25 FEBRUARY 1992: RICHARD RAXWORTHY TALKING TO DONALD MATLOCK
Mr Don Matlock was Accountant at the Victorian Credit Co-operative Association. I will ask you Mr Matlock where you were born and when?
DM: I was born in Melbourne in 1948.
Whereabouts in Melbourne did you grow up?
DM: I grew up in South Melbourne for the first eighteen months of my life and then we shifted to Preston, which is in the northern suburbs where I grew up for nearly the next twenty years.
What sort of influence did you get from your parents, what sort of people were they?
DM: My parents were, and still are I suppose in that sense, very solid and good citizens. I always learnt what was the right thing to do and what wasn’t the right thing to do. That amongst other things is the thing sticks in the mind most of all.
Any religious or political influence?
DM: No. Neither of my parents were religious at all. Politically probably fairly evenly balanced I would think. No real influence.
So where did you go to school?
DM: I went to school at the local primary school and the local technical school for the secondary side. I did a diploma at tertiary level, a Diploma of Commerce at Preston Institute, which is now called Phillip, which is out in Bundoora. So I did all my education in the same area as well.
Did you like school? Did you like academic things?
DM: Well certainly I think tertiary education is where all students have the opportunity to have a bit more flexibility and very much left to your own resources as to whether you get there or you don’t. I think a lot of students really enjoy that, once you get out of the more regimented uniforms. I liked school in the sense of that we all have to go to class and learn. School life in terms of other things, sporting-wise and companionship and friends, it was great. A lot less pressures on you in your life when you are at school than later on.
I can’t agree with you myself. So what was your first job?
DM: My first job was with ICI, the UK-based chemical company in Australia. I was there for two and a half, three years, starting as a clerk in the Novell Ammunition Division Group and become Assistant Accountant for the Ammunition Division of the Group before I left. I very much enjoyed my first working days, immensely there.
Where did you go next?
DM: I then joined Amytal, or British Tobacco which is now called Amytal, as a management trainee for a pre-determined course of about two and half years. We were set various tasks to do and we performed each job and then we put in charge of a section and that sort of thing. There were only four of us in Australia and that experience was invaluable. I think that is probably some of the best experience I have had in such a compact period of time ever. It was great.
How did you come to the credit union movement?
DM: I came to the credit union movement because after those first two jobs I felt I wanted to be in something that was closer to the people in a sense rather than be involved in strictly corporate life. Those two companies were both large corporates and it was all very regimented and there were forms to fill in and there wasn’t much scope for lateral thinking and that sort of thing. Apart from, obviously, interaction with the people you worked with it was a little bit limited and I wanted something you could put your energies into a bit more. When I went for the interview for this job it was a very small entity at that time, there were only six staff when I joined. It had a growth phase. I think the Board of Directors had just stated that the VCCA should be developed on a much larger scale and that was in 1973, so it was set about to develop the Association from that point in time. I think I was on the ground floor of that earlier development.
So what were you actually doing when you got here?
DM: I was Accountant for the VCCA which was looking after the general ledger, looking after the insurances and all those sorts of things. Primarily part of the reason I was employed was to develop the centralised banking scheme, which had only just commenced when I arrived and I think there were four or five societies on it when I arrived. When I left there were nearly one hundred and twenty. I was the Bank Manager to the credit union movement during that development phase of the scheme.
Was there anybody there working on that before you arrived?
DM: Yes, it had just commenced with David Manjiviona. David unfortunately was dying of cancer when I joined, which was quite sad. He died not long after, probably three to six months after. There was a Hall devoted to him at the Moe Credit Union, to his name, when it was built, when later on the whole building was constructed down there.
You know the Moe people?
DM: I can remember Laurie Watt, Wally Winter. Wally wasn’t Moe, he was La Trobe Valley, but they are all fairly close down there.
Jim Moore was Moe, wasn’t he?
DM: That name does ring a bell. There was another girl called Connie Pelligrini, I think. She and David looked after the accounting and administration.
So when you arrived was the system computerised or was it straight out investment?
