Co-operatives in Australia come in several different forms. The co-op organisational structure may be the right one for you if your goal is to produce goods and services in an isolated community where the middleman is making it difficult for businesses to thrive or people to access affordable services. Co-ops in Australia may vary since each has its own unique purpose and membership. An organisation’s legal structure will determine the types of activities you are legally able to carry out and which government bodies it is required to seek registration from or report to. Cooperatives are one possible structure of a non-profit organisation. To learn about other types of legal structures, view our legal structures fact sheet.
What is a cooperative?
Cooperatives are a form of organisation that are democratically owned, controlled and used by their members. As a legal structure, the cooperative is usually non-profit, but unlike other legal entities, it is able to carry out some forms of for-profit ventures. In some cases, if the constitution allows it, profits may be distributed between members. The purpose of a co-op legal structure is to support isolated or powerless individuals by combining material and business resources.
A co-op in Australia offers members equal ownership of the organisation and can make their own decisions about its activities. Cooperative members have common objectives that usually include providing goods and services to members, eliminating the middleman in trade and commerce to maximise profit, protecting the rights of goods and services producers and consumers, and promoting understanding and education among members and the public. The International Cooperative Alliance describes cooperatives as an “autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”
Cooperatives in Australia are built on seven core principles;
- membership must be voluntary and open,
- members have democratic control of policy and decision-making,
- members must contribute equitably to the group economy,
- co-op organisations are autonomous and independent of governments,
- cooperatives must offer their members information, education, and training,
- the organisation must foster collaboration with local, national, and international structures, and
- policies should promote sustainable development within the community Co-ops serve.
Examples of Cooperatives in Australia
Generally, there are four categories of co-operatives in Australia, including consumer cooperatives, wholesale cooperatives, service cooperatives, and cooperative banks (financial cooperatives). The type of cooperative will depend on the goods or services members are producing and offering consumers.
Consumer cooperatives are owned by their customers. The main purpose of a consumer cooperative is to increase access to goods or services and help make them more affordable. Two examples are food cooperatives and retail cooperatives. Food co-ops help bring products that local or regional citizens want but are not available in larger supermarkets. This legal structure is meant to transform the market into a more transparent and ethical system. The cooperative food model helps communities create sustainability by purchasing products for local suppliers. Many food co-ops in Australia also collaborate with local charities such as food banks by donating or heavily discounting some of their product.
Retail co-operatives (consumer co-operatives) allow members to operate a store where members can buy and sell goods to a community that is historically under-serviced or has seen many retail shops close. This type of organisation can also act to save or retain a store vital to a community but threatened by closure by transforming it into a co-op. Retail co-operatives in Australia are stores that offer consumers goods such as clothing, electrical supplies, plant nurseries, food, fuel, arts and crafts, hardware supplies, bookstores, or department stores. Cannie Ridge Co-operative Limited is a farm group in the rural city of Swan Hill that purchases and supplies fuel and other materials to a group of 19 farmers. The fuel co-operative is vital to the area’s agricultural sector and economy. The area is remote, and the delivery of fuel is expensive.
Wholesale co-operatives are often formed by people from the same industry, such as auto-mechanics, plumbers, hairdressers, journalists, or travel agents. They may also be represented by food and liquor producers, fishermen, and furniture makers. There are two types of wholesale co-ops: agricultural and producer co-operatives. Producer co-operatives process, brand, market, and distribute the goods and services of members or operate businesses that employ members. Co-ops in Australia allow their members to supply their goods and services to other members, creating a market for businesses that may otherwise not survive. Producer co-operatives can produce and sell agricultural goods, arts and crafts, or provide a service such as taxi or fishing.
Agricultural co-operatives process, brand, package, and distribute farm products. They often provide storage and supplies needed for agricultural production, such as seeds, fuel, fertilisers, and harvesting services. Co-op members have access to volume discounts, making their local industry more viable and their own farms cost-effective. Agricultural cooperatives can also consist of dairy producers. Tatura Milk Industries is a dairy cooperative and processing plant located in the state of Victoria. It is run by a group of 500 dairy farmers who produce milk products for local and regional consumers. The plan is supplied by its members’ milk products and supplies them with fuel through its store.
Service cooperatives provide services to their members such as housing, childcare, health care, electricity and gas, wind energy, water, transportation, communication, recreation facilities, or funeral preparation. This type of co-op can be owned by a group of individuals or several corporations or co-operatives. Housing cooperatives in Australia offer affordable housing that may include shared laundry and recreational facilities. Members often organise shared activities for residents. Their main purpose is to respond to the lack of affordable and safe housing in urban areas. Examples of such projects include eco-villages, housing co-ops, and communes. In general, to live in a housing cooperative, members must contribute time to the upkeep of the grounds, facilities, and buildings, and should participate in decision making.
