13 FEBRUARY 1992: VCCA16: RICHARD RAXWORTHY TALKING TO PHILLIP ELLIOTT
I will ask you Mr Elliott where were you born and when?
PE: I was born here in Melbourne 1946, just a short forty-five years ago. Family was living on a farm at Kyneton towards central Victoria, south of Bendigo. Lived the first five years of my life up there as a young country lad. Then the family shifted to Melbourne.
May I ask you what sort of influences you got from the family?
PE: Well coming from rural parents on both sides who had had fairly harsh and disciplined upbringings, they carried that attitude through to myself and my brother and sisters. It was a fairly tight family unit and fairly strong disciplined, particularly from my father. One of his worst demonstrations of it was his prohibition of any speech at meal time around the table. We tended to find that a little impossible to handle but were always severely dealt with if we transgressed.
Did you father, or your mother for that matter, take part in public life at all?
PE: No not really. Dad used to help a few of the local DLP, Democratic Labor Party. I think he had been, naturally enough, brought up on the Labor Party side of things and then being Catholic when the DLP split he had quite a few colleagues in that arena. I had no idea what I was doing on occasions, and that goes right throughout my life, but in particular I was referring to the fact that I would be out walking the streets stuffing how to vote cards in letterboxes all over the countryside with dad, who was just a very keen helper for a few of the local DLP candidates. But that is as close as politics ever came. So there were no external intrusions into life other than those that mum and dad brought into the house.
Where did you go to school?
PE: I went to a couple of Catholic primary schools in North Carlton and Fitzroy, St Mark’s and St Bridgit’s respectively. Then went to Christian Brothers College for secondary schooling, St Joseph’s, North Melbourne. They continued the firm disciplinary measures that father imposed at home. I think it would be fair to say that I had my share of disciplining.
Was there anything you liked at school?
PE: Well sport. Sport was fairly likeable. I must admit that at the time I didn’t enjoy school because it was such a harsh environment. Harsh in terms of the discipline that was absolutely rigorous. Anybody who has ever been taught by Christian Brothers needs to be told nothing else. They had full control and none of this kids’ rights or reporting any beatings to parents. I remember once I got home and complained to mum about having been dealt with fairly severely one day at school, which wasn’t all that infrequent, and she said I must have deserved it which blew the wind out of my sails because I was expecting a bit of sympathy. For example, the routines were so tough that virtually each lesson was work through a text book or a lecture with chalkboard work, we would have to take it down into our notebooks and then learn it that night. This is to say for up to seven to nine subjects each day. The first ten minutes of each period the next day for each of those subjects was a quick written examination. The teacher would be called out the questions and we would have to write down the answers and then have to swap. If you didn’t do too well in that, if you got less than say seven out of ten or a 70 per cent ratio depending on how many questions were asked, then you were in trouble to the point where you would be up and get two, four, six of the best depending on how they felt. So it was a tough time, but certainly built character I must state that.
Were there any subjects you liked, or were good at?
PE: I guess that the only one that I really liked was economics and geography, sorry I would put those two. I had always been good at English, I don’t know why because I never really read very well, didn’t read much at all, was not studious at all. I would get home from school and I would have the football boots or off to the swimming pool, that was all I was interested in. Couldn’t get out of the school routine quickly enough. I would feverishly thrash through a little bit of homework at night in half and hour or an hour or so and get on with something else.
Sounds familiar. What did you do when you left school?
PE: I had ambitions of becoming a senior sleuth in the Taxation Department. So one of the toughest decisions I made then was to commence accounting at night school and where was that held but here in Melbourne, basically no other place than St Joseph’s, North Melbourne. So I stepped back into the classroom at night, this time as a young adult, but Brother Purcell, well there is an unending list of them, there I was back into the same classroom environment which was pretty tough. So I stayed with the Tax Department for about five and half years and decided that I really didn’t like that big organisation in the way it was such a bureaucracy, number one, and it was for two factors, one it was so large and secondly it was a government department. I felt that something quite different to that might be more to my liking. So I left there and went to a finance company and found that quite interesting, because it was my first step into the real world, having gone from school into the Tax Department with a lot of kids from school so to some extent the environment had not changed.
So what did you do at the finance company?
PE: Well at the finance company I learned to lend money, I certainly learned to collect it. They put you through a pretty rugged training program and that really is their beyond job training. After about a year they bring you up to the Assistant General Manager level ready for promotion to Branch Manager office. They take you through all the facets of the management side of it then, the accounting for their particular accounting processes and so on. So it was a very interesting experience, but it was during that phase that I slowly started to learn what the broader game was in the finance company and found that I didn’t like that at all. I thought that I wouldn’t be able to tolerate that for too much longer. Fortunately I discovered credit unions and felt that they were down the same sort of street but with a very moral fabric to them that appealed to me. That is the stage at which I applied for a position at the VCCA.
Did you have the introduction to credit unions from anywhere else amongst that? Had you joined a credit union?