DM: It was computerised in that there were arrangements with the ANZ Bank for statements to be received each day in terms of what had been credited each day and the cheques presented on behalf of each credit society each day. It was controlled and balanced each day, so it wasn’t in a shambles when I arrived.
What was your main job, to go out and sell it to credit unions?
DM: Yes it was, to sell it to credit unions. I basically did all the marketing of it, which in some cases involved going to meet the Boards of Directors and discussing it with them and what have you. Literally getting people on to it, lock, stock and barrel, which involved signatories and various forms as you can imagine. This went on over three years.
Did you have to devise, or had there been devised in Victoria what in New South Wales was known as an equitable mortgage?
DM: Yes. In most instances where overdraft or line of credit facilities were provided to societies under the centralised banking scheme an equitable mortgage was taken as security for advances.
How did they decide on the wording of that? I understand there was a lot of negotiation in New South Wales. I don’t know what happened here.
DM: Actually here there was already if you like a standard document that was utilised then.
By whom and where did it come from, do you know?
DM: Good question. To be honest, I can’t remember.
New South Wales got theirs from Canada.
DM: Is that right. Well this was standard. Whether or not it was actually produced by the chap who was the Solicitor-Lawyer for the Association, John Galvin, I don’t know. John was familiar with it but I don’t know whether he actually drafted the document. But that was the document that was used to securitise the overdraft, line of credit facility.
Were there objections from the credit unions as they were joining?
DM: There wasn’t much objection. In some instances some of the larger ones had a problem with it mainly because they had given prior charges on real estate that they owned and this sort of thing. So it was more a matter of people having other arrangements and as a result of it the equitable mortgage disturbed or upset some of those existing arrangements. But most of the smaller to medium size credit unions who didn’t have separate borrowing arrangements against assets or whatever there was never a problem.
You dealt with Chairmen and Managers and all that sort of thing, can you remember going out and doing this?
DM: Oh yes I can remember visiting quite a number of credit unions, either the management and/or going to address the Boards of Directors about the merits of the centralised banking scheme and joining it.
So you had to go out in the evening?
DM: Yes, I drove and some of those were long drives. Down to Ararat and places like that.
Did you come back that night?
DM: Good question. I don’t think so. If it was a fair way away what we would normally do in the spirit of credit unions is have supper afterwards and probably a can of beer or two. Hence it was not sensible to drive home.
What about the investment of the funds? Did you have to do that yourself?
DM: Yes.
In consultation with anybody?
DM: I think probably I would have been the first person to be involved with investing the VCCA’s liquid funds on the short-term money market. In fact I can remember distinctly making the first investment that we ever did on the short-term money market with one of the official dealers. We put $150,000 on on the Friday night with a company called Transcity Discount, which is one of the nine official dealers, and Geoff Conrad and I were sort of scratching our heads on the Monday thinking, “Good heavens, hope we get it back.” Mind you it was the most secure investment that you could possibly make, Government Bonds as security and Lender of Last Resort available from the Reserve Bank. You couldn’t invest it with anything better, but it was just one of those things that we were breaking new ground.
So you hadn’t had any training in this sort of investment?
DM: Well actually when you say training in it, I was familiar with it, not from the point of view of transaction but from reading and what have you, that sort of thing.
Did the credit unions ask you where you put it?
DM: I don’t know how to answer that. I think once the centralised banking scheme developed there was a level of liquidity which was there each day and from time to time Managers would ask, “Where are the liquid funds invested?” They were told that they were invested in this shape or form on the short-term money market. That was always trusty investment in my time. I know it wasn’t the case some time afterwards, but I won’t digress into that. But the funds were always either in Government Securities or Bank Accepted Bills.
You had to answer to Geoff Conrad?
DM: Yes Geoff was General Manager all of the time. He employed me and he was still there when I left.
So did you have to actually answer to him every day?
DM: Yes. Geoff was my boss. What I think I liked about Geoff was that he was good at delegating and developing his own people, sort of say, “You’re the man for that job.” You could always discuss things with him but he was very good in saying, “Look you make the decision,” which I think was very good.
