Cooperative enterprises, of which there are several main types, are a form of economic activity fundamentally different to both capitalist enterprises and State socialism, often described as part of the ‘social economy’. In their ‘pure’ form, cooperatives are member-owned businesses in which each member has an equal share in the ownership and control, as well as an equal entitlement to any dividends earned.

Cooperatives are found in the financial services sector (credit unions and customer owned banks), in health insurance and other service sectors, in the retail industry and in the distribution, handling and marketing of primary production (producer coops). Worker coops, where the workers of an enterprise own the business are rarer, at least in Australia.

Although cooperatives have a long history, they now tend to be the forgotten sector of the economy, otherwise dominated by private enterprise and government-owned corporations and service providers. However, cooperatives may be making a comeback, judging by recent developments in Australia and Europe.

Note: A previous article in the Journal reviewing a history of cooperatives in Australia can be found here: Cooperatives in Australia (Journal of Work & Ideas, PDF)

ALP supports cooperatives

The Australian Labor Party’s 50^th National Conference in July this year adopted a new policy encouraging the growth of cooperatives and mutual enterprises. Conference resolved:

Labor will support diverse business models which bring innovation, new products, competition and quality jobs to the market. These will include co-operatives, mutuals, credit unions and customer-owned banks. We recognise and support the cooperative and mutual sector’s ambition to double in size and will work to address barriers it faces to ensure an equal playing field with other corporate structures. ²

The ALP’s support for the cooperative sector follows a similar commitment from the UK Labor Government which also pledged to work to double the size of the co-op sector in Britain, using almost identical language to their UK counterpart:

Labour will support diverse business models which bring innovation and new products to the market. This includes the co-operative sector, and we will aim to double the size of the UK’s co-operative and mutuals sector. We will work with the sector to address the barriers they face, such as accessing finance. ³

The UK commitment was made in 2024 under the Labour Party leadership of Sir Keir Starmer, but the recent change of Prime Minister in the UK will not alter this policy; rather, it is likely to be enhanced. New UK PM Andy Burnham hails from the UK Cooperative Party – and is the first Prime Minister from that Party.

In the UK, a Cooperative Party exists in its own right alongside the Labour Party but in permanent political alliance with it for nearly 100 years. The Cooperative Party maintains its own organisation but stands candidates on a joint ticket with Labour: the Labour and Cooperative Parties. Cooperative Party members must also be Labour Party members to be on this ticket but cannot join any other Party. The Cooperative Party grew out of the UK cooperative movement which pioneered the concept. Currently, there are 41 Cooperative MPs in the House of Commons, including the Prime Minister.

One of those MPs – Andrew Pakes, Labour & Co-operative MP for Peterborough and the UK Envoy for Co-operatives and Mutuals – visited Australia to take part in an ALP National Conference fringe event presented by the Australian Business Council of Co-operatives and Mutuals (BCCM). Pakes is a first term MP elected in the landslide election in July 2024. Addressing the fringe event he said:

I'm really privileged to be here at your 50th anniversary conference, but also a conference which has done what we've done in the UK, make a commitment to double the cooperative and social economy. And if I'd come two weeks ago, I would have started my comments talking to you about our commitment in the UK made in our Manifesto in 2024 to double the size of our cooperative economy. And then we changed Prime Minister. So, my starting point now is we now have our first ever Labor and Cooperative Prime Minister with an agenda based on cooperation coming from the home of the global co-op movement in Manchester,… He had national experience but has come to us as Prime Minister having been Mayor of Greater Manchester, Manchester being the home of the cooperative movement, the largest employer in Manchester. Manchester is also home to the Rochdale Pioneers, where in 1844, 28 working people formed together to set up the first modern retail cooperative in history.

