26 NOVEMBER 1990: ANSWCU90: RICHARD RAXWORTHY TALKING TO KEVIN BAIN WHO WAS AT ONE TIME PRESIDENT OF THE NEW SOUTH WALES CREDIT UNION LEAGUE
Mr Bain, where were you born and when?
KB: I was born in Auburn on 14 November 1927.
You grew up around there?
KB: Yes. I haven’t moved far, I am still living in Auburn.
Your parents? What did you father do?
KB: My father was a locomotive driver with the New South Wales Government Railways. My mother was a tailoress with Peeps and Company, one of the leading tailors in Sydney.
What sort of place did you live in? Did they own it, do you remember?
KB: Yes they were quite conservative people and saved and strived. That was just prior to the Depression years in the early 1920s. They paid off the house and owned it from 1930 on.
Was your father ever out of work, or was he on work rationing?
KB: He was on work rationing. I think he worked two and lost one, or it could have been the reverse of that. It was an arrangement where he virtually got paid for two weeks and worked three, or vice versa.
So I suppose you were fairly well off by comparison.
KB: Yes we lived what I regard as comfortably in that we always had food, we always had clothing. I wouldn’t say anything more than that, but what I regard as a comfortable existence.
What sort of influence do you think you got from your father?
KB: From both parents I was influenced greatly. I was an only child and that in itself means that you seem to get the full attention of both parents. I found that dad was extremely conservative in his outlook. He had strict rules. You never buy on credit you always save and have cash before you buy something, that was his approach to it. Mother was a little different, she saw some value in enjoying the benefits rather than waiting until she had the cash in the pocket. But that didn’t mean that she was a spendthrift, she had good economic sense, my mother.
Can you remember how they managed to buy the house?
KB: Yes it was on a loan from the Commonwealth Bank I think. It was a different name then it was the Commonwealth Trading Bank, I can’t recall the exact detail of it, but they obtained a loan and bought it that way. He bought the land first and paid that off. They lived in a rented place up until that time. They built the house at that stage for four hundred and seventy-five pounds.
Where did you go to school?
KB: I went to Auburn Public School, which was about a mile walk from home. I then went to Parramatta, Arthur Phillip High School as it is termed now, used to be Parramatta Intermediate High School. I did commerce as my main subject, that was my reason for going there rather than going to a technical college which involved trade courses.
Did you like school?
KB: Yes, I had no problem with school. I found that it was difficult in that school for sporting activities because it had no open areas. If you know the school it is right in the heart of Parramatta, next to the Lancer Barracks. Consequently even the rules in the school playground were such that you couldn’t do anything else but walk. You weren’t even allowed to run because of the size of the restricted area. So sporting activities were limited to football up at Parramatta Park, we used to have to walk up to Parramatta Park and enjoy the game of football or cricket or whatever it was up there. Consequently it was a bit limited.
What subjects did you like or dislike?
KB: Oh I would regard myself as an average student. I was not brilliant in any respect. As a result of that I found that I had no real dislikes.
How long did you stay at school? Did you go on to there to High School?
KB: I went to the Intermediate Standard, third year as it was known then. Then after that I got employment in the Department of Road Transport and Tramways and then did shorthand and typing and further extension of the bookkeeping and business principals at the Metropolitan Business College.
So at Metropolitan Business College where?
KB: In the city, in the city office. I found that the shorthand writing and typing were considered as prerequisites for further promotion in some of the positions in the Department. I thought the opportunity was there to get additional skills and that perhaps it would be beneficial in the future. To some extent it proved beneficial, particularly the typing. The shorthand I used very rarely, so as a result of that it was just a piece of additional information that was useful from time to time.
As far as the work you did, what exactly did you do when you first started?
KB: I was a clerical officer in the Department, recording registrations and drivers’ licences. Specifically I went into a section that was introducing the new Inspection Station scheme into the country. As a result of that there was a fair bit of formulation work associated with it and I was a bit lucky in that respect. I then went on to the general recording, which was a real factory situation. You were called clerks but all you did was record entries on cards at a set rate with a darg attached and you kept up that. They were fun days though.
How do you mean?
KB: Well it had that real factory atmosphere and some of the things the members of the staff used to get up to were quite outstanding, that I thought unique at the time. We were right next to Phillip Street Police Station, in 10 Phillip Street, the building went through to 99 Macquarie Street. The staff used to get up to some unusual tricks and habits, particularly with people parked out in the street. I remember on one occasion a fellow parked his truck out the back in Phillip Street in the street and he had a load of oranges on. When he came out the oranges had been used for dart practice by the clerks out the windows with pens and all sorts of things, the oranges were like porcupines by the time they had finished. Those sort of boyish pranks I suppose you could call them were forever happening within that environment, because of boredom mainly.
Did you ever get a turn in the butt room?
KB: Yes, only as a spectator mainly, but I never worked in the butt room.
Did you play cricket down there?
KB: Yes. Well they used to have basketball practice as well. All the departmental issue towels were rolled up into a large bundle and at morning tea-time the teams would come in from either end of these cabinets. I remember on one occasion the lady that was in charge of the typing pool happened to walk through and the teams came out from either end of these cabinets in a running group, like as if they were running on to a football field. I thought she was going to die on the spot with these two groups of young fellows charging in from either end of the room. It was unique. A fellow by the name of Warwick Oliver there, Warwick won the butt holding competition. You had to stand up against the wall and they had a mark on the wall and he held what I think was the miscellaneous butt, which was the heaviest and largest of all and would be five inches thick of paper bound together. You had to hold that at arm’s extension for a period of time and he won the competition. All those sorts of things to sort of break the monotony. I think Warwick has passed away now, as a matter of fact, but he was one of the characters. Along with one fellow called Bob Shriver, I will never forget him, he was the real Damon Runyon of the whole show. At Transport recently a few of the fellows were together there, we were recalling those days and the times it happened. It was rather unique, it is not like it now and never will be again. Bear in mind it was War time and the majority of the senior people were away at the War. You were virtually running it, seventeen and eighteen year old fellows, up to eighteen ages, then the had the hierarch of the place. There was no in between because they had all gone. There was a big gap and you wouldn’t say supervision was as good as what it could have been. It changed as a result of the War and changed in a different way, because the fellows who were pilot officers and those sorts of fellows came back and they were back again stamping dates on cards. It was a hell of a change and I wondered why some of them stuck it out, but they did. Some of them went right through.
What about up on the roof? You used to play up there as well.
KB: Yes, cricket on the roof. I do recall one of them decided to get up on the parapet and walk around one night after we had had a fund raising effort for the War effort. He was stoned to the world and how he never fell off there I will never know, but he managed to get around all right.
When you were a boy, did you ever get sent down to the ‘First and Last’ for a billy of beer?
KB: No. I went out to Parramatta Motor Registry in about 1945, 1946, and I was out there for eight years. Consequently I didn’t get involved in the overtime that was required to be worked to maintain this record system, given that most people who came back from the War thought the transport industry was a wonderful thing to get into. They bought cars and trucks and all these sorts of things and our records exploded dramatically at that time. Consequently they couldn’t maintain the level of work and they used to consistently work overtime. I wasn’t involved in much of that, I did a little bit but not much.
Did you have need of credit when you were first there?
KB: Oh yes. I married in 1953.
That was the year the credit union started. Were you a member straight away?
KB: No it was 1954 when I joined and needed funds straight away. The reason I joined was because I needed to buy certain household items like refrigerators and things like that. Up until then we had been using ice-boxes and that sort of stuff. Whilst I’d had a bank account with the Commonwealth Bank from school days, given that, as I said, my parents were conservative they opened a bank account and I used to go down with my shilling or sixpence, or whatever it was they could afford to put in every week. The Commonwealth Bank did not support me in any way, even though I at one stage had about fifteen hundred pounds in the bank account. I was also very conservative, I used to live fairly frugally. When I went to them for a loan, and I think it was a hundred and fifty pounds for a refrigerator they wouldn’t entertain me under any circumstances. As a result of that I got the feeling that it was convenient to have your money in their accounts, but not too convenient to give you a loan if you needed it. As a result of that I never borrowed any money from the Commonwealth Bank, or any other bank. I got a bit of a set against them for that reason and I still have the same feeling. I try and avoid them for lending under all circumstances.
So were you at Parramatta when the credit union was started?