Geoff Conrad left, well I believe he was removed, do you know anything about that or was that after you left?
DM: It was after I left, but I am aware of the problems that developed surrounding that, let’s say. I wouldn’t like to talk about those.
Well I have heard about it from a personal angle, not really about that but there was also some actual differences over the working of the VCCA wasn’t there?
DM: Yes I think from memory, leaving the personal side aside, it was Geoff’s understanding when he was employed as General Manager that he was there to be an administrator of the VCCA as it grew under the direction of the Board of Directors. Then I think people were virtually saying, “Well we want you out there amongst it all.” Sort of out there getting amongst the credit unions, finding out what they wanted, being close to them, all that highly involved almost at ground level in that sense of really getting close to the credit unions. Whereas Geoff thought his role, as it was described originally; and who knows, he may have been told otherwise in between time I don’t know; he felt he was there to do a job which was to administer and look after the VCCA and not have to get involved in getting very, very close to the credit union movement. But as you can probably appreciate I don’t quite know where the truth lies with all that on both sides.
Did you have any direct dealings with the Board while you were at the VCCA?
DM: No not other than getting to know all the Board members, because most of them were involved in the members societies. I think I can say I got to know them all quite well on a one-on-one basis because of involvement with their particular credit unions. Not in the sense of speaking to Board members directly about concerns of the Association that I had, for instance.
Did you have any dealings with Ralph Lewis?
DM: Yes I did. Ralph was the General Manager of the ACOA in those days. He was a tough man, but probably a fair man.
He didn’t invest with you did he?
DM: Ralph didn’t. If you have interviewed Ralph, we had a stern argument about the sorts of returns that he could get separately. I think one point that needs to be explained in relation to the central banking scheme and the development of the total banking scheme, was that when we were investing funds on the money market obviously the rates that we paid to the members who were investing with us were less than we got on the money market. Obviously there has got to be a margin to be made. The centralised banking scheme had to be profitable, which it was. So therefore, just like the banks do today, they don’t pay us depositors what they get on the other side. I think in fairness to the larger credit societies, and we used to talk about this, they had as much money to invest on a daily basis as we had. They became educated during that same time and in fact I would go as far as to say most of those same larger credit unions were just starting and/or hadn’t started at that point investing on the short-term money market. So we all sort of moved there together.
Were you in touch with any of the other States to see what they were doing?
DM: Yes we spoke to AFCUL, which was the central body, and they had some funds to invest. South Australia we used to speak to a fair bit, which was the South Australian group. I am stretching to remember whether we also spoke to Tasmania, but South Australia we used to speak to, probably more so than New South Wales, and we used to speak to AFCUL.
Was there a competition between AFCUL under Dermot Ryan to run it centrally rather than the States?
DM: Good question. You will have to forgive me if I stop for a second with some of these in terms of thinking back. Now that you say that I can recall that I think AFCUL wanted to be the central depository for credit union funds on that sort of money-market basis, a daily basis. Of course they ran into the same problems as we did going back to the membership in that if we deposited with AFCUL they couldn’t provide us with a rate that we could earn in the market place. I think all of that got back to the consideration that OK if you were large enough a society within the Association, or an individual society, or the central body for Australia, if you had liquid funds which were substantial enough to be able to invest on the money market in your own right well why should you lessen your return? I think that is what people were really saying. Very unco-operative for a co-operative movement.
Do you know whether Dermot Ryan’s methods operating his central banking system that he had were under challenge by the Board and by AFCUL people generally?
DM: I think once again memory is coming back. I think at that time let us say there was some dissatisfaction with AFCUL and the way AFCUL was operating, just generally speaking. I don’t think the States, speaking for the VCCA, I don’t think the VCCA was terribly happy about AFCUL and the way AFCUL was run.
So who was being critical? Was that Peter Hodgkinson?
DM: To be honest I don’t know. I think it was the Board generally. Obviously not being party to the Board meetings and what have you I couldn’t really say. But generally speaking I presume it came from the Board.
