual, through Stan Arneil, opened their own office and advertised to employ people. There were all sorts of things to carry some support and in other States too. They were working against what we saw to be the agreement that no action would be taken by either party until the full Boards of both organisations had considered the report from Hawaii and determine what action they would take. We finally wrote to CUNA Mutual and said as far as we were concerned we had no confidence in Stan Arneil and would not carry on any further negotiations with him. Again there was action being taken and all sorts of red herrings were being thrown in the path of what was the real issue, which basically came down to the retention of 30 per cent by CUNA Mutual. Eventually there was a further meeting organised by direct communication where CUNA Mutual said that their Executive Officers would come out to Australia for a further conference. This was arranged and held in about October of that year.
Would that be 1971 or 1972?
KM: That would be 1971, I think.
Because the final insurance change-over was in 1972. According to the various things in Quest, the actual split when a number of credit unions resigned from the League was in 1972.
KM: I think it was still in 1971, I think it was towards the end of 1971 when CUNA Mutual sent out their Executive to have an open discussion with us. When they did arrive the meeting was held in the League Boardroom in Sydney. Again similar representation as at Hawaii. There might have been one or two others like John Richards, the Auditor, and maybe Jack Lange was there too. But they also brought with them a Dr Richard Heinz, who was an economist and who is now the President of CUNA Mutual. But at that time he had been brought out under contract to make the presentation on CUNA Mutual’s behalf and justify their particular stance, in other words to dazzle us with figures. It was the first time we had met him. The proposal was presented to us in a booklet which was nicely bound, I don’t know whether you have seen a copy of that but there is one around, which in fact filled up quite a number of pages but really said nothing. It didn’t alter the fact that as far as we were concerned the 30 per cent of premium income retention by CUNA Mutual was totally unjustified and there was no need for that level of retention if they were to run along with us and provide a master policy for the League. So we talked all day and didn’t reach any conclusion. When the Table Officers took over, and it was the Vice-Chairman, I think a fellow by the name of Bob Cratt was the Chairman of CUNA Mutual at the time, Pete Gooch was the Deputy-Chairman, and he made a very quiet statement which said, ‘Of course we cannot persuade you to accept the CUNA Mutual Loan Protection Insurance Policy under the conditions that we outlined, then we don’t feel that we can continue to offer the general insurance cover through CUMIS and we would probably have to withdraw’. We took this as a direct threat. It was something that was fairly critical to us because by this time, with our endorsement, we had persuaded all our affiliated credit unions to switch over their general insurance to CUMIS and we were being told if you don’t take the other we are going to withdraw this. We then accepted that, said that our stance was the way we stood and we would take on notice what they had to say. As an aftermath of that we had our own meetings and decided that we were in trouble, that we had a responsibility to credit unions to see that there was adequate insurance and if we were not going to accept the proposal that they put to us, then we had better find some alternative damn quick, which we did by Les Robinson and myself hopping on a plane for Canada and the States and we made a very quick trip round some co-operative insurance companies who we thought would support us and in fact there was support given to us. The Australian Co-operative Insurance Company, members of the Co-operative Alliance, referred us to the Canadian Co-operative Insurance Company and they referred us back down to a couple of others. The result was that after ten days we came back with a package which whilst it hadn’t been put together in detail was going to work because these insurances had given us their total support and they would be prepared to back us. We got back to Australia and Les Robinson sat down with a couple of the insurance companies and they put together a master policy which covered all aspects of general insurance which was then offered to the credit unions as the alternative to CUMIS. That’s really when the break came and I would say in the following meetings which would have taken place in the next year in 1972 was where the debate was with those strong supporters of CUNA Mutual who would then have taken the stance they did and made the break and left the meeting when they saw that they never had the support of the meeting.
Do you remember at the meeting there was a stage when Stan Arneil wanted to speak and was not allowed?
KM: That’s not true. Stan Arneil was allowed to speak.
I think he was allowed to speak before that, but it didn’t allow him to speak further.
KM: Well, I am the Chairman of the meeting and I am trying to get a controlled debate on an issue in which I was very much interested. I had allowed Stan Arneil to speak at length.
In what capacity?