PE: I had actually. I had attended the formation meeting of the Taxation Department Credit Union but, and I suppose this goes on quite a lot, I really didn’t know what it was that I had joined. A colleague there said, ‘You’d better come along, we need numbers for this meeting and we are going to get a credit co-op going.’ I guess that is what he said, or it was words to that effect. The words had no impact on me, I didn’t know for the life of me what it was. Then about eight or ten months later I found that I needed to borrow a few hundred pounds, or dollars whatever it was, I think it might have been pounds back in the those days. Then I went and spoke to this colleague that had taken me to the meeting and so he took me down and introduced me to the Secretary and away we went. I found I had a low cost loan.
Did you come across Frank Crean in the credit union at that time?
PE: Frank Crean? No.
Well he was a tax man, he mentioned to me on one occasion that he was in the credit union.
PE: Is that right? Here in Melbourne we are talking about?
Yes, the Melbourne Tax Office.
PE: No, I had no idea that Frank Crean ever worked there. I never came across him.
Well he was probably in politics by that time.
PE: Must have been, I would have thought so. He might have been much earlier than me.
But he did mention to me that he went in the credit union.
PE: That’s quite remarkable.
Anyway, he didn’t talk very much. I was trying to get certain things out of him but he wasn’t going to be in it. But he talked on about the credit union. Can you remember the formation meeting incidentally?
PE: Not in a great amount of detail but yes I can remember it. In terms of ironies, at a later stage I was appointed Manager of that Taxation credit union, originally called STATAX and after a merger it was called PACE. So I found myself going back through the Minutes of the early meetings and where I got that loan and the actual Minutes of the formation meeting. So at that stage, about eight years ago, I was doing that and I found my mind moving back to that stage and remembering a number of the faces that were involved and so on vividly.
When you were employed by the VCCA can you remember who employed you? Did you go before the Board or a Manager?
PE: I certainly remember that quite vividly. Don Harris was the man in charge at the time. I had applied for one position and it was basically the Formation or Development Officer’s job. I had been rejected on that and it was suggested that I might apply for the Field Officer’s job, which I did do and I succeeded getting that. Don Harris was the man who conducted the interviews as the Manager-Secretary of the VCCA at the time. He also advised that my appointment was coinciding with the appointment of a new General Manager, who turned out to be Geoff Conrad, and that this was a very positive step by the VCCA Board to take the Association to a higher level and to really start to have a greater impact on the affairs of credit unions.
What was the job like when you got there?
PE: Well basically it was a new position and the VCCA was being totally recast at that stage. Essentially the job description was one of going out to credit unions to rebuild the VCCA’s image in their minds and also to provide advice in relation to the operations. The idea being to carry out an informal review of how they were doing, meet with the Board, have a look at their policies and then come through with a range of suggestions for improving operations.
Did you attend Board meetings?
PE: Yes, thousands of them over the years. In fact there were occasions when we were out at to many Board meetings three or four nights a week. In those days the VCCA was so impoverished we felt it was totally unreasonable to even contemplate staying overnight in towns as far afield as Moe, Ballarat, Bendigo, Shepparton even. We would drive back from there after a Board meeting and wonder why we felt a little weary when we got into work the next morning.
Do any of those credit unions stand out in your mind? Can you remember cases of people, credit unions that were in difficulty that you managed to help out?
PE: Yes. Probably two that I personally ended up putting a fair bit of time into. One was Leonburra down at Leongatha and it was in a terrible state, just a total failure in its administration. They had operated for at least a decade on the efforts of one man, Charlie Rogers I think his name was, and he fell ill and there was just nobody else there to pick up the reins. It just started to collapse inwardly with no administration being undertaken. Members records were a long way behind and so on. They were a remarkable credit union, they are still around today, they have survived some incredible periods and particularly came back from the point where they were on the brink of oblivion. Murray Credit Union also rendered some on-going assistance because they were much closer, it was much more expensive for us to try and provide it. The other one, which is quite an irony, was the first time across the VTU Credit Union, it is the second or third largest in Victoria now nearly $200 million. It was a neglected mess comprising two cardboard cartons in the office of the Trade Union Secretary. That is how I discovered it and its affairs had not been attended to for some two to three months. I am talking about members mailing in cheques and cash for deposit to their accounts. Moneys that should have been banked just all thrown into a box and totally neglected and in serious danger of collapse. So by that stage we had a couple of people on staff here at VCCA and we were able to put in quite a few hours and retained an accountant on a part-time basis to do a bit more of the tedious work. Spoke to the Board and they decided that it was time that they took it out of that risky environment of being a nuisance for the Trade Union Secretary and looked at recruiting a person to look after the affairs. So I find those two really as probably real roll-up the shirtsleeves and sort of ongoing hands-on assistance. They were both very small at the time of course. One of them has remained relatively small, survived against all the odds, and VTU has gone on to become one of the bigger and better credit unions in the State.
Did you become involved with the Stabilisation Committee at all?