Service co-operatives can provide essential services to members and communities. Childcare cooperatives offer non-profit services to community members and are owned and managed by the parents attending childcare programs. For example, the East Melbourne Childcare Cooperative offers local families affordable childcare and quality kindergarten programs to improve school readiness among young children. The Co-op serves the Melbourne areas of Powlett Reserve and Yarra Park.
Australia’s Co-op Federation states that 4.5 million Australians are members of financial cooperatives . Financial co-operatives or cooperative banks provide insurance, loan, and investment services to their members. Cooperative banks are owned by their members who take on the role of borrowers and investors. Members are often from the same community, religious group, or workplace. A financial cooperative’s purpose is to provide banking services and make decisions that benefit the group.
Institutions such as Bank Australia Limited and Central West Credit Union Ltd are both credit unions and are members of the Customer Owned Banking Association of Australia. The Association represents 58 Australian customer-owned cooperative banks. Other types of financial cooperatives include mutual banks and building societies. A credit union generates revenue for members and allows them to borrow from pooled contributions at a lower interest rate than standard banks. Mutual savings banks (MSB) offer members a place to save small amounts and earn higher interest. Building societies provide financial products and services that help members save, make affordable transactions, and access low-interest home and car loans.
For more information about how to register not-for-profit or charitable organisations, visit ASIC.
Visit the website of the relevant government entity below for more information on how cooperatives are regulated in your state or territory:
Tasmania — Office of Consumer Affairs and Fair Trading
Queensland — Office of Fair Trading
New South Wales — NSW Fair Trading
Victoria — Consumer Affairs Victoria
South Australia — Consumer and Business Services
Western Australia — Department of Commerce
Australian Capital Territory — Access Canberra
Northern Territory — Department of Business
Who regulates cooperatives in Australia?
The Council of Australian Governments (COAG) has introduced national regulations for cooperatives. As with incorporated associations, cooperatives are administered by state or territory legislation and the Registrar of Cooperatives in each state. The rules for cooperatives are similar but not exactly consistent in each jurisdiction. The government of Australia has been working on making Co-op laws more uniform, and the cooperative business model has experienced several changes under the federal rules, but unless all states adopt these reforms, co-ops will continue to be regulated differently by each state and territory. Currently, this is costing organisations more in terms of administrative work and time because some of the bureaucracy is sometimes duplicated.
What are the steps to registering a cooperative in Australia?
To register a cooperative organisation, you must first have a minimum of five members and decide which type of cooperative you’d like to create. You will be asked to describe at least one primary activity you intend to conduct as an organisation. Your activities should reflect the purpose of your co-op and improve members’ business operations. You will then need to draft a list of rules you intend to use to govern your cooperative and provide any other required documentation. Once the application is approved, the registrar will send a certificate and copy of the registered rules for your approval.
How do I draft the proposed rules of my co-operative?
First, complete the form 'Application for approval of proposed rules of a co-operative' available through your state government website. Your rules should show that you have active membership provisions and that they have been agreed to by members during a previous meeting. They should be approved by the registrar and returned to you, at which time you may hold a formation meeting and vote on accepting them and formally adopt them. Along will submitting a statement of director details, you will then need to pay a fee before the registrar reviews your application.
What are the disadvantages of a cooperative organisational structure?
Cooperative members have equal voting rights even when they invest less than others. This may be less appealing to investor-driven companies. There are also legal limits when it comes to dividends and shares, which may restrict business growth. There may be less operational control in a cooperative organisation since decisions are made by the entire membership. Decisions may not benefit all members or may be ill-fitted in some cases, which can be frustrating for individual business owners. These limits may lead to losing business. Small cooperative businesses that sell specialised services or niche goods may have to compete with other members selling the same thing.
What are platform cooperatives?
Cooperative leader Howard Brodsky argues that "platform ownership, high-quality services, and fair work are powerful points of differentiation that matter to customers and that are not available to any other type of business in the digital economy." Platform cooperatives are organisations that sell goods and services through a mobile app or website. The digital economy has created opportunities and barriers for goods and service providers. Member owners such as freelancers, technologists, business owners, researchers, social justice leaders, and philanthropist can benefit from platform cooperatives because they advocate for and provide free and fair Internet access.
This fact sheet is intended as a simple overview. Non-profit law is incredibly complex and there are many components, allowances, restrictions, exceptions and important qualifications that are not described above. Dedicated legal advice should be sought from a legal practitioner before taking action.