Why did they do that? Because they knew working families were being ripped off by the, by the factory owners, not just in prices, but adulterated food, food which was making them ill and sick. And they came together without power, with little agency, and they changed the way the modern world worked by forming a workers' cooperative. It was that ambition in our doubling agenda that we want to rewire the economy now and change the way capital works for working people…

…We have 65 million mutual members in the United Kingdom, many of them through our big building societies. The most common way a family in Britain gets a mortgage is through a building society, a mutually owned bank, which is really different to your experience where you think you've got your Big Four or Big Five [banks]…

Before he left England for his recent visit to Australia, Pakes told the SMH:

There’s a huge appetite to look at how we can build a purpose-driven economy, which puts communities into the equation, not just profit and loss.

We’re looking at new areas for co-operation and social enterprise, like adult social care, like expanding affordable housing to address the housing crisis.

It’s about how we can use the co-operative model in our supply chains, particularly in things like food and agriculture. ⁴

As a sign of the strength of the UK building society movement, Pakes noted that Nationwide, the largest building society/financial services cooperative in the world, recently bought out the private sector bank Virgin Money which had six million customers while retaining Nationwide’s mutual status. Nationwide has 16 million members in the UK. The supermarket chain ‘The Coop’ is owned by its five million members and the John Lewis department store is owned by its 74,000 employees.⁵

In Australia, retail cooperatives are a small part of the sector, surviving mainly in rural areas. Worker-owned businesses are rare as well, but customer owned business remain strong in the financial services sector, and producer cooperatives are also important in key primary production industries.

Building societies are member owned financial institutions which helped members purchase homes. They were either ‘terminating’ societies which wound themselves up when all members had obtained financing or were ‘permanent’ building societies offering loans to new members.

In Australia today, building societies as such have virtually vanished from the scene. Some were demutualised and folded into traditional banks but others have been transformed into customer-owned banks through mergers with credit unions which obtained banking licenses. According to some reports, customer owned banks are strongly growing their home loan businesses and currently have a combined loan portfolio totalling around $150 billion, significantly increasing the sector’s share of the mortgage market. ⁶

Overall, the BCCM says that “Australia has 1,810 co-operatives and mutuals, with combined turnover of more than $55 billion, more than 37 million active memberships and direct employment of around 95,000 people. The sector also supports nearly 367,000 small business members, showing that co-operatives and mutuals are an established part of Australia’s economic infrastructure.” ⁷

These figures indicate that, on average, each adult Australian is a member of nearly two cooperative organisations. These range from credit unions and customer owned banks, automobile clubs, member owned health funds, sporting clubs and producer cooperatives. However, the cooperative sector has a relatively small profile and little encouragement to grow. This may be about to change.

The BCCM has supported the ALP’s commitment to the sector “as a major advocacy milestone for both the BCCM and the sector. The commitment reflects years of sustained advocacy for greater recognition of business model diversity in national economic policy, and supports efforts to address barriers to growth and create a more level playing field with other corporate structures.” ⁸

In welcoming the ALP Conference decision, BCCM CEO Melina Morrison said the

The focus would now be on working with government and policymakers to help co-operatives and mutuals reach their potential across key parts of the Australian economy…

Even modest reform from the Federal Government could unleash potential across industries such as agriculture, finance and care.

There is now a significant opportunity to strengthen the role of co-operatives and mutuals in our economy. A legislative environment for co-operatives and mutuals to prosper and grow allows them to work harder in the interests of their members, markets and communities around the nation. ⁹

The Australian Greens support the development of cooperatives as part of a policy to return economic power and control to individuals. The Liberal Party does not have a specific policy platform dealing with cooperatives that I have been able to find but the previous Morrison Coalition Government enacted changes to Corporations law which assisted cooperatives to raise capital without jeopardising their mutual status. ¹⁰

The Liberal Party’s junior Coalition partner, the Nationals, has been more proactive in its support for cooperatives, not unexpectedly, given the importance of producer cooperatives in primary industries and in particular in agriculture where coops play a vital role in maximising returns to farmers and other primary producers. Nationals Senator Brigid Mackenzie has a public record of support for cooperatives and there has been a Parliamentary Friends of Cooperatives and Mutuals forum in existence in each Federal parliament since 2017. It is currently co-chaired by the ALP’s Louise MillerFrost and the Nationals’ Kevin Hogan.

