Maleny Credit Union … Back to the Future?

MEMBERS of the Maleny Credit Union (MCU) sent a strong message to its board in a special general meeting at the end of June – they do not want their credit union to merge with Credit Union Australia, one of the biggest credit union conglomerates in the country. During a campaign that was heated and rancorous, often on the main street of Maleny, MCU members expressed outrage that the MCU board could so easily give away a unique cultural icon. For almost 30 years, MCU had helped define the notion of a financial lending institution that put people before profit.

The question now is, can the passion and the commitment to MCU be rekindled in the current cut and thrust of a strongly regulated financial market. Hinterland Times Editor, Michael Berry looks at where the MCU came from and where it might go.

ONE OF THE most amazing aspects of this story of the Maleny Credit Union are the constant changes that brought this organisation to where it is in 2011. Over its 27 years, the Maleny Credit Union has raced to change, trying to keep pace with an increasingly diverse, vibrant and engaged community. For the Credit Union it was always a case of keep up or shut down; initiate or be left behind.

It is said that there is nothing wrong with change as long as it’s in the right direction. Of course, time will tell whether the MCU decision not to merge with Credit Union Australia has been in the right direction – right for the Maleny community, right for MCU members, right for the continuation of ethical and sustainable financial principles. These are big questions and I am no oracle. The future will provide those answers.

The Maleny Credit Union was born in 1984 when community change agent Jill Jordan was inspired by permaculture author Bill Morrison to gather support for a credit union in Maleny that directed local cash into ethical investments and employment opportunities.

To propose a credit union that put “people before profit” was a daring idea during the early 80s with the steady decline of a Queensland dairy industry that had sustained the local region throughout most of the 20th century. At the same time the financial times were changing in Australia and the stranglehold of the major banks was being challenged. Communities wanted more loan and credit options, and just as importantly, they wanted those finance options from more socially responsive organisations.

In common with world credit union culture, members of the new Maleny Credit Union, set up in April 1984, were linked by a bond of association – an association of members with mutual interests, hence the term mutual to describe all credit unions. Maleny members were to be bonded by their district and their desire for a more socially co-operative, and supportive community environment.

But it didn’t help that the 80s was a period of wild investments and entrepreneurial madness. Banks like Tricontinental and Rothwells collapsed and cowboy entrepreneurs lost huge personal fortunes. Governments looked on uneasily and realised the need to create a more stringent regulatory framework for the finance market.

The new credit union entered the highly competitive financial marketplace backed by astonishing passion and selfless commitment of early members to getting the Maleny Credit Union up and running. For years members staffed the tiny credit union office in Maple Street for absolutely no pay, and worked hours that often stretched their belief in this fledgling organisation.

It was this selfless commitment by staff and the passionate belief in its ethical core that drove growth in the Maleny Credit Union. Equal pay, decisions by consensus, donations to worthy causes and disadvantaged families, ethical investments and loans to those who were considered risks to the traditional banks – all were unique features of this adventurous project. And what an achievement to read in the conservative Financial Review in 1986 that the Maleny and District Community Credit Union was rated as the fastest growing ethical financial institution in Australia!

However, state and federal governments were slowly pulling credit unions into line with traditional banks. As one staff report said, “ We now have forms for things that we had never heard of!”

Through the 90s, there were constant tensions with increasing government regulation, the need for more IT support in Maple Street, and holding onto a socially inclusive philosophy. Fundamentally, the need to make the necessary levels of profit was uncomfortably at odds with the declared ethical mission of the Credit Union, which made it difficult to maintain competitive loan rates.

It was not surprising that the fierce financial competition in the late 90s started the merging of credit unions and building societies so that they could remain efficient and viable businesses. When the new federal, Australian Prudential Regulation Authority (APRA) was created it led one long-time Maleny Credit Union director to comment in the national media that, “We now have to have the same kind of procedures and policies as Westpac.”

Of course, no-one questions the government’s right to protect our money. Indeed, we saw graphic evidence of that regulatory protection during the recent global financial crisis. But at the same time that protection was closing off the community support policies of small community credit unions like MCU. Regulations also led to the appointment of professional managers with financial experience, more familiar with the profit motive than co- operative motivations. Credit Union directors, however passionate, dedicated and local had to be financially literate and ‘fit and proper’ to meet the demands of APRA.

The decision to merge the Maleny Credit Union with a much larger mutual came as a brutal shock in late 2010. Opposition soon gathered into Friends of Maleny Credit Union who asked questions about a serious lack of communication with members. They also expressed doubts about the Board’s willingness to explore alternatives, or to maintain the Maleny Credit Union as a going concern.

It is disappointing to say the least that the MCU board did not create, many months ago, the kind of “conversation” with its members that the Friends of Maleny Credit Union have instigated in recent weeks. Indeed, it was the board’s failure to communicate that caused the crisis of confidence.

No wonder then that emotions ran deep, friends argued with friends, and sadly, members of at least two co- operatives were seen to be publicly fighting with members of their own family – the Maleny Credit Union. One wonders what Jill Jordan would have made of this crisis of confidence.

So what of the future? Well, the trend in Australia is towards a small number of large credit unions that adhere to the mutuality principal but often lose the small co- operative community ethos. If the Maleny Credit Union wants to buck this trend, it must show once again, that a small town credit union is sustainable, ethical and a viable financial support for its citizens.


(At a special general meeting on June 25, 22 per cent of MCU members (total membership 5,500) voted on the Board resolution to merge with Credit Union Australia. 637 members (57%) voted against the merger. 464 members (42%) voted for the merger. 78% of the MCU membership chose not to vote.

Local author, Elaine Green has written a history of the Maleny Credit Union which is due for publication by the end of July. Contact MCU for further details. Tel: 5499 8988.

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