PE: Only in an informal way. I was never on the Committee. But Brendan Griffin, I think the one and only Manager of the Stabilisation Fund he then had another couple of staff reporting to him but I think he was the only Manager they ever had, Brendan and I use to work together very well. We used to combine the role of the Stabilisation Fund and the VCCA, interfacing with credit unions. Whilst I would tend more to the overall financial performance and policies giving rise to it lending, Brendan would be more involved in the solvency analysis and fraud detection as there has been a bit of. So I had no formal connection with it, but certainly had a lot to do with it and it had a lot to do with the VCCA because it was basically like a department of the VCCA.
What about the Registrar, did you liaise with them at all?
PE: Yes. Well it was essential of course at that stage to have a fairly good relationship with the Registry. During the time I was involved at the VCCA the two major people at the Registry were the Registrar Warren Jungworth through most of that period and Peter Rogan the Senior Inspector. We had a very good manly relationship, a healthy regard and respect for each other. We didn’t agree on all issues at all times. A lot of people considered the Registrar, Warren Jungworth, to have been a bit of a weak man, but particularly on reflection I don’t believe that was the case, I think he was a lot shrewder than most of us every realised. He tended to have his reasonable way in a different manner to most.
There doesn’t appear, from what other people have told me, to have been any heavy-handedness by the Registrar in Victoria. I mean did he ever go in and take over credit unions, or arrange for you people to take over credit unions?
PE: There was no great history of it. In fact the first time an Administrator was appointed in Victoria was when the Registrar Warren Jungworth was away in Queensland on holidays. To some extent that was fortunate because he may not have been prepared to do it. So no he wasn’t heavy-handed in that regard. At that point, Peter Rogan, who was the Deputy Registrar or Acting Registrar while the Registrar was away on leave, he in fact had the courage to fire that up and we had the first Administrator appointed to Telecom Credit Union. It proved to be the correct decision, a necessary decision, a decision that should have occurred some time beforehand because there had always been suspicions. Well there had been suspicions for quite some time about the General Manager and just what was going on at the Telecom Credit Union and following the appointment it was proven to our worst fears that there had been something very untoward going on there.
Was the Manager fired and the Board fired?
PE: The Board, of course with the appointment of the Administrator, was automatically fired. They went very reluctantly. The Manager was also removed, but the Board fought like crazy to keep him in place. In fact speaking to a number of people still connected to Telecom Credit Union to this day most of those Directors of that Board who were removed when the Administrator was appointed believe that they were done badly by and that Peter Basdio, their General Manager, had never done anything wrong. All the facts point to the contrary because Basdio was tried, sentenced, found guilty and spent time in gaol.
Were you anything to do with that particular case of the Registrar moving in?
PE: In terms of initiating it, yes. But once the Registry went in to do their inspection we stood back at that stage because it was appropriate for them to do it. But we gave them the initial grounds to go in there.
Where did they find the Administrator? Was that a person from the VCCA?
PE: No, no, totally out of the commercial world. They picked an experienced Company Administrator and his name was Ken Russell from Coopers Lyebrand, a fairly high profile man.
Did he have his own team to bring in or did he use the staff of the credit union?
PE: A mixture of both. As I understand it he didn’t disturb the staff too much. Over a period of time he had some problems with a couple of staff that appeared to be being loyal to the former General Manager and of course that is unacceptable. Basically he maintained the full complement of staff and had his own team that varied in size depending on what stage they were at.
That was the only case was it?
PE: No it is not the only case of an Administrator being appointed. There was another one at Knox Credit Union , now called Eastern. I was certainly involved at that stage because the credit union’s performance was just terrible, it was going downhill and could have done nothing but fail. A lot of attempts had been made to get the Board to see the problems and try and arrange for an addressing of the problems that they had and steps to be implemented to rectify them. But the Board had a very strong loyalty towards the General Manager which, in my opinion, is the completely wrong place to have their loyalties. They should be for the credit union, not for any individual. A lot of those factors were in train. It was more from the Reserve Board, I was employed there at that stage, that the Administrator was appointed at the Knox Credit Union rather than from the VCCA. It was after I left here.
Were there any forced amalgamations?