KB: No, I had just come in from Parramatta on the relief staff. The relief staff activity was such that I was moving around the locations and also into country areas on relief work. It wasn’t until 1954 that I went in to the Accounts Branch, they had a job there. They had registration refunds running out their ears. People complaining then couldn’t get their cheques prepared and issued to them. They were having three months delays. People would hand number plates in and wait three months for a cheque to come back. At that stage the Department had only just set itself up after the change from Road Transport and Tramways so they had a backlog. I was introduced to this job where there were two six foot cabinets full of these refunds. Choc-a-bloc, as hard as they could get them pushed in. I went in there as a Relief Clerk to do some work, because of my past Registry experience, I think it was the reason why they picked me, and I did these surrender registration refunds as fast as I could. As quickly and as accurately as possible and as a result we got that up to date. I was then appointed to that section, they said would I like to work in Accounts Branch and it was a fairly good job so I said yes, I would be quite happy to and I remained there. My involvement with the credit union came through Arthur Johnson who was in the Accounts Branch at the time. He was one of the Directors of the credit union and I approached him about getting a loan.
How long had you been a member?
KB: Oh I only joined in 1954, and it was the latter part of 1954 that I got the loan. So it was on a waiting list type thing. We had more loan requests that we could satisfy. The capital was the thing. I also put some money in, I drew it out of the Commonwealth Bank and put it in the credit union so that I had equity in terms that I was putting in something as well as taking some out. But I didn’t have enough to buy the refrigerator outright and my past influence of waiting until you had money before you buy something was still there.
So who originally approached you to join the credit union? Where did you hear about credit unions?
KB: Through Arthur. He was very much involved in them and in Transport in particular. In 1955 or 1956 I went on the Supervisory Committee as an internal audit for the credit union. I remained in there until I went to Wollongong as a clerk in the Motor Registry at Wollongong.
Do you think the Supervisory Committee of the credit union was effective?
KB: In those circumstances it was extremely effective. It did the continuous auditing of all transactions. It wasn’t on a random check basis, it was every withdrawal. Bear in mind that it was all on a volunteer basis and taken on the basis on when you could get the time to do the work, sort of thing. Consequently, all withdrawal slips were checked, all receipts were checked, your bank reconciliation was checked again by the Supervisory Committee. They did the nuts and bolts of the thing after the individual Directors had done their part in the entering or whatever was involved. As a result of that the supervisory committee was an extremely useful tool. Also from that you fed your Directors, because they knew what the credit union was about, they knew how it was working and what it did for the members and how the members could benefit from it. So as a result of that it was a very useful training ground for Directors. We somewhat lack that opportunity now.
There was one thing bears mentioning I think and that was the method of keeping the books.
KB: Oh in respect of the Kalamazoo Ledgers.
The Directors taking them home and having to be responsible for one group.
KB: Yes we broke the alphabet into segments and you were responsible for entering all deposits associated with that grouping, also all loan payments. As well you had the task of doing the calculation of interest and the like. That was a demanding task. When I became a Director I had one segment and in the end, and when I say the end at this time it was a short while before we employed part-time staff, I was spending two nights or every week or a Sunday doing nothing else but entering and balancing the ledger that you were allocated. The A to E was the best ledger. Those at the lower end of the alphabet, it was purely by circumstances, there were a few there of members who used the credit union to the fullest extent and you would have entry after entry for some of these fellows who, as I say, might have twenty or thirty entries a fortnight in their deposit and withdrawal accounts. So if you were lucky enough to get the A to E you were pretty right, but if you got R to Z or the L to Q section you didn’t fare real well.
So while you were on the Supervisory Committee did you get any training? Did you go to any Schools, or were there any available?
KB: Well there was the Newport School, which I didn’t go to the Directors went to that, I didn’t go that one in particular. But there were also various Chapter meetings and they were quite effective in getting you to know some of the dangers associated with the operation of credit unions. For example the problems associated with fraud and embezzlement and all those sorts of things. The establishment of proper safeguards and systems and procedures to ensure that you had an audit trail on all transactions. All of those things I learnt from Chapter meetings and the like. There was also the social interaction that went with that, but primarily I saw them as a learning curve facility.
What about personalities? Who do you remember at the Chapter? Where was the meeting held?
KB: I honestly can’t remember where the meetings were held. My memory is not as good as what it used to be in terms of those locations. I do recall some of the characters. I can remember Berry Calverley clearly, booming out his address as a person who was a leader within the movement. He would be invited along to give comment. Of course Berry was the first Pay Master I had in the Department. He was a time-keeper in the head office section of Road Transport and Tramways and he was the chap I used to have to go to get paid when I was going to Parramatta and the like. So I knew Berry quite well in my work situation. But if you knew him you would recall he did have quite a strong resonant voice and I will never forget some of those Chapter meetings where he would get up and speak and the walls would react and reverberate to his comments. He used to get quite emotional, particularly about where the future lay, and those sorts of things. That was one of the chaps that I used to recall. Stan Arneil was always a very good speaker and an extremely good motivater and he showed talent in that regard. Clarrie Murphy, I recall him at the various Chapters too, talking.
That would have been after the League was started wasn’t it?
KB: Yes.
Were there any Chapters around before the League was started?
KB: Not that I am aware of.
You can’t think of where the Chapter meetings were. You don’t think the Sydney County Council?
KB: I do recall one meeting and that was in the Commonwealth Bank cafeteria that I went to. Ken Martin and his now wife was there and my wife and myself went along to this particular credit union function. But as I say that wasn’t a regular thing. I had been to the Sydney County Council, now you prompt my memory. I thought the Water Board was involved too, to some extent.
Do you remember Adams Hotel at all?
KB: No, I wasn’t involved with that. I knew that some went there, but I didn’t get involved with the Adams Hotel clique. I didn’t also get involved in latter years with the various other meeting places that were around the city, the various sub-groups of credit union people, on a social basis or otherwise.
Do you remember the Department moving out to Rosebery?
KB: Yes I do recall that. We had a chap in the Department whose name was P D Collaton, Phillip David Collaton, he was the first chap I worked for the in the Department. He was in the Authorised Inspection Station activity for established garages for inspecting vehicles. That was what I was talking about originally when we were setting up this system. I was the junior stamp-licker type, I had no real involvement in it. Nevertheless, PDC, as he was known, he at that stage was very much involved with the move to Rosebery and every problem that you would have about space in at Macquarie Street was resolved was by this quick statement, ‘There is plenty of room at Rosebery.’ Everything was going to happen at Rosebery. Well it did happen at Rosebery, we were just as jammed in at Rosebery as what we were in at Macquarie Street after a short period of time, given the growth in motor vehicles and the changes needed. So people of that ilk still mention to me, ‘Well there is plenty of room at Rosebery.’ The other thing was at Rosebery, they took a photo of it. It was the old Parke-Davis building, the pill manufacturing place and the James Steadman-Henderson suites were opposite and they had a nice oval area out the front with date palms right round the side. So when they were promoting the transfer to Rosebery on a staff promotion basis, they took the photo from across Steadman-Henderson’s lawn so you don’t see Rothsechild Avenue, all you saw was the building, the beautiful green lawns and the palms. Of course when we got out there she was as bare as a Macadamised road, there was just nothing. The place was gutted by tearing out all the interior fittings and most of it was about twelve by twelve hardwood pillars in that ground floor section, the old part of it. They added a section on to it, so one part was concrete and one was wood. It still is the same now. They veneered, or covered the pillars to show them as being of a more substantial material, but they are all timber. Phillip did a marvellous job in selling Rosebery to the staff.
Do you remember, the last question before we move on from the credit union, the arrangements for SP Booking at Macquarie Street?
KB: Not at Macquarie Street. I had a fair idea of those involved at Rosebery. I think they were the same people as those at Macquarie Street, I might add. But there was an extensive SP Booking operation at Macquarie Street. Some of those blokes were extremely good gamblers. Well that me rephrase that, they were extremely active gamblers, I am not too sure how good they were. Some of them ran up enormous debts. The credit union became involved in that activity because we used to get loan applications from people for all sorts of reasons, extensions to houses and all sorts of things, when in fact they were repayment of gambling debts to the SP Bookie who was quite often their work mate or their boss.
Did the credit union know about this?
KB: Yes.
But they would still help them out.
KB: Of course. What is the difference in lending a person money to buy shares and lending a person money to gamble.
Did you hear of an outfit called Goliath Investments?
KB: Yes. I was a shareholder in Goliath Investments. It was quite an extensive exercise. It had a marvellous potential but got too big too quickly. In those days the share portfolio was quite good. If we had kept those as individuals and put our money on them, we would have been very wealthy people each individual. It was bought out by one of the members, although at the time I, along with the others, didn’t know who bought it. But in fact it was one of the members who I regard as a wealthy man in his own right. He saw the potential and cleared it up. Bill Hayes was one of the instigators of it. Bill was outstanding, he was involved with the credit union to a large extent too.