KM: I think he was there representing ABC, probably at that time he was still a member of ABC, and he was there to speak, which he did do. I think I then made a statement of what the League position was, my position. Then there were other speakers, Clarrie Stewart, for instance, spoke. Stan asked to speak again and I wouldn’t allow that because I thought in normal procedures there should be other people given a chance. I think I have mentioned this before, too, we had a lot of people there from interstate credit unions because they were all very interested in what was taking place in this debate because it was going to affect them. One of the people there was Jack Wight who was a Vice-President of AFCUL and came from the University’s Credit Union of ACT. Again a good friend of Stan and myself and Dermot, we had had a close relationship. He was there and almost beside himself because of the statements that Stan had made in his debate. He wanted the ability to get up and correct these statements that had been made because he apparently had been a witness to certain events which Stan had been discussing. I got a message up to the Chair that Wight was scandalised at some of the comments that Stan had been making and in the interests of the meeting he wanted to get up and rebut them. He wasn’t part of the meeting, he was a visitor, and as the Chairman, against my own interests, I ruled that he couldn’t speak. I mention that because the Manageress of the University Credit Union was also the lady friend of Wight, didn’t speak to me for two years because I wouldn’t let Jack up and speak. But as the Chairman I did the right thing, even though it was against the view I was taking.
Was that the same meeting where Jack Bannister put the vote of confidence?
KM: It could well have been. That would have been the one in 1972, it probably was that. But my recollection of that motion then was that there had been so much confusion and so much dissension over so many issues and the position was jumbled and in fact the meeting had endorsed the League Board’s views on all issues and carried all the recommendations right through. The only one that was knocked back at the time was the one where the Sun-Herald had a motion that we form a building society, they were still flogging that one, and that was the only motion of the day that got beaten. Everything else which came from the Board got carried. I believe after that to defuse the situation Jack said, ‘Well let’s have a vote of confidence in the Management’ and that is what happened. In many ways it wasn’t that meeting, that one was rough, but the one in 1971, I mentioned before, as the Chairman I had seven motions of dissent moved against my rulings and I won each of them. Those motions in the main were moved by David Nelson who was one of the two activists who wanted the Co-operative Bank and these other things that were running but who also was a Barrister. I think as a matter of interest, I believe as much as anything else the fact that he was the Barrister and with all his legal expertise he was challenging the Chairman of the meeting who was one of the mob, I think in some regards I might have got a good sympathy vote out of the group that was there.
The following week after this big meeting, when Stan Arneil was not allowed to speak further, was that when he walked out?
KM: Yes, that was also at that meeting. Clarrie Stewart and the Sun-Herald delegates walked out too.
Any more, or was that the lot?
KM: They were the only ones that left then. There were a couple of others, I think they resigned at a later stage, but they were the only ones at that time.
The following week, the following week-end actually, there was an AFCUL meeting at Wollongong.
KM: Yes there was a meeting at Wollongong, but Stan had no part at that meeting, he held no position. We had again that same sort of dissension there. We heard that Stan was going to go to the meeting as a CUNA Mutual Manager and he was going to seek leave to speak at that meeting, when this was really a meeting for delegates only to AFCUL from the States. He was due to arrive there, and he was met at the door and he was told he was not going to be allowed to enter, so he turned round and left.
I understand that there were a few more credit unions that left after that?
KM: Not necessarily because of that thing. We were quite justified in not allowing him into that meeting. He was going to come there and try and disrupt it and he had no place there, no position at all.
You would have to have been a delegate to that meeting?
KM: Yes, a delegate. But I didn’t make that particular decision, that was the Chairman of the meeting, I think it was Benson at the time there.
So is there any more to the insurance split?
KM: Well historically then it was won. CUNA Mutual maintained their presence in Australia and they still operated in Australia. The CIC Co-operative Insurance had been writing master policies for us for a long time. We eventually made a contract with a company which was owned by AGC, as a matter of fact, Shield Insurance which is now a company owned by Zurich Insurance, and they provided Loan Protection Insurance with a master policy and it has worked over the years that for a 5 per cent retention, plus a flat $10,000, I think it is, they are providing Loan Protection Insurance for credit unions and we are getting the rebates back from them and that money is being rebated through the Association, the League, back to all the credit unions in proportion of their contribution of their premiums. I would say from that point, 1972, I think now the rebate that has been going back to credit unions which would not have gone back in the same proportion would probably run into millions of dollars, because that was the amount of money that was involved in it at the time. I just mention this for one thing, I think the Teachers’ Credit Union because they have got a high proportion of members, they have got their own portfolio but they have been getting back somewhere about $150,000 in premium rebates, which is a lot of money. All that money would have been missed by membership. So as far as I am concerned we were quite justified and we did the right thing by taking them on, even though of course there was a lot of dissent in the movement. It was just one of those things that happen. But there are still negotiations which go on on a periodic basis with CUNA Mutual. We still retain relationships, like in my term after this when I was on World Council I was rubbing shoulders with these people all the time for years. Personal relationships were not affected. I still regard them as good friends up to this time. It was just that they had a different approach on this particular issue. I would like to think too that eventually we will come to the stage where under the right terms CUNA Mutual will write the insurance, because after all it is a credit union insurance company. What we did do was to establish a policy, or change the policy of CUNA Mutual, so that when other countries came through the same sort of position as we did, notably Ireland, CUNA Mutual were prepared to write master policies. So we were the ones who were the trail blazers although it didn’t happen for us it certainly helped other countries coming after us. Ireland operate probably on the exact basis that we would have liked to have seen ourselves operate at the time of the meeting advocating along those lines. So it was just one of those unfortunate things. Probably, I am sure, with different personalities involved I believe we could have at least had a better understanding.