PE: Well basically they were more coerced amalgamations and there were plenty of those, plenty indeed. In fact probably the most interesting one, because of the number of credit unions engaged in the merger, there were four credit unions merged in Ballarat to make the Ballarat Community Credit Union. I don’t know how many times I beat that track up to Ballarat and back. As I said before, coming back the same night the VCCA was too poor to afford overnight accommodation. So I would get home at half-past midnight or one o’clock or whatever feeling a bit tired, but at least there was no traffic on the road coming home at that time. It went over a long period of time. A former employee of the VCCA, Bruce Smith, actually found a nice little solution. We had gone through a phase of putting it to all four credit unions to take a decision about going ahead with a foursome merger and they had rejected it. I spat the dummy, I was really annoyed, because I thought they were being given a beautiful chance to do something great in terms of a credit union for Ballarat. Anyway some months later Bruce Smith suggested to me that what we should do is try and achieve that objective by putting together a full-time office that would be shared jointly by all four. He felt that might achieve largely what a merger would have done. I didn’t think that was an appropriate alternative, I felt that they had missed a golden opportunity. But on reflection, and talking further with Bruce about it, decided that perhaps it was a way to go in terms of achieving something better than what they had there at the time. The basic objective was to have a full-time credit union representation in Ballarat. So it would achieve that, if they could agree to it and then after they got to know each other and things rolled on maybe they would decide that they could pool their resources. The debate opened again on that strategy and after a few phases of costings and projections and so on, it tripped over fairly quickly to, ‘Well if we are going to do that, we might as well go all the way and merge.’ So we drew people in from all over the State, particularly from community credit unions, to a night on which there were special General Meetings of members held of all four credit unions. We couldn’t wait to get back to the central point afterwards to find out how the votes had gone at all the meetings. We had people attending all the meetings to try and assure the members that they weren’t losing everything, that the identity of the individual credit union would exist for some time while it meant something. The new identity would exist and the level of service and so on would be immeasurably better in just so many ways. Access ability, size of loans and so on. I would like to think that has turned out to be quite a success story.
Did the VCCA become involved in forcing a number of credit unions into one which was used as a method of putting in the lame ducks, as they had in Central Mutual in New South Wales? I thought there was one here?
PE: I suppose coerce must be the word because it was all you could do. There was no authority.
The Registrar would have had the authority.
PE: Not really. He didn’t really have the authority.
How about the one case that you talked about?
PE: The appointment of the Administrator? He had the authority to appoint an Administrator. But in terms of forcing a merger, no he didn’t have that capacity.
I haven’t got this quite clear, so I’d better explain what happened in New South Wales, I am clear about that. What happened there is that the Registrar and the New South Wales League worked together. The Registrar would say that was the credit union and appoint an Administrator. He and the League used to appoint an Administrator. He appointed them from a group which was the Savings Protection Fund. It was called a Stabilisation Group and Geoff Cambridge was the main one over there and he had a staff. They used to go into them on a Friday night, change the locks and tell the Manager and the Board that they were finished.
PE: They would be officially appointed as Administrators then they would recommend.
Then there was this credit union, which was Central Mutual, and it had what is known as a Common Board, that was part of the Board of the New South Wales League. They would act as the Board for all these credit unions which were pushed into the Central Mutual Credit Union, which is now Metropolitan incidentally. It has got all their Minutes there and everything, it was a feed through as a means of stopping them going down the drain. Now I believe there was such a credit union in Victoria, but I don’t know how it differed.
PE: Would it have been called the Victoria Credit Union?
I think it might.
PE: Right. Well that was a totally different concept. To clear my name of it, although I was involved as a Director for some period of time, I was very vocal in terms of its miserable chances of survival if one key element wasn’t put there. I am uncertain as to its lineage but Geoff Conrad was certainly an exponent of it and I don’t know where he was being driven from on that topic. The idea was to have a credit union that every other person who couldn’t join a credit union already, when they weren’t in an existing credit union’s bond, could join the Victoria Credit Union. I could see immense problems with that. Being an old philosophical type at heart I thought the common bond or not having a common bond, or not being a common bond, was not quite what a common bond was meant to be. On top of that the idea was also to remove this problem of Officers and so from their own credit unions getting problems with borrowing. There were special resolutions that had to be passed all the time and so on and there were a few unseemly events that occurred in terms of official’s loans from their own credit union. So we worked on the Registry to adopt a policy of doing away with permitting that resolution each year at a credit union’s Annual Meeting that would enable the Officers to borrow from their own credit union and in fact transfer their borrowing capacity to this Victoria Credit Union. Well we thought we had the Registrar convinced of the sensibility of that, however when it came to the crunch he wasn’t prepared to do it. But we still hadn’t formed it, this was still in sort of developing the final version of the rules. That is the stage that I became very concerned because if it was going to be a common bond of membership of people who don’t fall within the bond of another credit union anywhere in Victoria then I felt its chances of success were very low, that it would become a bit of a mess.
What about the mutual bonds that I don’t think were developed in Victoria?
PE: No, mutual bonds as such didn’t develop. There is only a few that you would say have got mutual bonds now. So without forcing the Directors and Officers of all existing credit unions in Victoria to do their lending business through the Victoria Credit Union we had some real doubts as to whether it could survive. But the concept had momentum and guys like Geoff Conrad and Peter Hodgkinson and a few others were pushing it and they were more senior than I, so it went ahead.
How long did it last, or is it still going?
PE: Oh no it was wound into another credit union quite some years later when it had suffered a series of body blows. So my worse concerns, along with concerns of other employees of VCCA, had proven correct. It just wasn’t sustainable on that sort of bond.
You went on to the Reserve Board after this, did you? You were in a few other jobs in the VCCA before you went on to the Reserve were you?
PE: Yes I started at the VCCA as Field Officer. That then grew to be termed Field Services Manager and we had about five of us at any one time, maximum, in that division. We used to put in a huge amount of our time meeting with Boards, meeting with management.