End Tape 1A: 4200 Words: 1 hour 35 minutes.
26 NOVEMBER 1990: ANSWCU90: RICHARD RAXWORTHY TALKING TO KEVIN BAIN
When did you first have anything to do with the New South Wales League of Credit Unions?
KB: In approximately 1970, 1971. I became involved as the result of a casual vacancy on the Board. I was approached to find out whether I would be interested in becoming a Board Director, which I was and I became involved from thereon. Stood for election at the next year and was elected for a further three years.
But you had been to Schools before that, hadn’t you?
KB: Oh yes to the various Chapters and activities of that nature. I had been very much involved with the Transport Credit Union over the years.
Had you been to the early Newport Schools? For instance had you been to the first one?
KB: No. No I didn’t go to the Newport Schools. Transport sent a number of Directors, but I wasn’t one of them that went to that School. I often regret afterwards not having had the opportunity, particularly with the information and motivation that came away with people.
More than that, I understand there was quite a social situation there.
KB: Yes, a lot of conviviality. Probably I wouldn’t have been able to stand the pace.
What about some of the other Schools? I believe there were ones at Parramatta, there was one at Prince Henry, the School of Administration.
KB: Yes there was the one at Prince Henry. I don’t recall having been involved in the one at Prince Henry. That was one of the very early ones as an establishment. I felt that they were excellent value but didn’t get the opportunity of going.
Right. So when you became a Director of the League, as it was then, who put you up, can you remember?
KB: I think it was Ken Miller. He approached me anyhow.
When did you first meet Ken?
KB: About 1944, I think it was that I first met Ken. We worked together in the Department. He was in the Drivers’ Licensing Renewal Section and I was, as I said earlier, in the Authorised Inspection Station area. We have been friends ever since.
So when you were on the Board, then he was on the Board as well?
KB: That’s correct, yes.
Do you remember the first meeting when you went on the Board of the League?
KB: Yes. I regard it as quite a tense meeting. As a member of the Board at that stage, a newly elected member, or appointed member, I very quickly got the feeling that there were quite a lot of tensions that had built up between individuals, particularly in regard to some of the topics that were coming up for discussion. Bear in mind that the insurance discussion had been on for some time before I came on to the Board. I think my entry onto the Board was as a result of a Director being disenchanted with the whole exercise and moving off. So came the vacancy as a result of that.
So who was that Director that you replaced, can you remember?
KB: No, I can’t remember. I tell you what there were two casual vacancies, one was filled by a chap by the name of John Hutton who was in the Electricity Commission Credit Union, the other was filled by myself. So I didn’t come in as an individual, there were to of us came on to the Board at the same time.
Nobody has mentioned Hutton before. What was he like?
KB: He was a very nice bloke, John, a very sincere and dedicated fellow. I think quite frankly that John suffered a lot of pressures away from the Board which made life difficult for him whilst he was on the Board. But a very decent fellow and a clear thinker and a person that was, as I say, dedicated to credit unions.
Is he around now?
KB: Well I haven’t seen him for five or ten years, but I understand he is still about. He was working in the Electricity Commission, whether he is still there or not I don’t know.
He is somebody that nobody has mentioned.
KB: I mention him because of the fact that we both came on the Board at the same time.
You were on the Board at the same time as Bert Beaufoy?
KB: That’s correct. Bert was from Tamworth. He was the Country Director, if you could call it that. I was quite impressed by Bert. Bert would always give you an honest opinion, there was no bias or prejudice in Bert’s approach. He never represented the Country per se he represented credit unions. In discussions that would come from Bert you could always rely on the fact that he would give an overall view of what he thought to be the right thing.
His background is actually Newcastle originally. He is back there now.
KB: Yes, he is back at Newcastle I understand. I am not sure whether he has a newsagency, or something of that nature.
I think he was, but I think it was hit by the earthquake.
KB: Was it, well I am not up-to-date with that.
I have seen him up there.
KB: Well I had a great deal of respect for Bert. As I did with all of my fellow Directors. One thing that should be recorded, in my view is, no matter what the divergence of opinion was those people who were on those Boards at that time were dedicated. They were interested purely in furthering credit unions. As you know, and I am sure you would agree, there are a number of opinions about the resolution of any problem and sometimes you will fight like mad to get your opinion heard to ensure that the course of direction is the way you want it to go. I think if you are a realist you have got to recognise also that that doesn’t always happen and the bigger people don’t just take their marbles and go home, they are prepared to accept the decision of the umpire. I think also, when all is said and done, there is no correct decision for all time, it is purely appropriate to the circumstances and that time. What could be right today, could be completely wrong in a week’s time because of other events and circumstances which tend to impinge on that decision and affect it. So sometimes we don’t look at the broad picture, we get too narrow in our views.
We haven’t talked much about the League in the Transport Credit Union history, but rather than talk about the insurance first, although that will come up, the one issue which hasn’t been discussed much at all around and you were President at the time was the matter of the Common Board and the problems with associated credit unions during the period. Do you remember how the Common Board came about?
KB: Yes, that was an idea that was floated. I think it was Les Robinson that floated the idea at the time. We were faced at that time with a number of credit unions who were ailing. That came about because of external circumstances to some extent. These are the factors that I assess to be the ingredients in the whole pudding. External factors given that there was a tightening of money, high interest rates and all of those things. Many of the credit unions were at a stage of development where they had seen growth as a must and as a result of that went into a deficit situation, a trading deficit, to establish growth or try and establish growth. That coincided with the tightening of the money market and the cost factors that were associated with it, and also the introduction of employed staff into the credit unions. Quite often as a result of them feeling that one of their Board members would be the appropriate person to be on the staff, as a result of that they appointed people who were not suitably trained or what I would regard as competent to manage an operation as such. All those factors coinciding together created difficulties for a number of credit unions and as a result they were in a loss situation, and in a worsening loss situation, progressively.
Lots of people have spoken about deficit budgeting. Some people have sort of said it was a good thing and others have said it wasn’t and still others have said that a lot of the credit unions weren’t deficit budgeting, they were just running a deficit. Now what was your view of this generally? Can you give us some individual cases?
KB: Well there were a couple of cases but I wouldn’t like to name them because it could appear that I single them out, whereas there could have been others that were worse. Some of them didn’t consciously go into deficit budgeting. There were, I think, nine in all developing credit unions that were established and they were planned for deficit budgeting. That was the initial plan and it was part of the establishment that they were going to pour funds into those and get development.
Whose plan?
KB: I think it was Les’ in the first instance, but obviously with Board approval to target these particular areas, establish credit unions there and then give them assistance. It was planned to the extent that there were credit unions in the areas that were selected to follow this pattern. As is always the case, a lot of others saw that as a means to push their own ahead and deficit budgeting got a bad name as a result of it. You know, this was the cause for all their difficulties. In fact if they had been managing their own affairs properly they wouldn’t have gone that course. But it was fashionable to some of them. I am not saying all followed this pattern, but some followed this pattern and they got in so deep they couldn’t get out. Bear in mind that at the same time we were trying to establish the Stabilisation Fund on a voluntary basis, which was having all sorts of difficulties from credit unions who saw it as not their obligation to put in funds to stabilise some other credit union. That parochial feeling is still there today in certain circumstances. Nevertheless, we had to establish some sort of Stabilisation Fund and thank God that the wisdom of the majority got to the stage of establishing that, otherwise credit unions may not be where they are today, that includes those who wouldn’t put in the funds to establish stabilisation. they saw themselves as in the exclusive group but they would have gone down the same as every other one if someone hadn’t pushed it to the extent of getting that fund established. Now we have a statutory Stabilisation Fund. The thing that I saw as a danger was that with credit unions you had no control over them. You had no opportunity to manage their affairs, they were autonomous in their own right, they could write their own cheques on deficit and we were virtually a lender of last resort. Not in real terms, but the extent of the availability of our funds. To the extent that one credit union in particular, which whilst I was President we managed, got the Registrar to agree to have an inquiry and dismiss the Board, it was losing $3,000 a month and that was being subsidised through the Stabilisation Fund. Now you can’t let that go on.
Which one was that?
KB: I am not prepared to nominate it. I don’t think it would be fair because it is no longer in existence now, it has been merged.
It wasn’t Earlwood was it?