How were your transactions organised? Was it done on the nod over the telephone?
DM: For the money market investments? Well the market operates that way.
I heard Dermot was in trouble because he was doing that.
DM: Well I think the answer to that is that when you place the money on the market it is verbally agreed on what conditions you invest it, but it is then immediately followed up with a confirmation, confirming that the investment was made on that basis and here are the physical securities for you to hold in custody. That is the way that I always dealt and I can say that we never had a problem, we were never in jeopardy to lose any of our money, never. That is the only way it should be done. In other words you have confirmation immediately. In those days there were no fax machines so what happened the next day couriers would deliver the confirmation and the physical securities and they used to be deposited in our safe. We used to have a register of the securities that we were holding, so that when we got them we gave the other ones back. We always reconciled how much we had and what securities we had. We had to do this otherwise it would get terribly confusing if you had say $3 or $4 million invested on the market and remember that these Bank Bills were in denominations as low as $100,000 sometimes, even $50,000, so you would finish up having a lot of physical paper on hand.
You mentioned earlier on that you were handling insurances. Was that generally?
DM It was for the Association and we were also dealing in those days with co-operative insurance. It was with CIC in those days. Most of it was with CIC.
Were you involved in the insurance split?
DM: No.
Didn’t happen in Victoria? It happened in New South Wales. When Stan Arneil got fired.
DM: Insurance probably became more of a major issue later on when I was there. Towards the end of 1975, or thereabouts. Credit unions were growing quite dramatically at that stage and loan protection insurance had become a major consideration and it was also a major cost. The credit unions used to bear the cost of it, they didn’t pass it on, I don’t think they passed it on, all of it. The cost of it was something that became fairly critical and a lot more attention was paid to insurance from then on.
Did the Association have a head policy with CIC do you know, on behalf of credit unions? Or did they operate to credit unions mainly?
DM: I am trying to recall now what way it was. I don’t think there was a master policy in that sense. I think CIC were the recommended insurer. I think that was about it. I don’t think there was anything stronger than that but I could be wrong. Memory is a bit stretched today.
Your transactions on the money market and such like, they were insured?
DM: Well there is no insurance for money market deposits in that sense, your insurance, if you like, looking at who you are investing the money with and how secure they were. Now getting back to what I said before if you are investing on a trustee investment, which is Government Bonds, Treasury Notes and Bank Accepted Bills of Exchange with an authorised dealer, one of the nine authorised money market dealers, then you can’t go any further than that in terms of protecting your money.
What about the people who were handling it, they would be subject to a bond I suppose?
DM: Each of the organisations that run those sorts of companies have fidelity requirements.
The VCCA too.
DM: Yes the VCCA used to have a fidelity policy from memory which was to cover misdemeanours of people, things like that. Just in case you got somebody who didn’t stay clean.
Well it did happen occasionally.
DM: I think as you are probably aware, I struggle to remember the exact time but some time after I left, the Association got involved in some down-the-line lending. They got away from the best form of investment and got into some other forms of investment which they ran into some troubles with, via some solicitors’ trust funds, for instance. I am sure some people would remember that. Of course that wasn’t in my time. I kept it very straight and narrow when I was running it.
Well Dermot Ryan didn’t have any trouble either in that direction. But on the other hand people used to criticise him for the way he did it. The reason I asked you was because I wondered whether you knew whether that was legitimate or not.
DM: I really don’t know I would have to say. I can remember having some discussions with Dermot and also the chap that was my counterpart at AFCUL, I can’t remember his name now.
Kevin Murray?
DM: Yes it was Kevin Murray.
The Treasurer was John Prescott.
DM: Well Kevin Murray was the party that I used to speak to. I did speak to Dermot as well. Kevin was very pro wanting to develop that relationship where moneys would be invested with AFCUL. But once again we had a bigger business to run and one of the primary vehicles for paying the Association’s way in those days was the centralised banking scheme. Each of the other functions such as field service and personnel, to name two, in the earlier days profit centres in such, they weren’t expected to generate a great deal of income, if any income at all. So we had to make sure that we gave the credit unions a reasonable level of return. Obviously it wasn’t fully on-market, because they could go away and do that themselves. But they were very happy to come via the Association and they got a reasonable return and we had a margin and that is what really paid for the profitability of the Association.