It is not clear what further measures the Federal Government will take to assist with the goal of doubling the size of the cooperatives and mutual sector in Australia. Regulation of cooperatives and mutuals now exists under both the Corporations Act and State and Territory Laws. No specific measures intended to give effect to the recent ALP National Conference decision have yet been announced.

Local solutions to local needs in Scotland

Historically, cooperatives often emerged to meet the needs of people in particular communities of interest, including local communities or those based on occupations or needs. As noted above, the Rochdale Cooperative responded to the need of a local community to obtain quality food at fair prices. The Mondragon Cooperative Community in the Basque region of Spain was a response to the need to boost employment and incomes in a poor region devastated by and a loser in the Spanish civil war. At a very local level, parents might form a cooperative to obtain school clothes and supplies at reasonable prices. Fishers band together to get the best prices for their catch.

Local initiatives to support local communities are at the heart of a new approach being implemented in Scotland. In February this year, the Scottish Parliament unanimously passed a Community Wealth Building Bill which became law in March seeking to build and retain wealth in local communities.

Amongst other things, the new legislation encourages the creation of cooperatives to meet local needs. The Scottish government says that the Act will encourage “action that stimulate [sic] new opportunities for local businesses access public procurement opportunities, support flows of new investment finance, and offer businesses, including social enterprises, employee-owned firms and co-operatives the opportunity to start up and grow.” ¹¹

The Government says that:

Community Wealth Building acts as a framework for place-focused activity across five interlinked pillars:

1. Spending

   Through procurement. Commissioning and wider investment, develop local businesses, support the creation of employment opportunities, develop shorter supply chains and maximising community benefit.

2. 2. Workforce

   Increasing fair work opportunities and developing local labour markets that support the strength, cohesiveness and resilience of communities.

3. 3. Land and property

   Growing social, ecological, financial and economic value that local communities gain from land and property assets.

4. 4. Inclusive ownership

   Developing more local businesses which generate community wealth, including social enterprises, employee owned firms and cooperatives.

5. 5. Finance

   Ensuring that flows of investment and financial institutions work for local people, communities and businesses.

In Australia, the BCCM has noted these developments with great interest:

The legislation provides smaller enterprises, communityowned organisations, cooperatives and mutuals with a greater ability to compete for public contracts. By embedding community wealth building outcomes into procurement decisionmaking, the Scottish model prioritises organisations that reinvest profits locally, maintain local ownership and deliver sustained economic and social value.

These reforms highlight an international recognition that traditional procurement systems often favour large incumbents and enable wealth to be extracted from regional and local economies. The Scottish approach addresses this by ensuring public spending contributes to community resilience rather than shortterm transactional outcomes…

Cooperatives, mutuals and employeeowned businesses offer proven pathways for collaboration that do not compromise local control or ownership. The Scottish legislation demonstrates how governments can create policy conditions that enable these models to contribute fully to national economic goals. The BCCM sees strong potential for Australia to adapt similar principles by embedding community value in procurement frameworks, strengthening local ownership models and ensuring that public contracts reward organisations that deliver longterm benefits. ¹²

The Scottish Community Wealth Building Act follows an earlier inquiry into “Developing Scotland’s Economy: Increasing The Role Of Inclusive And Democratic Business Models” [IDBMs] prepared by an Expert Group headed by Neil McInroy. In its report, the Group noted that

Our work goes to the heart of how well the economy works and who it works for. As the report shows, IDBMs (be it co-operatives, social enterprises, employee-owned firms, community enterprises or development trusts) have an intrinsic and adept capability to aid economic transformation, distribute wealth, support communities and be purposeful in ways that serve people, place and the environment. Questions as to who owns our businesses are not of peripheral or marginal concern, but central to creating a prosperous, innovative and dynamic economy. ¹³

Central to these considerations is the question of for whom the economy works. Supporters of locally owned enterprises note that they are located in and important to particular communities, unlike transnational businesses who may see only opportunities for wealth extraction and may readily move locations as a result of decisions made in boardrooms far away from the places which rely on good jobs to support local communities.

