Debt
My life has fallen into a few stages.
As a child, I lived in Box Hill when it was a Village. I then became Pastor to the Slums of Inner Melbourne for eight years. I was then a Country Parson and a Teacher at a One Teacher Bush School out at Jackson Creek in Western Victoria and then for thirteen years, I was a Suburban Minister in one of Australia’s largest suburban ministries.
And now, for more than 20 years I’ve been Superintendent in Sydney of Wesley Mission, Australia’s largest church ministry.
I’ve told you stories of people in each of these places.
Tonight I want you to come with me into the heart of the city.
When I commenced as Superintendent of Wesley Mission following my appointment in December 1977 the first challenge that stood out was debt. Debt was written everywhere.
I previously had learnt to cope with debt in church life. In fact in each of the churches where I had ministered in the slums, in the rural sector and in the suburbs the churches each had debts.
The big debt at Cheltenham when I started which was equivalent to 10 years total income was so big that I indicated to the Board that I could see that I would do nothing else in my ministry except to work to build up the church so that we could pay our debts. I indicated that if nothing else would happen I would at least leave the church debt free. That would happen of course, but in the mean time the church grew so large that we spent several million dollars in development and growth and new buildings.
Now that I was at Wesley Mission the same old problem of debt raised its ugly head. The only problem was it wasn’t as easy to see and realize as it had been in the simple accounting system in the other churches.
The accounting system at Wesley Mission was horrendously complex. There was nothing about it that was not true and accurate but that it was just so complex that no one seemed to be able to understand the total picture. Certainly members of the Wesley Mission Executive did not understand the problem and would have had the same problems I had, understanding the issues. Everything was run on trust.
I knew we had some debts because of new buildings. The debt on our new center to house homeless people in Darlinghurst and to get them out of the smelly rabbit warren in which the homeless lived in huge dormitories in Francis Street had now reached $1.4 million. This was due to extremely bad weather, a complexity about the construction that was not foreseen by the architects, and a very large number of disputes with our builders. We didn’t have the cash on hand to be able to pay the bills, which I knew would all finally come in within the next six months. Fortunately face to face meetings with Mr. Alan Kell of Kell & Rigby saw the builders write off many of their changes.
There was an old debt on Wesley Centre of a quarter of a million dollars following its rebuilding, and moneys lent to the Lyceum Property Trust which had no hope of ever repaying them!
There was a very large debt and future potential debts within our Aged Care Division for heavy maintenance on many of our hostels and nursing homes which had not been upgraded for years.
And there was an operational debt which simply meant that we were spending more money each week that we had coming in.
This debt reached a crisis the week I began. We had a cash deficit. We were able to pay the next round of salaries but could not pay the salaries of our staff in two weeks time. That was an instant cash flow crisis. An immediate decision – sell orchard at Galston, house at Gordon, the campsite at Leura. That helped an immediate need.
The financial accounts were extremely complex and confusing. In spite of having done some study in basic accounting and broadsheet accounting, I could not make head or tail of them.
What was more troubling was the attitude of senior management. Their answer to everything was simply to cut expenses by slashing staff. This meant staff other than themselves. There was a huge outcry when I suggested that we keep everybody on staff but that we all take a salary cut of an equal percentage. The only answer was that other people had to go.
To make matters worse I saw little hope of raising money quickly. The records were poor and many of the donors on our records were in fact dead.
The first couple of weeks at Wesley Mission saw the word “debt” come up time and again in conversations. It was a very worrying moment. We had bank overdrafts but we were not sure how much money we had actually drawn down. The books were in bad condition.
In those first weeks I also found I had to face the resignation of some very key people. Mr. Peter Tebbutt who had negotiated our call to the Mission had resigned from his position as the Honorary Secretary. The Senior Minister Rev. Alan Jackson on whom I was relying greatly to help us settle in to our ministry had resigned from his position to accept a call from Alan Walker to head up his World Evangelism Ministry.
A new Honorary Secretary Keith Walkerden who had just been appointed, was then appointed by his company to become the Chief Executive of Olivetti, United Kingdom and would be required to shift in the near future. Only Dr. Jim Pendlebury, our Honorary Treasurer remained. Even some members of our Board indicated that they had served with Alan Walker over many many years and they felt that it was time that they too should resign.
Little did I know it that that was the best thing that could have happened for me. It meant that I had to immediately get to work, meet people I had never met before, sum them up and build a new team of leadership who would work with me. What an opportunity to start with a clean slate.
I had a couple of basic principles concerning debt in my mind. The first one was that the church should not be in debt at all. The second one was that the only way we will ever get out of debt is by hard work. I remembered my mother when she took over the business following my father’s sudden death when I was aged eight. She had four little children, the youngest having just been born. The business was heavily in debt. She organized other people to care for her children and she worked night and day in order to turn the business around. I grew up sitting at the table with my widowed mother counting the day’s takings from the bakery business and listening to her talk about her plans.