What should we go to next, loan protection, no stabilisation savings protection fund, the reserve as the next subject.
KM: Well, I have mentioned that Dermot and I were keen that there should be a fund that was going to ensure some protection of members’ savings. We knew they existed in the United States and Canada, stabilisation funds that was the name they gave to theirs, which was a reserve fund established to meet any shortfall in the event of a credit union being liquidated in order that the members received a return of 100 per cent of their savings. That was the idea of it. We had nothing like that in Australia. We did have the knowledge that we would run into troubled times, something was going to happen somewhere along the line, and we felt there was optimal need to protect members of what every credit union they belonged to. So we advocated the establishment of this fund. I have mentioned that in the first rebate that started to come to us from Loan Protection Insurance from firstly MLC and subsequently from CUMIS before CUNA Mutual actually started operations, it was a decision of a General Meeting that these rebates not be returned to credit unions, but should be held by the League for use as a Development Fund. This had its opponents, this wasn’t carried unanimously, there were many there who said no, who were short sighted enough to say that we didn’t need a fund like this and that the money should be returned. So it was generally contentious at that point but it was carried and adopted. Then it came to the stage where there was money that was going to come back from CUNA Mutual, these small amounts. We had established this Savings Protection Fund which was now dependent on money, it was moved then that this was the best development we could do. To establish the Savings Protection Fund, so that rebate money was transferred to this fund. When it came to the question of the rebate which was forthcoming from CUMIS, which they were very reluctant in paying, we had to exert a lot of pressure on them as a matter of fact to give us that particular money, it was decided then that because of the political situation at the time and the general contentious nature of this and other issues, we had that this money would be returned back to the credit unions. Dermot was one Board member on the League who said this was wrong and he felt that like the other monies, the rebates should be passed over to the Savings Protection Fund because that was where the need was greatest. He was beaten on that motion by the Board and then he asked the permission of the League Board if he, as an individual member, could move a motion to that effect. Permission was given to him in the knowledge that the rest of the Board members would speak against it. Under normal circumstances that should have been in the end of it. Anyway, when that motion came up Dermot spoke to it and spoke for it, made a very impassioned plea. Directors got up and spoke against it and they said why they spoke against it and Dermot said in reply that he thought we should do it and show that we are responsible and we know where our money goes and to his eternal credit he carried the day. That was probably the best single victory that has ever been achieved anywhere. He took on the whole of the balance of the League Board and won for the membership. But of course it causes problems. Whilst he might have won the majority vote, he never got a unanimous vote and it started to be tied up with all the other problems that were going at the time.
Incidentally, when he became Chief Executive of AFCUL, did you have any part in his becoming Chief Executive of AFCUL?
KM: No, it was an appointment made by AFCUL Board or Executive, I don’t think I was on the Board at that time.
The other thing is, it impinges on the insurance again but just the end of it so to speak, it has been suggested that after the insurance had been removed from CUNA Mutual and CUMIS and was at CIC, that even after that Stan Arneil was still Manager of CUNA Mutual but that somebody was pushing to have him removed as Manager from CUNA Mutual, CUMIS. Did you know about that? Who was it, if there was anybody?