End Tape 1A: 4850 Words: 1 hour 50 minutes.
I was asking you about the other jobs you did at the VCCA?
PE: As I mentioned the Field Officer position had grown to a Field Service Manager with five staff. The departure of Geoff Conrad
Do you remember that, incidentally?
PE: Oh yes.
Have you got any idea what actually happened?
PE: Geoff Conrad was dismissed, sacked, unceremoniously. I think it was on a Mother’s Day about 1979 or so. Mother’s Day Massacre referred to as by some of his supporters. But Geoff Conrad had absolutely no charisma beyond an audience of two or three people. In fact he must have been terrified of large groups. Although he may have had an interest in credit unions he certainly never demonstrated it in front of me, ever. He perhaps was a good administrator, I am not really in a any position to judge, but if that is what he was doing as General Manager here, and the two big projects that he devoted most of his time too were Jubilee Lake and VCCA House at Wallet Street, Windsor, they were what he was interested in, the actual operations of credit unions he really wasn’t terribly interested in. So a lot of issues started to build and build and pressure continued through from various quarters and the Board finally dismissed him. Then they recruited Michael Hildebrand, who was the almost complete opposite of Geoff Conrad in that he was fairly fanatical, a workaholic and driven very powerfully by motivation and so on. His story becomes another one all together. But in that phase of moving from Geoff Conrad to Mike Hildebrand the restructuring that Mike Hildebrand undertook was to recognise the importance of the interface with government and the importance of legislation, influencing it and its effect on us. So he cast around for awhile and finally sat down with me one day and said, ‘I am looking at creating a position to have for the first time a full-time focus and concentration on government, government attitudes, lifting our profile, legislation. I would like you to think about taking it on because I think you could do it.’ So I was stunned at this proposal because I had never made any deep study of legislation, had no legal background had never even thought of the concept before. But as I thought about it and spoke more with Mike Hildebrand I started to warm to the idea, recognised the significance of it, and so I then took on the role of what was termed Liaison Manager. That was fundamentally the focus. We weren’t in the position to have a media campaign, or media relations of any great proportion, but it certainly helped in terms of legislation and government. So we poured a large amount of time and effort and sweat into that and over the next five years we achieved a huge amount of success. This saved the Stamp Duty Exemption for credit unions.
Were you on that deputation, by the way?
PE: Yes well they rarely had deputations, I basically did most of it myself.
That wasn’t the Sir Henry Bolte one?
PE: Oh no, that was Dermot Ryan, much, much longer. Dermot Ryan won the Exemption for us. My point was many years later I retained it. There was a Bill slipping through Parliament to remove totally the credit union exemption from stamp duty. We had that Bill stopped in the House and pulled out and reviewed. There were about five or six major legislative break-throughs that we had.
How did you go about that by the way?
PE: The termination of that Bill in the House? We hammered the Minister of the day, Brian Dixon, very powerfully.
When you say we?
PE: The industry in terms of using the Association by letter, by phone call. We also had at that stage a fairly crude but nonetheless fairly effective dossier on Parliamentarians, the area that they covered, the credit unions in their electorates and so on. We were building a dossier at that stage in relation to how we would implement the fullest of full-scale political campaigns if it was ever needed.
So what were you actually saying? We have so many members in your area that may or may not vote for you?
PE: Exactly that.
That is what they used the first time on Sir Henry Bolte.
PE: Is that right.
The bloke who said it was Ralph Lewis, of course, being primed by Dermot.
PE: Oh they would be a formidable pair to have doled up to you. I suppose the story really never changes, so I am not surprised it was trotted out again many years later and obviously with just so much effect. The other thing that we had to bring to bear was that here they were underhandedly removing an Exemption without any prior notification or discussion or consideration whatsoever. You know, how dare you. We had fairly hefty submissions hitting both sides of the House and targeted Cabinet Ministers and so on. I think I would say, particularly on reflection, that we were probably more sophisticated than we thought we were at the time and the result showed it. In fact we had an apology delivered from Brian Dixon, who was not noted for his apologies to anybody, on the floor of Parliament and an undertaking that he would never again amend credit union legislation or legislation affecting credit unions without prior consultation. We thought this was quite a victory.
What other legislation was there?