KB: No, it wasn’t Earlwood. That was one of them, but it wasn’t Earlwood in the particular figures I have quoted. But both Les Robinson and I had the greatest difficulty in trying to convince that Board of Directors that they had reached the point of no return and that they just couldn’t continue on with that existence. They appointed a Manager who had a second job and was running his own business as well as try and manage the credit union. They weren’t in touch with what they were doing, in all fairness, they weren’t on top of it, and the Manager was running his own race. So you can imagine what the result was and that credit union should be one of the biggest in New South Wales at the moment, given the circumstances. But that was the type of environment that they were in. I think historically the management of credit unions is of a very high level now, it is a professional operation that came about. Hopefully the level of Directors’ roles has improved dramatically and they are conscious of the need to be professional in their role. So I see the future for credit unions as being quite good, given those two factors still working together for the benefit of the members. But at that particular time there were a lot of grey clouds. We needed a massive consolidation of credit unions that were running in deficit to get them into a controlled environment, that would be about the best way that I could express it. Out of that came the Common Board. We then put them under direction and got the Common Board operating. The people that were on it, the McIntyres and others, did a good job in stabilising them. We progressed also to the introduction of management groups, like the Geoff Cambridge and Pat Davis. That had to be done with the co-operation of the Registrar because he was the one that had the powers. You must bear in mind that we were a toothless tiger. We were trying to represent the membership and protect their interests and yet had no power to invade, control, demand, cajole, or do whatever possible to influence the Board to be aware of the dangers. I do recall Les and I talking on a couple of occasions about potential problems with credit unions. Unfortunately our prophesies were true, they happened twelve months down the track. But we spent a lot of time going to those credit unions interviewing them of a night, talking with them and saying, ‘Look these are the dangers we see. We are not wanting to pry but we think it’s time you recognised what the difficulties are.’
How many of them that got themselves into difficulties were the nine that Les Robinson had planned to expand under deficit budgeting?
KB: That is a hard question, because I purposely can’t recall the individual credit unions in detail. But if my guess would be right, I think they all had to be merged or changed.
That wasn’t planned. It was something that happened.
KB: External factors came into that. As you know with any strategic planning you have got to establish what the external environment is and what you think the external environment is going to be over the period of your plan. Consequently we didn’t predict, nor could you predict, what was going to happen in the financial market.
Was this plan that Les was developing for enlarging these nine credit unions, was this the one of taking them into the community? Becoming mutual credit unions?
KB: Yes. A lot of them. I think Baulkham Hills, for example, was one in particular.
This was done successfully with some. I mean Sydney Credit Union has been fairly successful in this direction.
KB: Yes but I am talking about newly established community-type credit unions. To get credit unions into the community. Now what you are talking about with Sydney Credit Union is a transition from an industrial-based credit union to, as with SWB. Metropolitan, I can’t use Metropolitan because Metropolitan was Central Mutual which was the credit union which was established to receive these credit unions that were in difficulty at the time, so that they could be stabilised and if necessary brought out of their difficulty into a stage when they could then re-establish in their own right. It wasn’t meant that they were being put in there indefinitely.
There are a few people, and I suppose Tom Kelly would be the first to admit, that were disappointed about the demise of Universal. He felt that if you were going to do that with any credit union, why didn’t you use Universal?
KB: Yes well Universal, if I recall correctly at that time, was not in the League I don’t think. I don’t think Universal was in the League at that time but I may be confusing it with SDA, I can’t recall. But in any event it was a question of a matter of control and I thought Central Mutual, in my opinion, was the better vehicle than picking an existing credit union. You could have done the same with any one, not only Universal, but any one of a number. Just say, ‘Why not put them all into there and let them grow.’ You could have picked Railways. Out of all of that stabilisation activity and everything else, the difficulties, the tensions, the worries that people had of being taken over and there was personal worry in that. I do recall some of the Directors virtually saying that they had been run over by this League. As you would imagine anyone who had to face that sort of a difficulty in the League, the League was branded with that sort of ‘You don’t like me,’ approach. ‘You are being too hard. You are being biased, you should give us another go.’ All of those sort of feelings came out and I can understand that because no-one likes to be on a loosing streak, they like to win. But the thing with all of this, and I think the good news should be spread, the end result was that every League credit union, has the enviable reputation of not costing its members one cent in deposit funds. I thought irrespective of all of those other difficulties that we faced, and some of them got very bitter at times, the fact that the depositors’ funds were protected to whatever means possible was quite an achievement. Out of that I feel justified in the actions that had to be taken in some cases. Sure in hindsight you may have dealt with it differently, but you didn’t have the benefit of an opportunity to sit on your hands and say, ‘Well let’s hope it all goes away.’ It had to be acted on and it had to be done. There were a lot of people involved in that and I mentioned John McIntyre and Helen and others who were on that Common Board. The people that stuck with the League at that particular time to ensure that we did have a viable and established credit union industry in New South Wales.
The matter of mutual credit unions, it came up with David Nelson. He maintains that they went to start a mutual credit union down there, that is a credit union that had an extended bond. He was talking about what he claimed they did, and I suppose this is borne out by what I have found out generally speaking, they revoked their Articles of Association outside what was allowed according to the Registrar’s Rules. Then they put it in and asked to be registered.
KB: I don’t know much about that particular circumstance.
They just didn’t get a reply. They were just hanging around, then they sued them. Whereupon they registered them.
KB: Well at that time the Registry was under a great deal of pressure. I am not defending them, but rules took enormous amounts of time to get registered or changed. Issues, bond issues in particular, got put in the too hard basket because nobody wanted to touch them. Quite frankly that is still the case now to a large extent, although I think it is being resolved. But that bond issue was on in 1979, so if you want to put a time frame to it you are talking about 1979 through to virtually 1989.
Well he is talking about the 1960s.
KB: Well that is what I am saying. If you take it back that much further it was longer still. The Registry was in a state of turmoil. Boreham had established the Credit Union Act and with the work of Miller and a number of other people involved. All had input into the establishment of the Credit Union Act. It was subsequent to that that David Horton came along and of course there was an expanded business then. But at that time I am talking of the Registry was a very very small entity and had the greatest difficulty in coping with its work load. Whether there was some, and as I say I can’t comment on what David Nelson says because I wasn’t involved in it, but I can well understand the difficulties in getting rules registered and considering questions that may be a bit difficult to come to grips with.
David Nelson, incidentally, was on the Supervisory Committee in 1972. I don’t think he was on the Board. Did you know him? Did you have any talks with him?
KB; Yes he was on the Supervisory Committee. I had not a great deal to do with him for no other reason than that I was a Director at that time and I was busily getting myself up-to-date in knowing what was going on. Bear in mind I came on the Board in 1970 a complete greenhorn and was thrown into the turmoil of events of the finalisation of the insurance business. I will be honest with you, I was very, very busy trying to make sure I was on top of what was happening.
It is just that he seemed to me to be a critic of Les Robinson and Ken Miller and I just wondered if there was any friction there?
KB: Not that I am aware of. I saw David as a very honest individual who was concerned with the future directions. As I said earlier, what he saw to be right at that particular time which would form a direction for credit unions at that time, may have been completely divergent with the Board itself and Miller and Robinson. Bear in mind that both Ken and Les Robinson were futuristic in their approach. Much of the things that are happening now, in my opinion, were established in Les Robinson’s latter years in terms of a national entity. It is not project renewal in the terms that it is now, but he had ideas of an economy of scale and benefits from a national approach rather than an individual State approach. That was on in 1976, 1977, he saw that as the way to go and I think he is right too. Whether, and now I am becoming a bit cynical I suppose, we will ever get people of broad enough minds to loose State boundaries and parochial personal issues, and when I say personal I mean personal State issues, and get on to the problem of credit union Australia, rather than credit union New South Wales, or credit union Victoria, I don’t know. I think the difficulty that we all face is that whilst it operates under the guise of unity, we still have these divisions. We still have divisions within New South Wales unfortunately. I don’t think you will ever get rid of that. I think we will have to live with it and I think we will have to work around it. But the purpose is clear, and that is give everyone within Australia the opportunity of being a member of a credit union and recognising the benefits that come from it. That is the primary objective. All these individual issues are quite often about how you do that. The philosophies are, as you have seen the case of that credit union in Kurri, for example, the philosophy is that every credit union that is established is autonomous in its own right and it has got to look after its own future. If it goes down, hard luck. Well I believe that that is one way of looking at it but I still think that we are to some extent our brother’s keeper. To that extent I believe that we should work as co-operatives. If we are going to work as a credit union co-operative, why shouldn’t we work as an Australian credit union co-operative? But nevertheless I don’t think that it is going to be achievable in a Utopian sense. In other words, all credit unions all in the one thing, all working for the one objective. I just don’t think that is achievable.