End Tape 1A: 3905 Words: 1 hour 20 minutes
25 FEBRUARY 1992: RICHARD RAXWORTHY TALKING TO DONALD MATLOCK
There was some conflict in the credit union movement as to whether you should make a profit, or how much profit you should make.
DM: I think in those earlier days of rapid growth of the credit union movement, which was from the early 1970s, as they grew and grew in size and were handling more money and importantly they had much higher costs to cover and what have you, they had to focus very much on the income side. From the point of view that they had to be able to pay their way, which means at least breaking even, they really should be targeting a profit. Now there was a lot of argument about were we getting away from what credit unions were really meant for. They grew up in the Catholic Church and they were there for a purpose and they didn’t want to get big and beautiful, commercial and all the rest of it, therefore, there was never a debate about whether credit unions should be profitable. Hence the same sort of argument flowed on into central associations becoming bigger and handling a lot of money and/or whether they should be profitable. Of course if they weren’t profitable well probably the membership would have to be asked to bail them out with subscriptions or whatever to make up the deficit, simple as that, or capital or whatever. So those sorts of philosophical problems and arguments started to develop in that early period of time.
Were you involved at all with the Savings Stabilisation Fund, Savings Protection Fund, before the Reserve?
DM: Yes the VCCA Stabilisation Fund was a separate unit, or almost like a small subsidiary, of the Association. Not of the Association, sorry. From memory I am trying to recall whether credit unions subscribed to the VCCA Stabilisation Fund. I think it was part of the VCCA and it had a very small staff.
Did you invest their funds?
DM: No they handled their own funds. But there were no liquidity calls, or reserve calls, by the VCCA Stabilisation Fund in those days. It was very small and it was sort of nipping around the heels of let us say some of the very small credit unions which were being liquidated because nobody could be bothered trying to run them any more. With this growth that started some of the credit unions that were obviously very badly managed and directed ran into real problems once they started to grow.
Now were any of the ones that you were investing for involved in those sorts of situations? Did you get involved in them yourself?
DM: I did a little bit of work for the Stabilisation Fund purely on an availability of time basis. Actually after I left the Association I finished up doing some work for the Government body in analysing some of these problems of credit societies. I was given a whole heap of books and asked to come up with a report on the status of that credit union. So I did a little bit of work in a private capacity several years after I left for the Stabilisation Fund, which was then a Government constituted body. In the earlier days, when the VCCA Stabilisation Fund was there, I didn’t do much work with it as such, it was separately staffed.
You didn’t see anything of the problems of the credit unions and see what they mainly were?
DM: Well I thought the main problem with credit unions, less so today but certainly then, the quality of management, i.e. the background from which management came, should have been more directed towards let us say people who had been from the banking industry or from the finance industry. People who had been, if you like, Branch Managers of a bank or of a finance company, or whatever, who had been very used to the marketing and administration of consumer-lending. Unfortunately a lot of the people who were employed to manage these community credit unions, in particular, were not qualified enough to do it. For instance they couldn’t, in a sense, pick a con man when he walked through the door. Big problems in that regard.
And you?
DM: I wasn’t involved in consumer-lending. But I did have some experience after I left the Association running a finance company for Mr Arthur Goode, who ran a number of finance companies and other things in the merchant banking field. I finished going into merchant banking after leaving the Association. The one thing I might say, and it is interesting, later on, and now it is the case that it is mandatory for credit unions to have a certain level of deposits in liquid reserves, I developed a paper when I was at the Association to encourage credit unions to establish what I called liquidity reserve deposits with the Association. I think it was targeted about 5 per cent, or up to 5 per cent of their total deposits, which they should have a liquidity reserve. This should only be withdrawn in the event of real financial crisis.
Did Ralph Lewis carry that sort of level?