PE: Well the introduction of the 1981 Co-operation Act, which was a dramatic transformation. The VCCA went through a very, very democratic process with credit unions to try and build that legislation. Nothing went into that, that we could control, that wasn’t put out to credit unions in writing seeking their response and we went with the majority responses in those regards. That produced a dramatic leap forward from the old 1953 re-worded 1958 version through to 1981 that to some extent reflected the modern era of credit unions. Now there has been a variety of criticism, there are certainly some drafting flaws in there that we would never have guessed existed when all that work was being done. But I would tend to suggest that the major thing was that it was a fairly good leap forward for us. It covered a lot of things that hadn’t been covered before. It also, and we deliberately worked towards this, gave a bit of flexibility and scope for credit unions that hadn’t existed previously and we wanted to build that in there. Peter Rogan, who I have mentioned before the Deputy Registrar, and the Registrar, Warren Jungworth, they were characters. Peter Rogan has got a very good sense of humour. A little anecdote here where I nearly had a heart attack and dropped dead. Mike Hildebrand was a fairly forceful General Manager and certainly wanted results in so many ways. Here we were in the midst of getting some of the drafts out of the Parliamentary Draftsman by the Registry for this new 1981 Act. I was due to go in one day to hammer out further the matter on liquidity, what would be authorised liquid investments. Of course VCCA’s central bank was crucial, it had to be in there. Anyway I got in and he handed me the schedule attached to a lot of other sheets, but it was the authorised liquid investments, we had been working those over for weeks and weeks to try and get them right. There were building societies listed, but not VCCA. I nearly died. Like that was the death of us. We just couldn’t contemplate a situation where credit unions couldn’t invest their liquid assets in VCCA. What he had done, he had one typists just grab that sheet, put a bit of white-out over the name VCCA, or the Association, and replace it with Building Societies and then photocopy it. He had great mirth at my expense and it probably took ten years off my life that one, because I just couldn’t begin to imagine how I was going to explain to Mike Hildebrand and the Board that liquids could no longer be placed in the VCCA. It would have just stripped the whole place overnight. Anyway he let me sweat on that for about a day and a half. He hasn’t changed a lot Peter Rogan. He is involved with building societies now. That was probably the most traumatic moment in that period. The other thing in relation to legislation was the introduction of the Reserve Board as we know it now, introduced originally as the Guarantee Fund, or we got the name Guarantee approved for it. Thanks to Graham Benson a connection had been developed with British Colombia in Canada, and that went for many years. George May and Bob Hornell were the two people from BC Central that used to come out, infrequently but probably made three visits each to Victoria if not other parts of Australia. They certainly had a big influence on us and we learnt a lot of different things from them. One of them was the operation of these savings protection-type funds that they had over there. We had the old Stabilisation Fund here, but one of the frustrations that the VCCA had experienced was when you had a credit union that was in trouble and we really wanted to deal with it, it just disappeared from out of the VCCA and that terminated the Stabilisation Fund operation. So we recognised that a voluntary Stabilisation Fund wasn’t going to work, especially if someone had something to hide. So there was a lot of discussion with Bob Hornell and George May about how their funds operated over there. To cut a long story short, we had drafts of the legislation in various parts of Canada and how these funds were set up and how they operated and so on. A team was put together which included amongst others Brendan Griffin and Graham Benson to go and work up a proposal. So they went away and cut and pasted and came back with something. Then a lot of people had a look at it and reshaped it a bit and so on. So it had gone into the Registry and we were saying, ‘Hey we want this, we want that, we want this.’ It was somewhere in the mid-1970s, I am not quite sure of the year. Anyway we couldn’t get that on to the Parliamentary agenda, as much as Warren Jungworth would have liked to or might have agreed with us, there were just too many other political agendas taking up the space on the Parliamentary schedule. It had been lamenting there for well over a year and we just couldn’t get government to take an interest in it. Then one afternoon front page in the Herald, I think the headlines were about three inches high, ‘Communication Credit Union in deep trouble’. Well the Minister of the day responsible for credit unions seized upon the draft Reserve Fund legislation and it was in within weeks. Then the headlines followed, ‘Victorian Government moves to ensure credit unions safe here,’ you know that style of headline. So it took an unfortunate event to get the government to take an interest in it, but fortunately all that work had been done so the event was comforting in that it gave us the entre to get the Reserve Fund in to place.
Did you only have one association at that time in Victoria?
PE: Yes, to the very best of my knowledge only one. I think there had always only been one. The second one would have only been formed about ten years ago. Now of course I am involved with the third one.
Yes well of course you know about all the problems they had in New South Wales. Well they had the problem with setting up the Reserve there because there were all these different associations that ????? and didn’t even agree that there should be any sort of reserve.
PE: Yes that causes real problems. Moving on in time, but a different issue similar concept of very different opinions, we have that now.
The attitude of one and I think it was Tom Hanson of the Southern Association, whose attitude was if the Registrar did his job then there wouldn’t be any credit unions in trouble.
PE: A little too simplistic an attitude.
Yes but you see he came from Big Brother, BHP.
PE: Oh well. Very comfortable position to come from isn’t it?
They did everything for them, you know.
PE: Yes. Very comfortable. He is obviously operating at another level that most credit unions can only dream about, not reality.
The Antigonish, they didn’t want it either. It was nothing to do with the government. So what other area haven’t we covered?