End Tape 1B: 4177 Words: 1 hour 30 minutes.
26 NOVEMBER 1990: ANSWCU91: RICHARD RAXWORTHY TALKING TO KEVIN BAIN
I don’t think we have completely covered the Common Board area here yet. You sort of told me generally about it, but if you don’t want to mention the names of credit unions could you perhaps be more specific about some of the problems that came up in these credit unions?
KB: Well the problems were quite specific, they were going broke very quickly, that is about the only way you can describe it. It was based on poor management and poor Board direction. That is why the Common Board came into being, we had to have some reliable, definitive way of controlling their destiny. The Common Board, as a group of people, worked extremely hard. They used to come in and deal with the Board papers of these individual credit unions on the basis of the day’s session. The problems were difficult because you had to make decisions as to whether you would continue on with the credit union, whether it should be merged, or what should happen to it. The financials were extremely important and bear in mind also that you had people like Geoff who would go in and do a survey of what the financial state of the credit union was. That wasn’t always the same as the financial control the credit union would give you. Generally speaking, Geoff Cambridge and his team would go in and they would see what the paper was loan, the loan paper, the quality of it. Invariably it was much worse that what the individual Board and management would say it was. So for example say the deficit would be, just to pick a figure, $500,000. After Geoff had gone through his exercise you could find that could escalate to $1 million or $750,000. What he did of course was pick out the rock solid loans and base on that and leave the others as provisions, which would worsen the situation primarily but in the end it was the right judgement, I think. But in regard to the Common Board, as I say, I couldn’t speak too highly of the people who were on that Board and who worked tirelessly to resolve what was a major problem. People didn’t realise that the credit union industry was fighting for its existence through the stabilisation of these wayward credit unions. If you can call them wayward, and I don’t say that in the sense that they were bad boys or anything like that. What I am saying is they had struck difficulties that they couldn’t control and weren’t able to resolve. So the League provided what we regarded as expert Board and management control to get them out of their difficulties. The end result was quite good overall. So I think without getting down to crossing t’s and dotting i’s that was basically the purpose of the Common Board, what it did and why it was needed at that time. Of course when the Registrar achieved what he regarded as a more active role, then he brought credit unions under management and was able to deal with it that way. But by and large we helped ourselves to a large extent in the initial stages.
As far as the insurance split, it was, you came in almost spot on the time when that actually happened. Do you remember those meetings?
KB: I came in at the tail end of it virtually in that whilst it was still on our books that we would sponsor CUNA Mutual, CUMIS. It wasn’t until the first Annual General Meeting that I attended as a League and was given the task of seconding the motion that they discontinue to be sponsored that I came into the issue. Prior to that there had been a terrific amount of work done with management, the Board, Stan and a number of other credit union members who took the opposing view to the one that was resolved in the long run. I think the major issue, as I can see was, there was a breach of faith, in my opinion, on the part of the supplier of the service. In other words I had documentary evidence to show, I wasn’t the recipient of the document it was published in the Annual Report of the League when CUNA Mutual was firstly endorsed, to say that the retention rate would be reviewed at a certain period of time and that there was every indication that the credit unions would benefit from that. That wasn’t done and to me that was the breach of faith. The arguments concerning Stan Arneil, CUMIS and the League Board to me were the secondary issues in the whole thing and they were virtually opinions as to who said what and when. There were things that I was never able to resolve as to who was telling fibs in it, but there was some indications, in my way of thinking, that led me to believe either a lack of communication occurred between CUMIS and Stan Arneil or it was a devious plan to confuse the issue. I don’t know. But there wasn’t clear understanding between those two participants to start with and then of course it got further confused when Ken Miller and Les Robinson were getting different stories again from each of the parties. Now when you get that sort of a mix-up it doesn’t spell for integrity or confidence. Now what was the scene that I came into. I got all of this information given to me from all sorts of quarters. I am a bit of a bower bird, and I have changed that recently, and I had all of these old League reports that I had received, including the Annual Reports. When I spoke to seconding the motion, Jack Coyne moved the motion and I seconded it, I produced all this material at the Annual General Meeting which was at the University of New South Wales. I was able to show the printed evidence that we weren’t getting what we had been led to believe to be the case. I attacked it on the basis of purely an objective result. That is, insurance is no different to buying motor cars for your staff members to use, or typewriters, or computer equipment, or anything else. It is a service operation to the membership. If you lack confidence in the supplier of that information you are legally entitled and quite ethically entitled to pick someone else. I had reached the stage where I felt we should pick someone else.
Were you at the Annual Meeting where the Board asked for, and got, permission to go and find somebody else?
KB: Yes. That was dealt with through the North American group. There was a lot of work done there. I was told that the major difficulty in that exercise was to get re-insurance and CUNA Mutual, CUMIS, were confident that New South Wales, or Australia at that time, New South Wales it was, couldn’t swing the re-insurance requirement. I think it was Miller and Robinson and maybe Dermot, I can’t recall whether it was Dermot as well, went over there and had extensive talks with them in North America and did get re-insurance. Now that established the fact that we in New South Wales were able to provide an insurance package for the member credit unions. Up to that point there was doubt. There was doubt and there was a sort of confidence that they wouldn’t be able to do it, they being New South Wales. When that happened it changed the complexion of the thing quite dramatically. But forgetting all of that hoo-haa and all of the trouble that went on with that, it was purely a service operation. I see it as such still. I still believe that the product that you market on behalf of your members should be the best one, and one with a certain amount of integrity and a certain amount of ethics about it. That still applies today, as far as I am personally concerned.
Now as far as the historical fact is concerned, I have had difficulty pinning down what happened at different meetings and tying it through from what people say to the facts about the reportage in Quest, for instance, and in the general press. Now the meeting at which you moved the motion, was it that meeting or later that Jack Banninster got up and moved a motion of confidence in the Board? Seconded by Maurie Ryan.
KB: I think it was at that meeting. That Annual General Meeting at the University of New South Wales. That is my recollection of it.
Did Stan Arneil walk out at that meeting with a group of people?
KB: Yes. He asked for time. He was no longer on the Board at that time but he asked for time to speak at the meeting. If my memory serves me correct, Miller, who was the President at the time, gave him an opportunity to speak but then Stan wanted to introduce other things into it and Miller said no. That was when he was virtually chopped of and I thought it was quite good on Miller’s part to give him the opportunity of saying his piece at that stage. But of course I have seen it happen at other meetings where people have been given an opportunity on a fair and equitable basis and they have tried to extend beyond what was reasonable. My recollection is that was what Stan tried to do again. Which was unfortunate because I don’t think he got any benefit out of that.
Now according to my understanding, the following week after that meeting was the AFCUL meeting in Wollongong.
KB: Yes.
Again I was informed that Stan Arneil turned up there and Dermot and he had an argument and Stan Arneil was turned away.
KB: That is my recollection of it too. He came to Wollongong, yes. That was the AFCUL meeting. Gosh that is a long while ago, I can’t remember the exact time. But I do remember that meeting in particular because a lot of the feeling was still running rife in that meeting. For example, there were all sorts of back room committee meetings and jockeying for positions and politicking going on, which doesn’t seem to be the case any more. But it was an indication of the hype of the situation at that time which took a long while to settle down. It took many years and I don’t think it will ever settle down. It was an event that was unfortunate but some people will probably never forget it. It burnt into them quite a deal and the wounds haven’t healed.
Did you have any friendships that broke up over that?
KB: No, none at all. No, I was friendly with Stan to the extent of an acquaintance basis. I actually went to Samoa and other places with him on a tour from Transport. But I had little personal contact with him after that and before that it was only those sort of events. I have quite honestly not met him since, so I don’t believe that there was any break up because we have just not had contact. I share no personal animosity to the fellow at all because I believe he was one of the most outstanding orators I have every heard and a great motivater. Dedicated to what he sees to be right. The only trouble was he didn’t always see things in any way of a sense of compromise. He didn’t seem to want to compromise on anything. It had to be his way or no other. It is something like what happens in autocratic leadership. I don’t know if you have done anything on psychology at all, but autocratic leadership generally has a limited life span. It comes in on the crest of a wave and is the new breed and does quite well for a short period of time and then ultimately dies because of its autocratic nature.
Autocratic leadership, would you think Ken Miller was an autocratic leader?