DM: No as per usual Ralph wouldn’t be privy to that. Ralph might have been a Board Member of the Association, but Ralph didn’t provide a lot of support in let us say the functions of the VCCA. He didn’t provide much support.
He told me that he didn’t have to have as much as anybody else because he had a special relationship with the Bank Manager.
DM: Well I think that gets back to the larger societies going their own way as they grew quite large. A number of them, even in the earlier days, certainly surpassed the Association in terms of size. They became in their own right quite substantial financial organisations and thus they have to make their own way. That always happened at the end of the day there wouldn’t have been any, or not any but later on, after I left several years after I left, the Association started to run what was more akin to taking very short-term money from some of the larger credit unions and trading on a much finer margin. Turning it over into something say a quarter or half per cent better. I would still today challenge the merits of that in that you have got to have one hell of a lot of money at a very small margin for it to be worthwhile, otherwise it is not worthwhile.
Well what else were you involved with in your job that we haven’t talked about, can you think?
DM: Probably not that much else in that the centralised banking scheme, which involved overdraft line of credit facilities, various forms of deposits, that in itself was time consuming every day in running that system. Over and above that I was responsible for segmental sort of reporting in relation to the various activities of the Association. Responsible for getting the accounts together for monthly reporting for the Board, all the normal things that a Financial Controller/Accountant is required to do for maintaining the accounts and putting the results up to the Board. Dealing with the Auditors. Annual accounts. All those sorts of things. Just the overall administration of the VCCA.
Can you remember any of the financial problems that the VCCA had?
DM: Well I was there at the very beginning of Jubilee Lake. I actually drew up the original books of account for Jubilee Lake. This was the very early days where something like $30,000 or $40,000 was allocated for the Board to review and call upon various consultants.
Do you know whose idea Jubilee Lake was?
DM: That is interesting. I can remember the nub of where that started actually. There was a guy from the VC Cental Credit Union in Canada called Bob Hortall, or something like that. He came out and provided a major seminar to the credit unions in Victoria in University House. After that was completed Geoff Conrad, Elva Eden, his secretary, Graham Benson and Bob Hortall went for a drive up through Daylesford. They happened to stop next to this little lake in Daylesford called Jubilee Lake. Everyone was sitting having a picnic there and saying wouldn’t it be a wonderful idea to have a convention centre resort for the credit union movement and that is how it started. Geoff walked up to my desk on the Monday morning and said, “We were talking about something yesterday.” He started to draft out some very rough numbers that day. That is how it started. I can say with some confidence that is how it started.
Was Leon Turner involved then?
DM: By the time I left, which was I think November 1975 or thereabouts, Leon had been on deck for about three months at that stage. He had just started to do the research, or whatever.
Was there any talk about buying land rather than leasing it off the Council?
DM: To be honest I can’t remember. It was pretty early days when I left.
Had any problems come about regarding Teledata at that time?
DM: No. Teledata didn’t exist in my time. Teledata wasn’t even thought of. Teledata I think came probably a good eighteen months after I had left. It wasn’t there. The Credit Union Centre had only just been physically completed. The day I left, they moved in that weekend. I actually wrote up the first set of books for Credit Union Centre. I was at the start of a lot of these things, but they weren’t my idea.
They can’t blame you.
DM: No, they can’t. The concept of having a central office for the credit union movement in Victoria, I don’t think there was anything wrong with that idea. But in hindsight, and it is very easy in hindsight I suppose, Jubilee Lake was certainly a mistake and so was Teledata.
More a matter of timing. You didn’t see anything about Teledata?
DM: I stayed in touch with some present and past employees.
So it was all second hand as far as you were concerned?
DM: Yes it was all second hand. I heard about the bits of drama. I might add, as they say off-the-record, my wife, Cheryl Matlock, I met here about four or five years after I had left. Cheryl had joined in 1977, or whatever it was, and she was Mike Hildebrand’s secretary. Cheryl and I met and we have now been married for thirteen years. Cheryl was Mike’s secretary for a couple of years whilst we were married. But I can say my wife did the right thing as far as that sort of thing goes, what was happening here was kept to herself, which was a very ethical thing to do.