PE: Recapping a little. Geoff Conrad sort of took the Association, using the word took loosely because he had a Board of Directors as well, took it away from credit unions and that really bothered me and it made a real distance between Geoff Conrad and myself. What he did was devote his time and the resources of the organisation to this building that we are sitting in, the VCCA building, and Jubilee Lake and that was a massive, absolute massive level of the limited available resources to the VCCA. So then came Mike Hildebrand and to some extent more directly in line with the needs of credit unions, but he also applied a major portion of VCCA resources in areas that had a bit of a question mark as to viability and/or suitability. Certainly was progressive in many ways. Wanted to set up a plastic card system, CUE, Credit Union Exchange, which conceptually had a hell of a lot going for it. I don’t think anybody had any idea how expensive it would be to try and put it into place and so on. At least it was in the area of providing services for credit unions and breaking new ground on technology and so on. What else did he do? That’s right, he almost had those insurance bonds going out of credit unions, or available from credit unions, ten years before anybody else really knew they existed. But that was done on an unusual arrangement without a preparedness on the part of credit unions to in fact be an agent to sell those things. I think the point about Mike Hildebrand was that he had great lateral abilities, very powerful motivational and driving instincts, but he probably wanted to get to tomorrow yesterday afternoon. He really did drive too hard, too fast and a bit too thin. A number of times you could have compared him to Rommel. With a name like Hildebrand you know he could have popped up out of an African Corp tank and you wouldn’t have been surprised, like he had the pure Aryan features and so on.
Did he take the Teledata move?
PE: Yes he was primarily responsible for the Teledata move. He discovered it. That is another good example that fits into this mould. He felt that was the way to go, for the VCCA to grab hold of Teledata and use that as the technological development. The wisdom of that of course, either in advance or with hindsight, can be judged. Nonetheless, again it is a good illustration of a good level of the resources being applied to a concept to try and help credit unions. To some extent it didn’t quite do what a lot of people might have wanted. But in terms of trial and error, and nothing is guaranteed in this life, it probably did a fair bit.
Do you think that in Teledata the man who had originally sold Teledata, Ken Steele, who was left as Manager there, do you think that Teledata could have worked if the VCCA had put their own people in charge?
PE: Oh, that is a heck of a question. Ken Steele was the knowledge behind Teledata. If you removed him I don’t know that it would have the capacity to develop, let alone hold together.
How about a joint operation then?
PE: Probably something like that. I didn’t have a lot to do with that on an operational basis, but I think Ken Steele might have been a very difficult man to have dealt with and probably always have another two or three options that he was considering. So it probably was the fact that Ken Steele was Ken Steele that made it difficult to work. I think Ken Steele if he owned and ran an enterprise himself, he would be driven by all the normal motivations, when he had someone else owning or controlling I think he would have difficulty handling that. Particularly if you get two strong individuals like Ken Steele and Mike Hildebrand, you have got the recipe for a bomb. They were very strong, very single-minded individuals. Then of course poor old Mike Hildebrand inherited the housing scheme, housing loan scheme, which the VCCA had developed. It certainly caused a lot of problems, not only for VCCA but also for individual credit unions. The idea was a bit of a pyramid scheme in the old sense of the word in that people save ‘x’ amount of dollars and after a period of time and having reached a certain amount of dollars, here was the loan. Now that can only work while you have got enough new people coming in at the bottom end. I always had trouble with the concept, I didn’t believe that mathematically it was capable of occurring. I have had many debates with former VCCA people about it, some who still believe that it would have worked and myself who believed that it could never have worked because it just runs out. One day you’ve got to have everybody in the world, you know, contributing at the bottom end if loans are going to be taken out at the top end.
Yes it is not a Starr-Bowkett is it? With Starr-Bowkett everybody gets their loan in the end. You seal them off. It is totally different.
PE: Well to some extent the Starr-Bowkett is similar, in that really you’ve got to come through. I guess that the problem this had in one sense was that it was being sold that if you save this amount of money over this period of time you would get your loan after this amount of time. The problem was, was the money going to be there to cover that? I just don’t believe that it could have. I believe the fact that the whole system was scrapped is proof of that situation. That was another problem that Mike Hildebrand had, in terms of inherited, and tried very hard to sort it out, in Jubilee Lake also. He put in a fair amount of time, effort and money on Jubilee Lake and he wasn’t able to resolve that. The tragedy with that thing as I saw it was, and we touched on it earlier, not one brick got mortared on top of another one and there was a $1 million loan. Leon Turner, that temporary Manager was the Project Manager a Quantity Surveyor by profession, you just have to wonder about it. I remember at one stage the hotel down at Cowes, Phillip Island was for sale at half the price that was going to be spent on this project. In the final analysis it was a going concern, it was viable and it had twelve months bookings. How much smarter it would have been to have gone for that. But the idea was to build a new place. In fact I remember like it was thirty seconds ago the day Graham Benson whizzed in to Geoff Conrad’s office in the old rented premises in Albert Road. It was obviously about Jubilee Lake, but nobody other than Graham Benson had any idea what he was on about. But he and Geoff Conrad were leaving to drive north of Melbourne to have a look at this site for the replacement Warburton Chalet. I will never forget that afternoon in terms of thinking back on it many times subsequently, what a saving there would have been if that concept had been capable of being killed off then. The words were, ‘It is at a site north of Melbourne and that is all we can tell you now.’