KB: No. He was an extremely good politician was Ken. Extremely good politician. I don’t say that in any disparaging way. He had some enemies and obviously through this time they developed. Ken saw an objective and would fight like hell to get his view point accepted. I can remember one night at a Chapter meeting when Frank O’Driscoll was establishing a youth group. They were trying to make their mark and they were getting encouragement. Ken, as President, came along to speak and he laid it on the line, quite factually, he said, ‘Look, I will support everything you are doing, but you are going to have to work very hard to topple someone like me.’ In other words he was throwing down the challenge to them and he was right in what he said and what he did. He said, ‘Look you have got to justify your existence and you have got to prove that you can do it.’ Those were challenging words. It could have come over as, ‘I am God and you are the serf,’ but it wasn’t meant to be that way. It was quite clear that he was throwing them the challenge to shape up. That is the game. It is the game in credit unions. Management and Directors have got to perform and there has got to be competition there to make sure they do perform. Otherwise the membership suffers, the performance of the whole operation suffers. If it is a laid back, lackadaisical, no challenge basis well they will die.
What about when you became President? Did Ken Miller put it to you that he had had enough and he thought you should go in? What happened?
KB: No, he asked me if I would be interested in standing because of his involvement with World Council and other things and his work in Teachers’. He asked if I would be interested in standing and said yes I would. Bear in mind that I was Vice-President at that stage also. I also said because of his wealth of experience and my work situation, I would like him to stay on the Executive of the Board purely to use his wealth of experience and also to deal with some of these daytime things that I couldn’t get to. It was physically impossible because I was in a demanding job. In 1976, when I was at Denver, I was appointed to a departmental position of Senior Administrative Officer of the newly formed Traffic Authority. I didn’t know anything about it, I was over in Denver when they appointed me to this position. It was a new set-up, a new structure, and I was seconded from the Department to work in that. Now of course when you come back into that environment and you are trying to establish an entity within community there are problems. It also had a lot of problems because the Police and Main Roads were dead against it because they saw some of their power and control being vested in this Traffic Authority, this you beaut thing that was going to make life terribly difficult for them. So there was a hell of a lot of work to be done to placate that and to get them to understand that all it was was a controlling committee involving Police, Main Roads, NRMA, Motor Transport and a number of others. So I was in the hot seat in my work environment and I couldn’t take off days from work to attend meetings. I worked of a night. I nearly killed myself because every night I was on credit union matters, seven days a week. But in the daytime I had limited scope to be able to go those things. So I saw both Bill Howe and Ken Miller as being quite available in that regard.
Bill Howe was back from the bush. Of course he spent a lot of time up Warragamba way.
KB: Yes, in the building of the dam. He was also involved in his army activities too. He was a volunteer in the Defence Forces.
Did you see, and did you think that Ken Miller took a beating over the insurance business? Or do you think he was more the one that was handing it out?
KB: My understanding of it was that he saw problems arising as a result of the breach of faith, as I called it, with CUNA Mutual and he saw it as a matter of principle that you can’t accept that and let it ride on. Bear in mind he had been over to America on a couple of occasions and seen how things were operating over there. Whilst CUNA was a body in its own right, it was financially supported and lived on CUNA Mutual, CUMIS, as a financial entity in their operation. Now it is like a holding company, if the funds are provided by some other source they have got a say in how the pie is going to get cut. That was what I saw Ken Miller take on as an issue. He got a beating out of it, not in terms of a loser, but a beating because he had to suffer a lot of personal animosity, a lot of trauma, extreme pressure from all sources. Even the work of establishing a second string to the bow in terms of insurance was a mammoth task in its own right. So yes, he took a beating but not in the sense that somebody beat him around the ears, he just had to work like hell to overcome difficulties. I think the industry took a beating out of it and I mean in a physical sense. I think we lost things then. But it is a question of whether you are prepared to compromise to the extent of matters of major principle. I don’t think anyone else would take on the same sort of act again with the Australian Association. I think that established very clearly that we are masters of our own destiny.
There are a number of people, and credit unions with them, who left the League over that issue. The Broadway, the Sun-Herald and so on. There were some that left anyway but there seemed to be this element that wanted to take it with the Southern Association.
KB: What do you mean take it with the Southern Association?
Well I mean it was set up, they joined a branch of the Southern Association which became the Central.
KB: Oh I see. Well there was a Southern Association based on the Australian Iron and Steel and a couple more down there.
They had three branches of that later on.
KB: That’s right. Then you had the Central group which strengthened after the insurance issue. Stan moved into that area along with his followers, if you would like to call them that. Then of course you had the Newcastle group that were the Northern Association. Well it wasn’t then called the Northern Association, I forget what it was called.
It was called the Southern Association, Northern Branch.
KB: That’s right. But it was virtually those three segments and to a large extent that is still the same situation now. Not a large extent, that is the wrong word, to some extent it is the same situation now.
I know about this, and I have spoken to Clarrie Murphy about it and he seems to be fairly open about his attitude. I said to him that he actually took Punchbowl into the Southern and became himself involved with the Southern Association. Did you have any contact with Clarrie during that period?
KB: No, not very much with Clarrie. Bear in mind Clarrie was the Manager of the League and then he was replaced by Les Robinson. I am not sure what the feelings were then, because I wasn’t involved. Whether he sees that as being a bit of a problem.
Oh he was disappointed, there is no doubt about that.
KB: Well as a result of that and then the Stan Arneil thing and the insurance thing.
Clarrie was involved more there as well, because he was selling insurance for the CIC.
KB: That is right.
I was just wondering exactly what affect it had overall?
KB: I don’t think it would have much affect to be quite honest. That is my opinion. I don’t think Clarrie’s influence throughout was strong enough to have a major affect. If you take your bat and ball and go somewhere else, it is a question of what influence you have on the team that you left. I don’t think he had that much influence there to cause any major upsets. From my recollection he had no major influence as far as I could see. Punchbowl was always a credit union, as far as I could see, that had very strong views about things. I think it is still the case now, they have got some very strong views about issues. Whether they’re right and everybody else is wrong, or vice versa, I don’t know. On the current issue I have got to say this, there is no way in the wide world that you can stop change in anything. In other words, change is inevitable. Whether that change is the correct way to go is the only issue. So that in our current environment as a credit union industry change will be forced on us. It is question of whether we are controlling the change to the right direction. Perhaps some of the people may need to examine that a bit more, the individuals I am talking about that have doubts. But there is no way that you will stop change in this business. It will be brought to us if we don’t do it ourselves. Given the Federalisation, and let’s face it the control within Australia is very much more now Federal than what it ever was. They talk about the rights of States and all the rest of it and deregulation. I think we have got more regulation now as a result of deregulation and it has been brought in very surreptitiously. I am talking in the political sense now in the terms of Federal and State controls. They were there before. Like any funds that you got in the States you had to be accountable back to the Federal Government for and how it was spent. They set up mirror departments like the Department of Transport and Mr Brown in his present state of having a greater influence. He is clearly heading towards a national registration and licensing system. So in other words that is Federalisation.
Yes, I know we don’t want duplication, but on the other hand you can still argue that it doesn’t stop you can argue for decentralisation against centralisation, just as long as there is not duplication.
KB: Yes but where it is a funding control you end up having duplication. I am not arguing against Federalisation, I am just saying it is not being recognised by the masses that that is what is happening. It is happening very quietly and if that is the case, and what I say is correct, then the credit unions have to be in the position to be on a centralised basis to combat any of the work coming from the Federalised approach.
I don’t really know anything about that. I just do know that if things have got too big and unwieldy one becomes alienated in dealing with them. Where as long as you have got something that is reasonably small you can control, and have some control over, some feeling for, OK. But if it just becomes so gigantic it is just like another bank, or another anything, you know.
KB: You are right. You are correct too. That is the big challenge out of Project Renewal, to retain that face to face contact. If that doesn’t happen, Project Renewal will fail.
End Tape 2A: 4040 Words: 1 hour 35 minutes
26 NOVEMBER 1990: ANSWCU91: RICHARD RAXWORTHY TALKING TO KEVIN BAIN
The time that you were in, although it was a difficult time, was also a fairly positive time for the movement and there is an area which we haven’t covered, that is the lead up to the establishment of the Reserve Board on a compulsory basis. What was your involvement with that?