Did you ask her?
DM: Well having been in contact with others, I didn’t need to. But I must say that was purely on a social basis. I used to catch up with some of the people here once every one or two months and have a beer on a Friday night and would hear a bit about it, but that was all.
Did you go to any of the old credit union Schools at all?
DM: Well I was involved in a number as a presenter, a number of these seminars that we used to have. I did go to quite a few and I was actually involved in some presentations at quite a few.
Where?
DM: Most of them were at University House. There was another place that we used to use, but I can’t think of it now. There were two places that we used most of the time.
Warburton Chalet had burnt down? It was burnt down the year you came here, 1973. There was a 1972 School.
DM: Obviously I wouldn’t have gone to that one. I am stretching the brain a bit there. I can remember Warburton Chalet, I can remember it being part of a conversation or whatever. University House I think in Royal Parade we were at mostly. Monash at Wellington Road was where some of them were held.
Didn’t go to any interstate ones?
DM: No. Was never invited.
Australian Institute of Credit Union Management hadn’t been formed at that stage?
DM: No. I don’t think so.
What about Credit Union Executive Society, CUES, it is an American organisation but had a local Chapter, so to speak?
DM: I don’t think so.
Lloyd Hawkins, Queensland?
DM: Doesn’t ring a bell.
He is the man who was mainly responsible for picking up the plastic cards in 1977.
DM: That was well after I left. I left in 1975. I can’t recall him.
He had a number of other schemes which were going around at the time as well. So what do we need to cover that we haven’t covered? People?
DM: A couple of comments. I have thought about it. I think they might be valuable. I think one of the reasons, looking back on why I think the VCCA really failed to be successful over a long period of time. Failed to be very successful lets say and in that way avoiding some of the disasters it ran into. I suppose it gets back to people. From my recollection, I can never recall a General Manager of the VCCA being a banker when you think of the industry that fundamentally credit unions are in. Sure I understand the spirit of the credit union movement and I think it is an excellent one. Lending money can have a lot more sort of empathy and a lot more of the personal thing, lending money and collecting back and all the rest of it, and that is what I think is still great about the credit union movement today. But I think where the Association probably should have, in hindsight hopefully someone might agree, really got for the development of the credit union movement in Victoria, which is really consumer finance, all right these days mortgage finance, but primarily consumer finance, we really should have had a very good person or good persons from the banking industry. At that point in time they were basically, banking finance, the only people that had done it successfully. It would have been quite easy to get the right sort of person and indoctrinate them with the credit union ethic and what have you. I think we may have run into a lot less problems. That is a very general comment.
The people that you worked with here, anybody that you admired or thought a lot of?
DM: Yes I think there were some people I worked with. Brendan Griffin was one. I still see Brendan and we are quite good friends. Brendan was the first General Manager of the Stabilisation Fund, the VCCA Stabilisation Fund. He was highly regarded in his work that way. He became Deputy General Manager of the VTU Credit Union and just retired recently. We play golf together quite regularly and we both like red wine. Brendan is somebody who really made a good contribution to the movement in trying to keep all these checks and balances in place whilst to a certain extent it was growing out of control in lots of areas. He was very good. Another chap who I thought worked extremely hard, and I am not talking about the seniority of management just talking about somebody who worked very hard and did a lot of good work and may not have been recognised for it enough, a guy called Phillip Elliott who was running the Field Service part of the operation when I was there. I still see Phil occasionally. They were two people. Looking at the Directorship of the Association, I think from time to time it is the same old problem and it has happened with companies in the corporate scene if you have too many people. I think the Association should have had more if you like non-executive directors, i.e. directors who were not in the credit union movement. They should have had say out of a Board of twelve, probably three or four people who were non-credit union people who could provide more of a balanced view. You know what it is like when you have too many people all from the same place they can’t see outside, or they are not thinking laterally.
That wasn’t allowed was it?