And Spain?

Similar questions have been under consideration in Spain. The left-wing coalition of the main Socialist Party [PSOE] and its smaller partner Sumar have been campaigning since 2022 for the implementation of worker rights found in Spain’s Constitution but not enacted in a meaningful way. The Spanish Constitution declares that:

“The entire wealth of the country in its different forms, irrespective of ownership, shall be subordinated to the general interest;”

And specifically, Article 129.2 of Part VII states:

“The public authorities shall effectively promote the various forms of participation in the firm and shall encourage, through appropriate legislation, cooperative businesses. They shall also establish the means to facilitate workers' access to ownership of the means of production.” ¹⁴

An expert report on how the provisions of Article 129.2 might be implemented was released in February 2026 by Yolanda Díaz Pérez, Spain’s Second Vice President and Minister of Labour and Social Economy. ¹⁵

The report considers in detail the extent of the operation of cooperatives and other actors in the Spanish social economy. Mondragon remains an outstanding example of a successful cooperative economy, dominating as it does the Basque economy, but it is not the only example in Spain or in Europe where other notable examples also exist.

The Spanish report and its recommendations look at both mandating worker representation on the Boards of private enterprises but also the encouragement of worker owned and managed enterprises, as in Scotland. It examines possibilities for both “voice and ownership.” ¹⁶

The Expert Group concluded:

… that Article 129.2 is not currently being applied through effective legislation. Indeed, Spain is among the least developed countries in the European Union in terms of the recognition of workers as key constituents of the economy, measured both in terms of institutional structures that allow for democratic participation in the workplace and in terms of worker access to ownership of shares in companies. At the same time, the Committee also observed a number of Spanish enterprises that model exemplary applications of Article 129.2, notably worker cooperatives, which are some of the strongest in the world. ¹⁷

And recommended that:

VOICE:

1. 1. Reinforcement and new legal requirements for worker participation in company operational decisions, including reinforcing the prerogatives of Works Councils and Employee Delegates in particular with a new Co-decision Right to Shape and Consent to the deployment of AI at work
2. 2. Inclusion of workers in strategic decisions via Boards, with minimum statutory thresholds designed in alignment with, and seek to advance upon, European best practices in codetermination (1/3 of workers on board seats for firms with employees between 50 and 1000 employees, beyond 1000 employees: 1/2 of workers on board seats)

OWNERSHIP:

1. 1. Minimum statutory thresholds starting with opening access to 2% of share ownership to workers.
2. 2. New Citizens’ Funds designed to acquire shares and accelerate the transfer in order to make Spanish firms more resilient, and less dependent on extractive financial actors, and a transition plan supported by new ESOP-type financing mechanism for workers to acquire their company’ shares in anticipation of a founder or owner’s retirement. [Note: ESOP stands for Employee Share Ownership Plan].

Whether Spain will act on these recommendations is in doubt. In early October, following large protests regarding Spain’s housing crisis, the Spanish Prime Minister called a snap election for late November. The Coalition parties have been trailing in the polls for some time and a right-wing government may emerge which is unlikely to support any of the Report’s recommendations.

Moreover, Deputy Prime Minister Yolanda Díaz Pérez, the driver behind the Report, has announced that she will not stand for re-election and the leadership of Sumar will pass to someone else. Diaz Perez has been a prominent voice for workers’ rights and succeeded in passing the ‘Rider law’ in Spain which required online delivery platforms to classify their workers as employees. ¹⁸ Politics matters, in Spain, as elsewhere.

However, if the Albanese Labor Government is seeking ideas as to how it might go about giving effect to the recent National Conference decision to double the size of the social economy in this ‘Commonwealth’ of Australia, there are many ideas from overseas that can be examined for suitability and possible application here.

Declaration: Keith Harvey is a member of two cooperatives [customer owned banks].

Disclaimer: The views expressed in the Journal of Work and Ideas are those of the authors only. They do not represent the views of the journal, its editors, nor the AIER.