KM: I would say if it was anybody it would have been me, naturally being the Chairman of the League. Because we wrote, as the League, we wrote to CUNA Mutual in America and said we ceased having any confidence in Stan Arneil, we’d found that we couldn’t work with him and we requested that any future communication be handled directly from the USA to us. That was it. But that was as far as we went. We never at any stage, nor would it have been pertinent for us to suggest that they remove Stan Arneil. I know that Stan after, at the time when he got the sack said that the League was responsible and people were out to get him, though in fact I can personally tell you that I was told by Carlos Matos, who was Stan’s boss and Vice-President in Charge of International Operations as far as CUNA Mutual was concerned, that Stan was dismissed from his position because he refused on two occasions to carry out the instructions of CUNA Mutual.
Now it was reported that Stan Arneil was called out to AFCUL at Lidcombe and in some way threatened with pressure for his dismissal. Did you hear anything about that?
KM: Before he was dismissed?
Yes, before he was dismissed.
KM: I have to say no. He may have been told something in the terms of what we were saying in New South Wales or AFCUL had decided to write to the United States saying they could no longer deal with him. Yes that would be true, because he became impossible to deal with. There is no question about that, it was quite arbitrary, there was nothing conciliatory about his approach. It was a case of you will do it my way or we just don’t do it. There was no arbitration whatsoever. He didn’t have any arbitration left in him. Under those circumstances it was just impossible to talk with him. We never had any problems about CUNA Mutual philosophically we all wanted and still do wish that CUNA Mutual was going to be our insurer, but under our terms. We had reached a stage where it just became impossible to negotiate or talk with him for a number of reasons. Things that he wanted to do that we wouldn’t allow him to do, things that he knew were contrary to the policies that were in existence. There is a whole list of them, list of correspondence that went between Stan Arneil and the League and I have got them on the file, all these letters which run through over months. Things that Stan wanted to do that we didn’t want him to do and he came out publicly putting the wrong slant on it.
So what have you got there?
KM: At the time when we were with CUNA Mutual, back in April 1971, and Stan Arneil, we got a letter from CUNA Mutual via Stan asking about the insurance premiums, a letter which went to credit unions directly asking them for administrative reasons in future they pay their premiums directly to CUMIS and not through the League. That type of thing. When he knew this was breaking down any master policy. That went to all credit unions. Then they sent out another letter to all credit unions saying that the League had withdrawn its endorsement and complaining that this had happened. A CUNA Mutual circular to all credit unions promoting its new Home Owners’ Policy. A CUNA Mutual Report from Management, from the CUNA Mutual Board, a CUNA Mutual Report to the Management in America was circulated to all credit unions to build up their own image out here. There was a letter sent by the AFCUL President to the new CUNA Mutual Chairman in the States which would have set out these things. A New South Wales League letter to CUNA Mutual, this was in June 1971, probably getting critical here, enclosing a circular to credit unions advising against CUMIS proposals regarding conditions payable on Home Owners’ Policies, again because they wanted to deal directly and not through the League. A CUNA Mutual letter advising trainee executives were being appointed in Australia and requesting permission that they be allowed to work with League field officers, again these trainee executives of course being the representatives of CUNA Mutual. Then a letter from J B Lange on behalf of CUNA Mutual pointing out that the League’s Circular No. 13, 1971, could be taken to infer, and I have got in brackets ‘wrongly’, that credit unions are legally obliged to pay premiums through the League. Now there was never an intention like that. A New South Wales letter to CUMIS demanding a clear policy statement on the payment of insurance rebates for 1971. New South Wales League letter to CUNA Mutual, USA requesting statements of rebate for 1971 payable to credit unions and advising the League was no longer prepared to negotiate on any matters with Arneil. That is probably the critical one that you mentioned. Again, June 1971, the Queensland League to AFCUL disapproving of the composition of the AFCUL Insurance Advisory Committee, which was a committee which was set up to look at insurance matters. July, 1971, a Victorian VCCA letter to CUMIS, to CUNA Mutual, USA endorsing the actions of AFCUL and the New South Wales League re insurance, that is not talking to Stan Arneil. AFCUL letter to Queensland League regarding the relationship with CUNA Mutual. AFCUL to the South Australian League regarding insurance matters. Again in July, a CUNA Mutual letter regarding a proposed 7th Newport School in 1971, this was aborted. July 1971, a CUMIS letter of AFCUL and all State Leagues regarding a proposed conference with CUNA Mutual Executive Board. July 1971, New South Wales League Board negative reply to Arneil re the holding of the 7th Newport School, and letters of concern from other States. That happened for reasons that were not associated with the insurance issue. The decision was taken by New South Wales not to hold the Newport School.
