Page 2864 - Week 10 - Thursday, 15 August 1991
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One of the most important matters that the Registrar of Cooperative Societies is responsible for is keeping the prudential skills of societies under effective surveillance. By "prudential skills" I mean, for the information of members, the sorts of ratios, if you want to put it into simple language, between assets and debt, or between liquid assets and obligations outstanding. Indicators that bear on those matters come from annual reports, from the qualifying statements from time to time attached to accounts, and from effective surveillance by the Territory Government servants of the building societies.
One of the matters mentioned earlier that was of great concern during the Canberra Building Society epoch, and that of the cooperative societies generally - and I will not go back to it - was the fact that prudential matters were not always properly observed. In fact, there were breaches of the codes and the laws provided for in the Co-Operative Societies Act, without prosecution. In fact, decisions were made not to prosecute in relation to breaches in that area.
I think the public is entitled to know how responsibly the Alliance Government acted at the time of the Pyramid crash and the potential crash of the Canberra Building Society. There was a day in the life of this Territory, not long ago, when a major depositor withdrew funds from the Canberra Building Society when the Pyramid story and experience were about and when concerns were expressed about prudential issues - I will put it no more highly than that - affecting that society.
It was a great toss for me, as Attorney at the time, to decide whether to press on with an open public inquiry into the manner of shareholding transfers of the Canberra Building Society, and thereby cause a further public rout and withdrawal of deposits, or to allow the metamorphosis into a bank to proceed. The latter view prevailed, to guard the interests of the small shareholders. But in that process I believe that a significant advantage was obtained by some not so small shareholders and by some people who should have had the whole issue properly aired and debated.
I also want to make special mention at this time of the duties that lie on the shoulders of the public servants who have to undertake these activities - who are now with the Treasury but who were with other sections of the Territory administration prior to self-government. It is incumbent on those public servants not to become close and get into a situation with the directors of such societies such that it may affect their judgment or influence them in any way. I am not suggesting that that obtains at the present stage, but I still have a range of serious concerns about how a company, Hamib Pty Ltd, came to purchase a building known as Savings House in a situation where a building society, as proprietor, had liquidity problems or prudential concerns at the time.
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