Credit union leaders from around the country will gather in Washington DC later this month at CUNA’s Governmental Affairs Conference. I won’t be attending this year because I will be spending time with my family in Australia, my first opportunity to do so since the pandemic hit. When I arrived in Australia a few days ago, the first thing I did was to contact my Australian credit union to sort out a couple of issues. Actually, I didn’t contact my credit union, I contacted my bank. Since I was here two years ago, my credit union changed its name from Credit Union Australia to Great Southern Bank.
Being greeted with the words – “Welcome to Great Southern Bank” really hit hard. I’d certainly seen lots of changes, many of them not for the best in my time as a credit union member in Australia. However, this change was by far the most jarring.
When I first became a credit union member in Australia 46 years ago, my credit union was very much just like an American credit union and the Australian credit union movement looked just like the American movement. This was because leaders from the American movement came to Australia in the late 1940’s to help credit unions get started. The Australian movement was a mirror image of the American movement with a national association, state leagues, local chapters, credit unions with fields of membership and a very strong commitment to credit union principles and philosophy.
This mirror image continued with great success until the 1990’s. Then things began to change. Former bankers began to enter leadership positions and the people helping people focus began to shift to a bottom line focus. State leagues disappeared, and because the leagues were the support mechanism for chapters, chapters began to disappear. Credit unions became more competitive and less cooperative. The focus on the bottom line drove a merger frenzy which saw the number of credit unions go from over 700 at their peak to 65 today. Field of membership was the next casualty. The most recent change is the rapid trend to ditch the term credit union and replace it with bank. Of 65 “credit unions” that remain today, 31 have changed their name from credit union to bank.
The national trade association name also reflects the change in culture. Customer Owned Banking Association (COBA) is the new name for the trade association. Gone are the words credit union and member, replaced with banking and customer.
One of the major reasons for these dramatic changes was the decision to impose income tax on credit unions. This occurred in the 1990’s. One of the reasons the Federal Government gave for taxing credit unions was their change of focus from living the credit union difference to the bottom line. Then, when the tax was imposed many credit unions saw the payment of tax as their sole way to fulfill their social obligations.
I was a credit union board member from 1982 until 2004, which was when I moved to live in the USA. I saw up close the changes that took place. I witnessed the lack of advocacy that occurred when income tax was proposed. I have closely followed the impact that taxation has had on credit unions and in particular the impact it had on the credit union focus.
During my early years living in the US, I traveled the country speaking at credit union conventions, conferences, training courses, chapter meetings and to anyone that would listen to me. I told the Australian credit union story and the impact that taxation had on credit unions. I explained why I thought US credit unions should advocate to retain their tax status. I became involved in programs that focused on helping credit unions live the credit union difference and retain the appropriated balance between their social mission and their financial mission. I have taken every opportunity to plead with credit union leaders at all levels of the movement to continue to strongly advocate for the retention of the current tax status.
As a member of an Australian credit union and an American credit union, I can clearly see the many differences that now exist because of the impact of taxation. I urge all US credit union leaders at all levels to continue to live the credit union difference and to use their story to advocate for no change to our tax status.