End Tape 4A
ANSWCU 76: 7 AUGUST 1990: INTERVIEWER RICHARD RAXWORTHY: TALKING WITH KEN MILLER
KM: We were talking about the Savings Protection Fund and how that developed and we had reached the stage where money that was rebatable in respect of insurance premiums to credit unions was, by approval of the general membership, being placed to start the Savings Protection Fund. That was voluntary. At least they realised that this was only a start and it wasn’t sufficient to carry this Fund to be effective. So in latter years we moved to the stage where we proposed that contributions on a formula basis be mandatory for all credit unions who were affiliated with the League. This was carried, surprisingly. There were some dissidents and also there were a number of credit unions who did not pay their subscription in the first year or so. We handled this one in a fairly statesman-like manner. We agreed as a Board to close our eyes to the few who were not paying and persuade them over a period of years that it was in their interests that they should do so and within two years we had them, everybody was paying. We didn’t lose any credit unions as a result of that mandatory payment, a word not in the rules because everybody hates the word ‘mandatory’ in this sort of operation. That went along there, that Fund, during the 1970s when credit unions were being liquidated at a quite phenomenal rate. That money stood in good stead when eventually towards the early part of the 1980s, when Sid Einfeld was the Minister, he followed the idea being generated from us and the knowledge coming from us that the League was picking up and paying out funds for non-affiliated credit unions who were in trouble as well as our own, the unfairness of this and the need for a fund was appreciated by the Minister. He then set up a committee to investigate and recommend to him ways and means of establishing a reserve fund which would be obligatory on every credit union in the State. So we participated in that. An interesting part about that was that that committee which he had appointed brought together the non-affiliates and also Father John Gallagher around the one table. That was a good exercise in human psychology for the first of the meetings to see how that went. When we found that we did have a Charter to stick to and there were no personalities in this and it came down to free discussion, I think everybody realised the sense in starting a fund of this nature, even Father John. Father John tried a few times to disrupt us and I think he finely left the meeting, but I think he was arguing on a matter of principle from his previous tenets. We made a recommendation to the Minister and pretty well I think without any correction or change at all they were adopted by the Minister and they became law. So every credit union has to contribute to the Reserve Fund and that has been set up under a Board of Trustees which is appointed by the Minister. As a result of the coming together of the minds on that particular issue and also went then to other areas that we might have something in common and perhaps we could come back to an Association. So from there a lot of the participants who were ithere in committee kept on talking about a unification of the credit unions in New South Wales.
How long were you on the Credit Union Advisory Committee?
KM: I think about seven years.
Can you relate what went on during that period from the point of view of the Committee?
KM: Firstly, I was appointed to the Committee because of my position as the League Chairman.
Was it the same year?
KM: No, I think it might have been 1968, it might have been the next year after that. But that was made quite clear to me that was the reason for my appointment. It was also made clear to me that could expect to be re-appointed year after year whilst ever I was the League Chairman, but once I resigned the position then I would be expected to resign off that Committee. They did make other appointments too of people from credit unions. I found it fairly effective. Having worked with bureaucrats for most of my working life I never expected an awful lot out of that. There were some things wrong with it. First of all, the appointment was made by the Minister and the League representation was not proportionate to its membership, because the Minister was trying to cut out all the political aspects. For instance, it was mandatory that someone from the Commonwealth Bank be on it, I don’t know why, but it was. Then you had representatives from non-affiliates and because they weren’t affiliated and there were a couple of small associations, you had to have one from each of those when the main body of credit unions were only represented by two, the League President and one other who he selected. Strangely enough this was where I found I good ally in John Phillips, who was the Chairman of the Commonwealth Bank Credit Union. I think there is no reason why that should have happened, but he was a man of commonsense and he had a genuine interest in credit unions. Usually we found ourselves voting or advocating the same thing, which probably exerted sufficient influence on the rest of the Committee to carry the day. Another unfortunate part about it was that the Chairman of the Committee was the Registrar, so if the Registrar wasn’t too happy about some proposed legislative change then it never got off the deck. That was the weakness of it. But if you had a fair-minded Registrar who was prepared to listen to reason and give you a go, even though he might, once the debate took place, express his own view, if the decision of the Committee was against his view he was still fair-minded enough to carry that and report the view of the Committee. There were a lot of changes. We got increases in the level of lending we could do, we got changes to the controls we had on established interest rates and a few things like this.
What about deficit budgeting?