KB: Well at that particular time, 1975, we had come through a large part of our difficulties. They weren’t all over, but we were rounding the corner. We identified very clearly, at the League at least, that our capacity to be able to stabilise credit unions was largely limited because of the fact that we didn’t know what funds we required. We also saw the need for some statutory control so we could put some teeth into the tiger, rather than on a voluntary basis getting credit unions to agree to stabilisation in various forms. At that time I made a comment during our difficult period that virtually the League had a cheque account with many credit unions being able to draw cheques on it through deficits and all sorts of other things. We had no control over their trading in real terms, no power and control over the operation of the credit union. It was only when they got into difficulties that we could bring some force to bear through the Registrar to resolve those problems. So it was clear that something else had to be brought into the Act to give it power, we couldn’t get it in our own right. Laurie McGinty, who was the Member for Willoughby in the Liberal Government at the time, was quite amenable to that approach. But you will recall in 1976 he got ousted and a new Government came in under Mr Wran and we had Sid Einfeld as our Minister.
How had you got on with the previous Minister, Stefan Stevens?
KB: Stefan Stevens was quite good. No problem at all. He clearly knew what we were trying to do as a movement for the community at large and he was quite supportive. Laurie McGinty was supportive excepting that Laurie didn’t really achieve much. He had other problems which seemed to intrude on to what he was doing for credit unions. He did the best he could, but he didn’t achieve much. Sid Einfeld was clearly in control of the situation from day one and knew what he was on about. He took up the issue of wanting to have a statutory stabilisation fund and very quickly laid it on the line that we could have it two ways. We could have it by the membership getting together and preparing legislation for his approval, with certain control measures as far as he was concerned in it. Or if we procrastinated and kept our divided ways, he would very quickly establish his own on his terms. Well I, as President, at well as the Antigonish movement, as well as the major independent credit unions, as well as the three associations and that Antigonish movement of Father Gallagher, were all called to Sid’s Board Room office, he had a Board Room office in his suite of offices. He came in, thanked us all for coming, put a tape recorder on the desk and said, ‘I won’t be misquoted in the future, I will have everything recorded. We are here for a meeting to establish a Fund. You can either do it two ways, as I have already said,’ and he laid that on the line. There was a great deal of objection from a number of quarters, I won’t name them because I don’t think it matters.
What about Father Gallagher?
KB: He was the principal contender. In a jocular sense I sat there and I thought he was going to leap on the table at any stage, he was quite vociferous about the whole exercise. There were what I would regard as the independent credit unions, those that weren’t in any associations, and there was the Southern and the Northern and League. Sid laid it on the line, ‘You get together,’ he said, ‘I will let you stay here for thirty minutes and you can tell me what you are thinking about then. You can establish what you consider to be the best thing for the movement and then I will give my approval, or change it, or do whatever I have to.’ I must admit he stood by his word, he did give us the representation that we wanted and largely the Savings Reserve Fund has worked so effectively because he saw the need for self-discipline by the credit unions and he gave approval for that to happen. I can only speak very highly of him in regard to the way he did it. He was quite brutal in his comments, there is no doubt about that. Some of the things that were said at the time by Father Gallagher and others were such they didn’t want a bar of it, but I could see it was inevitable, it was going to happen that way. Consequently out of that came the Statutory Stabilisation Fund, or CUSRUB as it is now called. It was formed as part of the Registry and in my view it has done a great deal to improve the management and the direction of credit unions in a benign sense. In other words, it has imposed standards that they have had to meet, their being management and Boards, that were not unreasonable. Prudential standards that were essential to have a proper, viable operation. So out of it has come a very big bonus and I give credit it to those who have been on the Board over the years to establish that sort of a set up. But yes, it was something that proved the League was right in that sense, even though there were a lot of dissenters. The opinion is still formed, ‘Hey let individual credit unions look after themselves. I they are not prepared to do it the right way well they have got to live or die by it.’ Now I have never proscribed to that view and it has been proved to be right by the Statutory Stabilisation Fund.
Now this happened in 1976, was that all settled at that meeting? You only got thirty minutes for discussion?
KB: Oh no. There were a whole series of meetings from then on. A whole series of them in which the work was established. Bill Howe, Ken Miller and Les Robinson and myself to some extent. Although as I said earlier I was tied up with this Traffic Authority which precluded my daytime meetings to some extent. But there were a whole series of meetings after that and had to be. I think that, for example, Father Gallagher never accepted the view that was forced on him. He had to accept it but his view of credit unions was totally different to what mine is and what other people’s were and are. So as a result of that you can understand why he saw credit unions not to be a big monolithic operation which are controlled to any large extent. It was virtually a people thing and he only wanted it to be that, which of course meant that it limited its growth. It limited its activity to the extent that the members didn’t get the benefits, the good that flowed from it. But that, as I say, is another view that could be taken.
But it is still going. Miss Rose Gallagher is the Secretary for nearly all those organisations.
KB: That’s right and they will continue to go. Some of them get into trouble, some of them get out of trouble. But as I say it is a question of whether you want it like that and be able to give small amounts of assistance on a very much a social conscience basis, or whether you are going to have them as an operation which is able to supply larger needs of members.
I thought that the Antigonish attitude was that involvement in a credit union was an educational thing which would change people’s lives. The idea was to get the majority of people involved.
KB: Yes, that is one of the philosophies associated with it. It also was on the basis of small loans. For example you wouldn’t entertain a $20,000 loan for an extension to a house or something, because the scale of operations were such that they couldn’t.
But they have got a housing co-operative section. They must be handling quite a bit of Government money in that?
KB: Yes, but I am talking about the credit union aspect of it.
Yes, but my point is they are running other organisations as well as credit union.
KB: Yes, yes. It is a question of what you want to do. As I say it is a philosophy thing. It is a question of what you want the operation to do.
So is there any other thing that could be said towards the leading up to 1978 when they set up the Reserve Board? Anything else you remember?
KB: Nothing that comes to mind at the time. I felt that the whole set-up was a good one. The representation involved, the Minister’s involvement, all of those things was right for the needs of the industry. I was horrified recently to hear that there was some question that the Minister wanted far greater involvement in it and was going to amend it. I understand that has been retracted now. There was a need, there is no doubt about it. The need was, as I said earlier, that there was no statutory control over individual credit unions by the League, and that applied to ones outside the League. We weren’t being big brother or anything like that, it was purely on the basis of a need to be able to stabilise credit unions per se, whether they be this brand, or that brand, or something else, it didn’t matter.
All right. Well what about the Central? The central banking system started a good deal earlier. I understand it was Don Harvey who did the initial research, but it was Les Robinson then. What was your involvement?
KB: Only after it was operational and that was as a Board member and President of the League, ultimately. It was the greatest thing that had ever been brought into operation as far as I am concerned. It gave the financial resources to credit unions to be able to, to some extent, get the best results from their investment of funds. As you know banks take the cream off the top because they are profit orientated, there is no question about that. We were banking virtually through them and all the funds were going their way. Whereas it is the principle of co-operation again, when you have more bargaining power the larger and the stronger the type of operation. Consequently centralised banking did just that. I believe it was the greatest single thing that was introduced to credit unions for the benefit of members.
Were you involved in the argument over the possibility of a co-operative bank?
KB: I came in at the latter part of that. Tom Kelly was the chap that supported that. I never disagreed with Tom on that, although we have never discussed it at any great length other than in debate, in meetings and things of that nature.
I think he felt that he was let down by the League.
KB: Yes I think he would feel that way. His idea was quite OK. It is a question of whether you call a co-operative bank a centralised banking system or whether you call it something else. But his approach was right but it was untimely. I think a co-operative bank now could be quite a distinct possibility. The idea was never wrong, and these are just my opinions, it was just the timing of it. I don’t think we would have lived well by taking it on, given that you had the upsets of the 1970s in financial terms. Now we have just gone through another one. If ever there would have been a case of having pressure on us, it would have been over the apparent escalation of interest and all the other things that go with it. So in my opinion, the idea was right it is just a question of when it should be brought in. As I said earlier in these tapes, there is no right decision, it is just when they are appropriate to the circumstances at the time.
Yes but Tom, particularly, felt that the League had been supportive of the meeting, which was convened in Melbourne, but then when Ken came down he didn’t support the idea of a co-operative bank.
KB: Well I wasn’t involved in that. That would have been before my time. It would have been in the late 1960s I think.
I believe it was actually.
KB: That still continued into the 1970s. There was still discussion about it in to the ’70s. Tom was still on the Board when I was involved on the Board. But as I say it was only in sort of topics that came up about co-operative banks, whether we should do it or shouldn’t do it. But the thing had virtually been discussed and put aside earlier than my entry into the League Board area. But I think it is important to recognise that the idea still is one that has potential. Again it is just a question of timing.
