On-Site Coverage: It's Taxes and Paid Volunteers for Australia's CUs
LAS VEGAS -- In Australia, credit unions are taxed, volunteers are paid, and the loss of interchange income three years ago is still a sore subject.
Louise Petschler, chief executive officer of Abacus-Australian Mutuals, the country's national credit union trade organization, shared that insight with this morning's Credit Union One Conference general session audience, and was joined on a panel by CUNA Chief Economist Bill Hampel and Herve Guider, general manager of the European Association of Cooperative Banks.
Australia's credit union volunteers receive compensation because "they take on very serious obligations, and we expect a lot from them," Petschler said, adding the posts can be as time consuming as a full-time job. Boards "down under" are also required to complete a regulatory skills test.
Taxes "had a big impact on profitability initially" when enacted in the early 1990s, Petschler said, but now the expense is managed as a part of regular operations. European credit unions also pay taxes, Guider said.
After Australia's central bank took control of the country's payment systems, interchange income dropped from 95 basis points to an average of 12 cents. In total, Australia's credit unions lost $22 million due to the reform, but gained back $15 million in reduced interchange costs. Like in the U.S., interchange reform was pitched as pro-consumer, but Petschler said Australians now pay higher fees, and some retailers no longer accept some cards.