Economic Survival when the Economy Slows

Kevin Cox
5 min readMar 21, 2020

There are immediate economic problems when individuals, households, communities, countries and the whole world is in Lockdown. One problem is the reduction in income to pay for recurring non-discretionary services like rent, mortgages, electricity bills, rates and taxes, and insurance.

One way to tackle the problem is helicopter money of showering affected communities with cash. Helicopter cash is a short term blunt approach that will kick-start the economy and keep it functioning for a short time. Unfortunately, it is not a long-term solution. What is needed is a system where individuals can adjust their non-discretionary expenditures to match their incomes.

Imagine a system where individuals are required to pay a fixed percentage of their income for non-discretionary expenditures. The percentages could vary depending on the total of a person’s non-discretionary expenses and the expenditure amounts. Imagine a system where consumers of each non-discretionary goods or service can join a cooperative that funds and supplies the specific goods or service. Imagine a system where consumers can easily move between cooperatives. Such a system would adjust itself to the circumstances of each individual consumer. Each consumer would optimise their economic needs and contributions resulting in an overall optimisation for the whole community.

A Home Ownership Cooperative

One such economic optimising cooperative would be a Home Ownership Cooperative.

A Home Ownership Cooperative could consist of investors and occupiers. Investors invest in all Cooperative homes. Occupiers become investors in the home in which they live as they pay to occupy the residence. When they have paid the total cost of the home they would stop paying to occupy the home and move to pay the cooperative for services, such as insurance and tax payments, provided by the cooperative. All investors and occupiers will collectively own the homes with occupiers having the right to occupy the home and of sharing in any capital gains if the home is sold.

Investments in a Home Cooperative are structured as prepayments. With prepayments, investors get a fixed inflation-adjusted annuity return of 7%. Member Occupiers pay a percentage of their income as determined by the cooperative.

Superannuation Funds can become investors in Home Cooperatives by SuperFund members choosing to invest part of or all their superannuation funds in Cooperatives. Existing landlords can transfer the title to a Home Cooperative and receive a good inflation-adjusted return. Mortgage holders could transfer a home to a Home Ownership Cooperative and the Cooperative could pay the lender or the lender could become a member and receive periodic payments.

A critical part of prepayments payments is that each month investors receive partial repayments and if taken as cash these partial repayments are counted as income and capital returns. If the cooperative does not have the funds to repay then the income and capital are reinvested under the same terms and conditions. The important part of the process is the movement of money and the immediate realisation of any gains from the use of the money. This helps prevent cash stagnating.

Water Supply Cooperatives

Water Supply Cooperatives can offer an immediate overnight boost to the cash flow in local economies. The organisational basis for the local cooperatives exists with local Water Watch and Land Care volunteer groups. The Capital Funds exist as local deposits of resident’s superannuation savings, low-interest cash accounts, and large bank debts available for purchase and the freeing up of Capital. In Canberra Icon Water has 1.5 billion in bank debt for which it pays 4% interest.

Assume Water Catchment Cooperatives are formed for each of the creek systems in Canberra. Residents can optionally choose to join a Cooperative. If they join they are required to pay a fixed percentage of their disposable income for their water. If they pay more than their consumption then the extra money is invested in the Cooperative as prepayments.

Every consumer is given an allocation based on their expected consumption for their family and the amount of open space they are responsible for watering. If they consume less than the expected amount then they receive prepayments to pay for future consumption.

The Water Cooperatives will have a surplus of funds over the amount required to pay Icon Water. As not for profit Cooperatives they are required to spend the funds. The funds can go for Water Catchment projects and purposes.

If all the $1.5 billion in Icon Water debt is converted into prepayments the ACT Community as a whole will increase the cash flowing in the community by the cost of interest and repayments or about $60 million each year. Such a system would cost about $2 Million to implement and operate each year. It would require little or no change to existing Icon billing or operational procedures and could be operational in two months.

There would be little change to government revenues from Icon Water. The banks would have $1.5 billion in cash to reinvest in the Australian Community. People on low-incomes could meet their repayments while people on high incomes would prepay for some of their future consumption and earn a fair return on their investments. Water Watch and groups concerned with the waterways of Canberra would have the funds to carry out their operations and the Canberra Community would have the circulation of more money within the community to help ease the cash flow crisis caused by the LockDown of the community.

Rooftop and Community Renewable Energy

PrePower Cooperatives are setting up a way for all households in Canberra to invest in rooftop and community renewable energy production. The investment proposition is a 10% annuity for 20 years or an equivalent annuity for a shorter period. The payments of households can be set as a percentage of their disposable income and can work with EvoEnergy to achieve the same result over electricity and gas charges from the existing grid.

This system is well advanced in design and implementation and can be rolled out starting within two months.

Local Ride Sharing to supplement Public Transport

The same principles can apply to the sharing of private vehicles and to the payment for Public Transport. This would take six months or more to implement because there are more issues of public distancing and testing to consider. The software and systems to implement the system can be rapidly deployed.

Health Costs, Medicare, and Health Insurance

The same principles can apply to health costs. The National Health Cooperative is an existing community cooperative that can form the foundation for funding Canberra Health Services.

Education Costs

HECS is a prepayments system that has been operating for the past thirty years. It can be extended to cover child-care, primary and secondary schooling. It can be localised by giving local schools more autonomy.


Local special-purpose cooperatives provide the foundation for local funding of community services. They remove unnecessary costs from the financial system and make the financial savings available for lower-cost services. The financial cost savings can increase the returns of investments that produce sales of goods and services the community requires.

The economic principles are similar to those of the original HECS student fees system. Those principles are to flatten the difference between expenditure and income over a person’s lifetime. Over the past thirty years, those principles have worked well.

Modern technology provides many alternative mechanisms to the taxation system to spread income and expenditures across time. Investing and paying with prepayments is one such method.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.