KM: That really never came up to the extent on that particular Committee. The main problem was the credit union with the biggest deficit budget was the one I was the General Manager of, New South Wales Teachers’. That was a separate subject, another area of contention that came about at the time. The League never did advocate deficit budgeting per se. There was a situation where Teachers’ Credit Union in its infancy was in trouble. It had enormous potential, as is shown now by the fact that there are 66,000 members and $300 million in assets. This credit union was about to go under. It needed an office to work from and it needed staff to operate it because all the Directors were employed teachers and they had their job to do. Now to achieve this it had to go into deficit budgeting. Deficit budgeting was supported financially by the League. So that was the way it went. But on the basis of this, those credit unions who through their own inefficiencies found themselves operating in deficit then claimed that they were really only operating like that because this was that the League was advocating. The League never at any stage advocated deficit budgeting to that level. It did, if it was being done with prudence under certain conditions, certain circumstances. So that was deficit budgeting.
What about the Common Board?
KM: The Common Board again was an evolutionary process. One of the things that we saw in 1967 in the United States was the operation of central credit unions. Now the central credit unions in the US were established because the law of the land said that no credit union officer or employee could belong to a credit union. Now we felt this was totally unfair, so what they did in the States to get over this was to create central credit unions where the bond was those officers who were employed or engaged in some other credit union. They were quite successful and they grew in size because you can appreciate they were very well managed because of all the managers who transferred and they became quite influential in their own way in the United States. They started to serve other purposes, something like the central banking facilities we have out here they used to run through these centrals over there. Anyway I got hold of this idea and I thought now we could do something about this surely in Australia, there must be a need, not because that restriction which wasn’t here, but there must be many occasions when there are Directors of credit unions who for their own reasons would not want to borrow from a credit union of which they were a Director. They wouldn’t want to be accused of any pecuniary influence or anything like this. So I came up with the idea that we start a central. So we tossed this around and so the Central started, but when it started it was Les Robinson’s idea, picked up here. He used the name virtually not for the purpose that I wanted, although that could be it, but why don’t we start this for Central Banking. So this was the way this started to go. We developed this central bank where money could come in and money could go out and could be lent to credit unions. Then we started to run into the problems with great frequency of credit unions that were going under. Now we had a central fund, this Central Bank that was operating there quite successfully with large amounts of money coming in from credit unions, and we had these credit unions like Universal who were going under and when they were going under they were in debt to the tune of half a million dollars and that was a lot of money to be found. What are we going to do with them. Nothing wrong with the members of the credit union, you can’t hold them at fault because of poor administration or what have you in the credit union has gone to the wall. Why should we loose all these credit union members out of the system because of somebody else’s problems? Now wouldn’t it be a good idea if we paid them out, or transferred all the membership of that credit union into a central. Then you could liquidate that original one but still have that membership. So we kept on doing this and we were pulling all these delinquent credit unions into one central pot. Eventually it got to that time when they were in total in deficit budgeting we found that the deficit for these credit unions who were grouped together was somewhere about three quarters of a million dollars. That money was guaranteed by our Savings Protection Fund so there was no worries about that, but we also felt now is the time to turn them loose and why don’t we make a good credit union out of them. So this is where we appointed a Common Board (and the Common Board were in the main were Directors of the League) to operate taking in all these groups. Now running through this there were a couple of credit unions who for different reasons wanted to get out of the game. They were too small and the Directors saw they could not ride it, but they still wanted the facility there. So they voluntarily wanted to put their credit union over into this one. We were looking for somebody to operate it. We had the AWA Credit Union which John McIntyre was the Manager of, there was a credit union that was being very well run, but with no where to go, so we felt this was a good vehicle to transfer all these others to, so we created Metropolitan Credit Union. In the process of creating Metropolitan Credit Union jumping off with an independent Board we still wanted somebody there who was going to keep it on the straight and narrow and that is where we persuaded Kevin Bain to go on and become a Director of that particular credit union in addition to what he was doing. That was the evolutionary process about that.
In some ways it is a pity they didn’t call it Universal, isn’t it?
KM: The Universal finished up in it. I suppose the name would have been more appropriate, than Metropolitan, yes.
A lot of people were saddened to see the Universal name go, you know.
KM: You know the Universal went at the end because of its own problems, I think. There was no foresight of vision in its administration. I think again a couple of people much involved in that might have been preoccupied with other ambitions.
Now there is one thing coming out of that, Les Robinson mentioned something about that, following the central banking system. Were you involved with any of the negotiations to shift it into the banking system through National Australia Bank?
