New attempt to privatise NRMA
Last week a board meeting of the NRMA, the NSW motorists' association, decided to pursue for a second time the privatisation of the NRMA's insurance company. The vote was tied eight-eight, with banker Nicholas Whitlam exercising a casting (second) vote in favour of demutualisation. The proposal to restructure the mutual road service association and to float its insurance company on the stock exchange needs membership approval before it can go ahead. The demutualisation resolution was opposed by board members Maree Callaghan, John Campbell, Bronwyn Gould, Arthur Llewellyn, Genevieve Rankin, Jane Singleton, Richard Talbot and Ian Yates. The question is likely to be put to a membership vote before October when elections for the board are due and some of the pro-privatisation members could lose their seats. As the vote indicates, the pro-privatisation board members do not have a majority. An earlier attempt to demutualise the NRMA in 1994 was defeated through legal challenges by Richard Talbot and Dawn Fraser (Dawn has since retired from the board). Since then the anti-privatisation forces have gained more places on the board and in the next elections could win a majority. Hence the haste by those supporting privatisation. Over recent years management has made a number of changes to the insurance company in readiness for privatisation. NRMA members no longer receive rebates on their insurance policies. NRMA treated its employees well compared with other insurance companies but this appears to have changed. Staff morale is low with reports of older employees leaving after 20 or more years with the company. Management appears to be trying to change the culture that came with the mutual nature of the organisation. Ian Rogers writing in the Financial Review described the new ethos very clearly: "The name of the game is to keep pace with the better-placed banks for a crack at market dominance and the rich stream of profits which well- positioned firms can extract from a market where demand is rising." NRMA recently paid $6.6 million for 20 per cent of a Thai insurance company. It bought MLC Building Society and SGIO in Western Australia. Profit has already taken over as driving motive of management — they did not wait for demutualisation (privatisation). "The only thing that will result from the NRMA being placed on the stock exchange is that it will be taken over and swallowed up by some other organisation", said Richard Talbot. "The Motorist Action Group directors will always vote to retain the mutual and that, in my opinion, nothing has changed since 1994."