DM: You are right it wasn’t allowed, but I think when you look back it should have been. There seemed to be a lot of conflicts on the Board between Board members and they also to a point had call it secular interests. Community credit union, industrial credit union, parish credit union. Sure all of their considerations had to be taken into account and what have you, but I don’t think the Board of Directors at the end of the day were balanced enough. There was too much from within, in that sense, and not enough from without.
Well they Government apparently have appointed a number of outside members to the Reserve Board recently and are getting great criticism about it.
DM: Well I think there is always criticism to change or substantial change. But I think at the end of the day the important thing is whether the change is right. Consistent with what I believe, I think there should be outside people involved.
Well they have got bankers in. Bankers have dropped an awful lot recently, whereas credit unions haven’t.
DM: Well I think the answer to that is there are good bankers and bad bankers, there are good credit union managers and bad credit union managers. Not everybody is good, not everybody is bad. You don’t agree?
It is not whether I agree or not, I am putting the points of view of people I have spoken too. I don’t really have much of a view on that.
DM: I think the comment about the banks is pertinent. Certainly the banks have got a lot to answer for in terms of all this spurious lending to entrepreneurs.
No proper security and all sorts of things.
DM: That’s right. All on the basis that the good times are never going to end. They have learnt their lessons out of that. Put it this way, amidst our four major trading banks, and I have never worked for one so I am not pushing anybody’s barrow, there are some very good people amongst them.
It is only lazy lending isn’t it. It is much easier to lend a great big amount to one person than it is to a whole lot of little fellows.
DM: I think that is one element of it. What a lot of people forget, and I suppose I have been involved in merchant bank lending after I left the Association, a lot of that lending that failed was against Share script on public listed companies. A lot of the banks, for instance, said, “Look if we are going to lend you $10 million, then the shares that we take are marketable shares,” that is very liquid you could sell them tomorrow and someone would buy them. Most banks were lending on a 2 for 1 ratio, in other words they would only lend $10 million against $20 million of immediate liquidity if they were to sell the shares. Now in those days that was considered quite prudent. In other words the share market would have to fall 50 per cent before they started not getting their money back. See the point I am making. Now that was considered quite prudent by everybody. I think if you had have asked the man in the street at that stage he would have agreed, the market had to fall 50 per cent for the bank not to get its money back. But the problem was the market fell about 90 per cent, sometimes 100 per cent. That is why the banks are still trying to collect the money today.
In other words ones at the back there as well.
DM: That’s right. In that sense ????? Bonds are regarded as being tradeable in the market place. We all live and learn.
Now what else is there? What about this building? You say you set up the books and what have you, but have you had any other involvement?
DM: No. From memory the contributors, the capital contributors, for the ownership of this building originally was a three-way split between the VCCA, the Postal Credit Union, from memory, and one other I can’t recall to be honest. There were three equal owners of Credit Union Centre once it was built. What happened after that I don’t know. Once again, having left I don’t quite know what happened.
As far as management is concerned, we have covered that, so it looks as if we have just about come to an end of the amount of your involvement. What did you do after you left here?
DM: Well I joined a merchant banking group called the A C Goode group of companies, the Arthur Goode the stockbroker. I joined his merchant banking group, not the broking house. I worked with that group for six years. Then I left it in 1981 and joined a British merchant bank called Clynewood Benson. They were starting up here in Australia and I worked for them for nearly five years. Then in 1986 I started my own corporate advisory business, which I have been running now for six years. So I have spent a lot of time in that banking corporate advisory field since. That is how I came into contact with it, investing funds in the money market for the Association. I became very interested in it.
Well you have been successful through the late lamented problems, I suppose you have been successful.
DM: Oh things have gone well, it is six years and I suppose the important thing is I have survived the last eighteen months. Things have gone quite well and I am quite happy with the way things are going. I enjoy my work and I hope I can continue to enjoy it despite the fact that earning a dollar these days off your own bat is a lot harder. You would know that.
Well as I said, I can’t think of any further questions. I think we have covered the field pretty well. So thank you very much Mr Don Matlock.
DM: Thank you very much.
End Tape 1B: 3770 Words: 1 hour 15 minutes