I found the brochure for another hotel in the Warburton area in Berry Calverley’s papers. I have asked several people if that was considered as a possibility. It was another hotel in that area.
PE: Well I don’t know that it was. It wouldn’t surprise me because basically from all I could overhear of Graham Benson walking out of Geoff Conrad’s office was that he certainly had professional people up at the old Warburton Chalet site. The original concept was to rebuild it, we would buy the site and build on it. That proved to be commercially non-viable for reasons that I am not aware of. So I wouldn’t have been surprised if that had been considered, to buy something there. Then all of a sudden the talk went from doing something with the old Warburton Chalet site to bang a place north of Melbourne. People would be able to land at Tullamarine Airport and it was a short drive away and so on. This is not for real surely. We would have been lucky to have been $20 million in assets at the VCCA then.
Then you became Manager.
PE: Well Mike Hildebrand was finished, terminated by the Board, for a host of features. I don’t know if anything would be gained by running through them now. Suffice it to say there were so many financial problems in so many of these issues in the VCCA, matters which no-one person knew all about. That might have even included Mike Hildebrand, or he would be the only exception. I had some idea of the things. A few other people had ideas, but nobody had an idea of the complete picture. I think the Board was shattered when it all come to light, as I was. I think I might have guessed or known about a third of the extent of the problems as they were finally trotted out to be. One example of how bad it was, Mike Hildebrand was convinced, or had convinced the Board, that he was about to be able to borrow megabucks, millions and millions, tens of millions of dollars, from the DG Bank, the Co-operative Bank in Germany, Germany I think it is. He was in Sydney at a meeting for a couple of days and I had been on this end of faxes coming in from this DG Bank, they were about to visit, and it was looking promising. Anyway he had to send up some financial statements on the VCCA and credit unions to the DG guys and did that. They started to smell a rat and they smelled it very quickly and all of a sudden it became quite clear that no money was going to be made available from that source whatsoever. So that really was probably the straw that broke the back. Then everything else tumbled down at the same time. So we had the mess of Jubilee Lake, the housing fund, Teledata and the savings bonds-type concept as well. They were probably the bulk of the ingredients that led to the fairly nasty deficit position of VCCA. So with Mike Hildebrand gone I was put into the position temporarily as Acting General Manager. I tried to come to grips with what things were. I spent two months just trying to find the extent of all these problems and the further we probed, the bigger they became, so much of them were hidden. For example, Mike Hildebrand had done a deal with an Actuary that the basis of his payment for all the actuarial work on this bonds was no money up front, it was when the money started to flow into the system he would be getting a royalty. When he saw that was never going to come into being, he then crunched out some pretty big invoices and they were in the tens of thousands of dollars. So all those things sort of started to come out of the woodwork and we had a major problem. We went through a very tough period where the VCCA was on the verge of insolvency.
So what actually happened then?
PE: Well what was happening, the member confidence in VCCA became acute. We had a few meetings. I had disagreements with the Board about how we should go about certain things.
Such as?
PE: That we should have a Committee of Managers appointed. I wanted to work with them so that they would be the interface with credit unions on that directly important management line, because they certainly do have a lot of sway in credit unions, rather than the historical structure of just the Board being the official communication back to credit unions which had clearly failed to work, it had not protected the interest of credit unions. The position of the VCCA in those days with a deficit was clear evidence of that. I wanted to set up this Committee and I was challenged by the Board as wanting to usurp the role of the Board, which I said clearly was not the case. I said, These are not normal times, we have got a crisis on our hands. I believe that it requires some unusual strategies.’ They refused for such a Committee to be put in place, which I think is a real tragedy. Subsequently, just such a Committee was forced on the Association. But the timing of those things was essential. So what had happened was there was a loss of confidence, quite a reasonable reaction on the part of credit unions, in the VCCA. So they virtually started to pull their money out of the VCCA and not invest their moneys with us. We came close to having to close the doors on VCCA, the whole centralised banking scheme, the box and dice. There were a core of stupid investments, fixed rate, fixed term mortgages that had been put into place by the former Finance Manager and the losses were there. We had the building. So we were insolvent in that sense. We bottomed out within a few dollars of having to close the doors.
So what was done about that?
PE: In what sense do you mean? Trying to prevent hitting that situation? Well in fact we borrowed some money and it was in that money that we borrowed that the trough bottomed out. The liquidity position very, very slowly stabilised and started to pick up again.
Where did you borrow money?
PE: Where from? The Reserve Board, the Reserve Fund. They had security for it, but it was a very unusual step for them to take. We really didn’t have any steps after that one. If that hadn’t have stopped it then there certainly would have been a liquidation, or at least an Administrator appointed. But that was very sad, that credit unions, so many of the credit unions in Victoria, that said they wanted the VCCA said that they didn’t want it to disappear.
End Tape 1B: 4608 Words: 1 hour 50 minutes.