KM: Yes, very much. This leads to other areas too. The central banking system as it was operating, was operating through the ANZ. There were no problems with the relationship there until came the time, as usually happens, when the ANZ wanted to hike their charges, a very substantial hike very suddenly, again in an arbitrary form. Do this or else and we don’t like being spoken to like that so the alternative was to find another medium. We then called for tenders from other banks to see what sort of proposal they would be prepared to give us and the one that came out front was the National Bank. So there was an agreement that we would swing over the accounts to the National Bank on a certain day. ANZ didn’t think this could happen, but it was one time when the credit unions showed their strength because on the one day eighty credit unions switched their bank accounts. There were a number of post mortems that were conducted around the ANZ and we understand that a couple of people lost their jobs. They lost all that business in one hit and the National Bank got it. This is another point that I mentioned and that was on travel, going to other areas and just an aside that affected me personally. When we switched to the National Bank, this was mainly a management line and it was Les Robinson who did the negotiating, at this stage the Board all they did was put their hands up and approve it. But one part of the agreement was that the Bank said, ‘Well look, if you are going to switch over and we are going to give you an account, there is a bit of exchange, quid pro quo, here, we will expect for you to consider any other arrangements that could be made, any other service between the League and the Bank.’ We said that was all right. One they particularly mentioned was travel. The Teachers’ Credit Union had its travel operation operating through ANZ Travel. We were virtually the only ones who had moved to take this path, the other credit unions who had moved into travel had formed some form of joint venture with a travel company. I didn’t believe that this was a sound way to do it and nothing has happened to change my view on that, so what we did was negotiate with ANZ to provide a travel service for our members, in which our members would get certain concessions. The arrangement was good except that the ANZ travel people were banking employees and therefore they were very restricted in their attitudes, which need a little bit of flair in travel, and we were not getting out of there. When the League switched to the National Bank and all the accounts went over too, I decided for Teachers’ that that was the time to switch over our travel. So we did this and switching over our travel and talking to National Bank on the potential we had in Teachers’ Credit Union, which was quite substantial, we came to an arrangement like this; we provided the space in our office and National Bank put in the staff. They ran the travel office, initially no charges at all, all they wanted, all the savings they had, no rental nothing like this, but what they had to do they had to come to terms on what sort of concessions they were going to give our members. We had no problems with that, we had a very good relationship with them, we started stage two where if travellers wanted traveller’s cheques, and we at that time were not able to issue traveller’s cheques in our own right, so we used to at the critical times with teachers’ travel before Christmas and so on, we used to have bank clerks come and work in our premises issuing traveller’s cheques. A most unusual operation. But all done with good co-operation. They could offer traveller’s cheques we couldn’t and they soon got over the unparalleled thing of having to sit in a credit union office. The travel office is still going. We have got two branches of this. We have got somewhere around a dozen travel people now working at the credit union, all working for National Bank Travel but servicing our members, not open to the public, just strictly our members. Now that idea was most successful, but other credit unions started to say, ‘Hey what are you doing with National Bank Travel?’ So we told them and they said, ‘How can we get in on this?’ They were not of sufficient size where they could put an office in, they were too small to have a travel office, but they could run off the benefits that we got here. So virtually the thing is that Teachers’ hold the master policy and we do all the negotiating, all the conditions that we got for our members we carried through onto these other credit unions who wanted to come in to the National Bank Travel. I think there are about twenty credit unions who are using National Travel round about the place, just from a simple development like that.
Are they actually making a profit out of that?
KM: National Bank are I hope, but the credit unions are not necessarily. They may be getting something back for rental and a few things like that. But the main thing is that members are getting good concessions, that is what it comes down to. What it means too, is that National Bank on our behalf, link in part of these negotiations with Teachers’, we go out and we talk to travel companies, airline carriers about the potential of say five to ten million dollar travel business going their way and we can talk terms on those conditions. If you are talking about two or three hundred members you can’t do it. So that is the good part about that National Travel one.
What about the development of EDVEST?
KM: EDVEST again came out of Teachers’. It was one of those things where a couple of Directors from Teachers’ who were over in the United States on a study tour.
Which ones were these, which Directors?