What about Tom’s Vice-Presidency? There was some talk that he actually lost his Vice-Presidency over that issue, or rather the issue of publicising the co-operative bank after the League had voted it down, using Quest for that purpose.
KB: At that time there were all sorts of tensions, as I was saying. There was also prior to that, and I am not wanting to fail to answer that question, I think Tom was dedicated to this idea above all else and would not let it lie. That is why I say to you in the 1970s it was still coming up from time to time. He was insistent on trying to follow that approach. It is a matter of judgement, and that was his view of it. I don’t think once a stance is taken by an association or by a group, that you can keep on in your own right, but that is a question of how you feel individually about it.
Dermot did over and over again.
KB: Dermot was impossible. There was no other way of describing him. He would not accept reality as it was. That brought Dermot undone a lot, in my view. He was a bitter fighter and I must say this Dermot left blood on the floor quite often when there was no need for blood on the floor. People will say I am a dreadful person talking about Dermot this way, but this is the way I saw him. I remember the Canterbury meeting which was on about stabilisation. He spoke of matters there which were not objective, they were purely personal. I don’t believe you get any mileage at all out of denigrating people who are there to give their view. That was what I regard as one of Dermot’s major failings. One of the things that came out of these bitter fights was that the credit unions either became disenchanted, or left, or did something else as a result of his haranguing individual members of the Board. I can remember the Broadway situation where there Chairman was constantly getting battered by Dermot, and others, and I thought that was no good. It was inevitable, you just don’t keep coming to those things if you are going to get your head kicked in every time you come in the door. Even though what you say may not be right, there is still a way of doing it without leaving blood on the floor, and that is my analogy to the term. We’ve done untold damage in the past as a result of that without any real benefit coming from it. Those are the regrets I have, I hate to see people getting torn apart when they are honest in their approach. As I say that is one thing that Dermot and I never saw eye to eye with. He believed that strength was the approach and you king hit someone where you can. I don’t believe that is the way to deal with people. I have never proved it to be successful in my own right and I have plenty of case histories to show that what he did was not right.
When he was Chief Executive of AFCUL and he was forced to resign, were you involved in those occasions at all?
KB: I had a number of talks with Dermot in the old League Building, with Les Robinson and Ken Miller present, in particular over some of the things that happened at AFCUL which were regarded as, to say the least questionable. Intruding into areas which weren’t the province of AFCUL and we had discussions with Dermot over that. He saw a different view and we agreed to disagree.
What areas?
KB: Well, for example, the Aboriginal credit union was one that I thought Dermot had control of, but he managed to shelve the problem back to New South Wales as a matter we had to resolve. I thought that was unreasonable. New South Wales had virtually no control over it, to any great extent. He had the two helpers working with him and we were footing the bill. It was like the credit unions that were going bad and you had no control over how much it was going to cost you. There was some arguments about that. Jack Coyne had the unenviable task of having to deal with the question of Dermot and Jack was well aware of the problems at that particular time. But we had a number of discussions with Dermot. Let me say this, that Dermot was a character in his own right. He was a person of outstanding ability, there is no doubt about that. He could influence others to come to a way of thinking, he was very good. Those are the pluses. Extremely dedicated and in latter years terribly concerned about the direction the credit union movement was taking. I remember three years ago, might have been four years ago, I was asked to lecture on the role of a Director, no that is incorrect, it was on the question of democracy in credit unions, at the Bathurst College of Advanced Education. Dermot was there talking on some matters. He and I got into debate then over what was happening with the movement. He saw credit unions as losing their philosophy and no longer credit unions. It is the usual comment that is made around about. I took the opposite approach. We used to argue frequently, but on a friendly basis because I had a lot of respect for him and I think he had some respect for me. We were prepared to debate without leaving blood on the floor. That was the way I liked it and that was the way we could debate. As a result of that he was still firmly of the view that we were in the wrong direction. Maybe he is right, I don’t know, you can’t tell.
What happened in the wash-up over the Aboriginal credit union, the Boomerang Credit Union?
KB: Well my recollection is a bit hazy. I think we ended up footing the bill for that in winding it up and putting it to bed as it were.
Why do you think it failed?
KB: I don’t think it was because of the Field Officers or because of Dermot. I don’t think it was because of those two things. I think there is a fundamental issue here that the people were not educated sufficiently beforehand as to what a credit union was. In other words, come and borrow from us and they had no intention or hope of paying back the money. They saw it akin to a government grant type thing. A similar thing is happening in New Guinea now, they can’t get the repayments. They borrow but they don’t think they have got to pay back. That is the same sort of thing that happened with Boomerang. The bad debts were astronomic and consequently it couldn’t live that way. Again I say it is education of the people before you introduce it. The timing of it was wrong, in my view, but we were seen to be doing something. The Government of the day, the Whitlam group, wanted to make this big deal about Aboriginal Affairs and it was just another disaster of events that have occurred with a lot of Aboriginal projects.
Do you think it was a disaster because it was imposed rather than coming out of their natural situation?
KB: Yes. They see it as a white man’s hand out. That is my opinion and the facts prove that in the final wash-up of it. The Field Officers were there to do the task and I don’t know how good or how bad they were. There were all sorts of rumours about them not being employed on what they were supposed to be employed on, running around having the good life. Whether that is true or not I don’t know.
Les Robinson I suppose was of the same opinion as you, but he spoke to them at the end and said, ‘Well why did you go along with this?’ to them. They said that Dermot had suggested it to them.
KB: That was the view that they took, I knew that. Yes. They were told to do it this way and that was it. Whether that is right or not, I don’t either and neither will Les Robinson know. But the whole thing in very, very short terms was a bloody disaster.
Well there is no point in crying over spilt milk. Now you went overseas to the World Council in 1976. Were you involved with the World Council apart from that? Could you describe your trip?
KB: I went over there for the World Council Meeting in 1976, which was held in Denver. I also had a look at a number of credit unions in the California area. I thought that the World Council meeting was of little value as far as I was concerned. It gave me an exposure to the American way of doing things. Their voting systems and the committees and all the other set up that they established and worked on. It seemed to be to be somewhat staged, the whole exercise, that all the decisions were taken well before the meeting, in my view, the way the voting went and the debate on things. But it was an exercise to that extent that I learnt quite a bit of how the World Council operation came into effect. I found that credit unions in America were too large. Seemed to be management-controlled to a large extent, these were impressions that I gained in 1976, that the Directors were there but management virtually ran the operation for them. We had this great monolithic structure that was trying to do something in third world countries and other areas through American aid, because at that time American aid was quite bountiful for those sorts of projects. To their credit they were doing quite a bit in regard to that, doing quite a lot of good work for third world countries. So, yes I was exposed to the World Council meeting. I saw a bit about credit unions in America and up into Canada. In particular I went to the British Colombia League who had a Manager, George May, at that time. He was quite an outstanding fellow, brilliant in terms of ideas. He was what I would regard as a leader as far as Les Robinson was concerned. Les placed a great deal of value on his judgement. They had sophisticated computer operations, statistical information. They did things that we are doing now as a matter of course. For example, George May each year would call in the Opposition as well as the Government members and he would lecture them on what was going to happen in the credit union in the next twelve months and would present them with draft legislation which they could consider. He would prepare it completely by using solicitors and the like.
Did Les want you to do that here?
KB: We knew we couldn’t do that here at that stage. But we can do something towards it now. That information was useful when Sid Einfeld and the Savings Reserve Board was on the go. We were able to put forward this idea that we would prepare it in draft form for him to look at it. Now that was the benefit of that. I might add that George May went into extensive housing operations and big estates, developed them and all the rest of it. Some of them went bad and he got his fingers burnt and the BC League went bad as a result of it. So he was quite a forward thinker, but again external factors caught up with him.
Is there anything that you can say, fairly briefly, to sort of wind the interview up?
KB: Well, very quickly, I am confident of the future of credit unions irrespective of whether there is a divergence of opinion about Project Renewal and the changes that will come about out of that. Given that that is implemented correctly, it is the way that I think we should go. I believe that the consolidation of New South Wales in those 1970s was the key factor into making New South Wales the pre-eminent credit union State within the country. Those consolidation years in the ’70s were the ones that established New South Wales in my view to being the pre-eminent State on credit unions and I think the future will prove that to be correct. I think it will still be the dominant operation of the Commonwealth as far as credit unions are concerned. I have every confidence for the future for credit unions.
Well thank you very much Mr Kevin Bain.
End Tape 2B: 4443 Words: 1 hour 40 minutes.