KM: Lester Yabsley for one and Dick Macauley was the other one. I had been over there for part of the trip but then I left them and the other ones that stayed there were Steve Birt and Paula Ashton. Lester Yabsley, was attracted by this development or a retirement service for senior credit union members, which incidentally was started, developed and financed by CUNA Mutual. So they investigated that and they saw this retirement situation over there and they thought there was something that could be done back here for teachers. Now when we came back we took the proposal to a meeting of the Credit Union Teachers’ Association, which is an Association where all the teachers’ credit unions in Australia get together and have an exchange of views. We put together the package and said this was what we would like to do, what did they think? South Australia was the only credit union to come up with it so we formed a joint venture, an informal joint venture. So we established a package that was designed to attract and hold members who were reaching retirement age. There was a general view in industrial credit unions that once they stopped, in our case teaching, then the credit unions no longer had anything to do with them because they were no part of the industry. We set out to disprove this and we put together a package. The package covers financial advice and assistance, extra travel concessions over and above what they get as members of a credit union, free legal, accountancy, tax advice, lifestyle advice, all this sort of thing. There is an actual package of it. Now we formed this. We had it going between our two credit unions and it started to develop. Other credit unions started to hear about this and say, ‘What are you doing with this?’ We said, ‘Would you like to come in on it?’ That then developed into a package where other credit unions came in and shared it. What happens is, the members have got to pay for this but in return for it they get regularly bulletins of areas of interest to people in the retirement bracket, like an analysis of the budget, the financial advisory service, all this sort of thing. So we have got a number of credit unions in it. This particular EDVEST package then started to fit in with the national developments through AFCUL, AFCUL Services, where they were establishing the various funds for annuities and the retirement ones, the DA’s and all that sort of stuff that is going in there. Now that meshed in with what we were doing so AFCUL got interested in and said they would like to buy into this. So we said it was fine, we weren’t holding this to ourselves. We had taken on employees to administer this particular thing as a separate from the credit unions. So for a virtual song we sold out a half interest in this to AFCUL, so the EDVEST Retirement Service now, on a national basis, is 50 per cent owned by AFCUL and about 25 per cent owned by New South Wales Teachers’ and South Australian Teachers’. There are somewhere about seventy credit unions who are using that service.
Do you think there is a need and an opportunity for credit unions either centrally or through individual credit unions to offer other co-operative services?
KM: No. I have some quite firm ideas on this. I say this because I have seen it in the past. There are parts of the co-operative movement, and in fact credit unions in the past mainly Antigonish, who want to give a financial package that is going to take care of the individual. In all the circumstances I have seen, to my knowledge, where credit unions have moved into other forms of co-operative venture I have not seen one that has been successful. They move into retail trading and they get caught up with selling refrigerators and television sets and the whole lot and they get diverted from their main purpose.
What about the friendly societies that have moved into credit unions and such like?
KM: Friendly societies have been going for such a long time that I think their move over has been very gradual. I don’t have any problems about that. I think you can come the other way. What I am concerned about is the entrepreneurs in the credit union movement who have suddenly decided they can do a better job selling white goods than the retailers can. That is my main concern and that is where I have seen them go bust. But I don’t have any problems with friendly societies. I think within a lodge or that sort of framework the provision of a financial facility is good, I think it is part of the operation.
Have you been involved in the Institute of Credit Union Directors, or the Institute of Credit Union Management?
KM: The first one, the Directors, no. The Institute of Management, because I was a Manager, I certainly attended and I was involved in the early part of the formation of this. I think I have seen enough to know that I have got a pretty full plate. I really physically never have time to involve myself in either of those organisations and I was quite happy to let other members of my staff look after the management and other Directors look after the Directors. So no, I haven’t had any active involvement.
Now is there anything else that we haven’t covered, that we should?
KM: No, I think but perhaps when you get it all together if we can do this, I have been talking a long time and I don’t know that it has been terribly explicit, but perhaps we might do another tape sometime which would run on anecdotes and a few things like that that have happened. They don’t normally get their place in history but some of them are, I think I have mentioned a few of them here. I think perhaps we might be able to put together some sort of tape when you have done all your rounds, if you are interested in that.
I would like to do that.
KM: The only other relevant point here that I should have mentioned to you earlier, at a request from Jack Dublin, and I mention that name because many credit union people would know Jack Dublin, I did write a short history of the credit union movement in Australia, covering about ten years ago, a time up until about 1974. I have got a copy there, perhaps you would like to take that and read it and see what you can do with it.
Thank you very much.
KM: It just might fill in some gaps. But again it is written in a newsy sort of a way, as I have said. But it covers a number of issues I have mentioned here.
End Tape 4B