I realized the first thing that I should understand was the true financial picture of Wesley Mission. I needed to get someone who was extraordinarily good at understanding financial pictures of companies. Several people recommended to me Professor A.H. Pollard of Northwood. Professor Pollard was the Professor of Economics and Actuarial Studies at Macquarie University. My soon to depart, newly elected Honorary Secretary Keith Walkerden took me to his home and I took with me a huge box containing all the financial statements, annual reports and other relevant financial information. I had never met Professor Pollard before. After introductions I told him my predicament and asked if he could work through the financial reports of Wesley Mission and tell me the true financial picture. He willingly agreed to do so and indicated a time when we could meet a week later. I was impressed with Professor Pollard sharpness of mind, of the questions he asked me and of his genial spirit.
A week later I met with him alone and he returned the big box of financial papers. He looked at me with a twinkle in his blue eyes and said, “Do you want the good news or the bad news”? I looked back at this man. My heart had already warmed to him. Little did I know it but we were to commence the most personal deep friendship that could exist between two people which would last for the next 23 years until his untimely death. “Well”, he repeated, “do you want the good news or the bad news?” I replied to him straight forward “give me the bad news. I can cope with the good news at any time but right now I have to get to work on the bad news.” Professor Pollard replied, “Well Wesley Mission is technically bankrupt. You have not got enough cash in hand to pay the salaries of your staff and your work is heavily in debt.” I said to him “Well what is the good news?” He replied with his eyes twinkling “Your books are in such a bad shape that no one will ever know!” That was the good news. We were broke but no one needed know it. I said to him, “What must I do first?” He replied having already worked out an answer. “You must get a loan of at least a quarter of a million dollars to pay your staff salaries. I have already gone ahead and made an appointment for you on Thursday with the Chief General Manager of the Commonwealth Bank on the corner of Martin Place and Pitt Street. I have told him about your need but you will have to tell him your terms and conditions”.
On Thursday nervously I stepped out with Professor Pollard down Pitt Street to the great imposing columns of the Bank’s head office. Although new to Sydney I recognized this building instantly. Every child in Australia once had a tin moneybox with the picture of this huge building on it. I was going to meet the Chief General Manager.
He welcomed us into his office. He was benign and genial just like Bank Managers used to be in that era before banks became so unpopular. He settled me down and personally served a cup of coffee and after some warm chitchat came round to say, “Now how can I help you?” His smile and warmth of character made it appear like the bank was in business to do nothing else but to help its customers.
Professor Pollard had told me that I was the leader of the work and it was up to me to tell my story and to do the arrangements. He held no position at Wesley Mission and was merely a friend who was trying to help a young man come to grips with his future.
I cleared my throat and looked at the Chief General Manager “I want to borrow a quarter of a million dollars. We have a cash crisis, which I believe we will overcome. We have plenty of assets in buildings, nursing homes, hospitals and children’s homes but I can’t sell any property because we have very vulnerable people living in them. If I can get a loan of a quarter of a million dollars without the normal security for a number of years I will promise you that every cent will be repaid as soon as I can get this Mission back on its financial feet.”
The Chief General Manager smiled broadly “Is that all, a quarter of a million dollars?” I suddenly realized I had the money and with the courage that’s only found in a very young man I added “Yes, a quarter of a million dollars, but I want you to lend it to me at no interest whatever.” He smiled from behind his chair and tapped the tips of this fingers together, “I am prevented by legislation from lending it to you without charging interest. But the bank normally helps charities with a donation or two from time to time. If you are prepared to accept the fact that the Commonwealth Bank of Australia will not give you any donations for your work I am prepared to lend you a quarter of a million dollars at 1% for the next 10 years” I could not believe my ears. We had a quarter of a million dollars at only 1%!
I was able to get the financial position of the Mission straightened much more quickly than I anticipated and within three years we had generated enough surplus to not only clear out our debts but we could even pay that quarter of a million dollar loan.
Again Professor Pollard gave me advice, which I will never forget. “Repay it? Repay a quarter of a million dollar loan, which you have got at only 1% for another seven years? You will not! No, although you can pay the bank the quarter of a million dollars, you should take that quarter of a million dollars, go down to the bank and place it on deposit with them at 8%.”
Professor Pollard was teaching me, one on one, a few lessons in economics.
After we had left the bank on that day when I first borrowed the money I asked Professor Pollard would he consider giving the time in all of his acute busyness to becoming the Honorary Secretary of Wesley Mission. I explained to him that we were not in a position to pay any expenses and yet the job would involve him with more than ten hours of work a week. He replied with a typical response, “No expenses and ten hours a week? All my life I have been looking for a job like that!” So Professor Pollard became our Honorary Secretary and with Dr. Jim Pendlebury our Honorary Treasurer we met together on a weekly basis in the closest of friendships for the next 23 years.
So we are in the position to pay our staff their salaries, but the underlying problems were not yet solved. I didn’t believe you solved the problem of a cash shortfall by terminating staff. That was the view of the then General Manager. My approach was to find ways to raise more incomes. So we were in conflict. I was deeply troubled with the thought of staff being terminated, the personal and family difficulties that they would face upon being dismissed and the mortgages they had to face.
It came home to me in a most personal fashion. We hadn’t been long in the Mission when my daughter developed a friendship with a young administrative assistant who worked as administrative assistant to Dr. Keith Suter. Ron Schepis and Jenny became close friends. I had first noticed them in the restaurant having lunch together. I realized that the enthusiasm that Jenny had showed coming in to visit her father at head office was not just to see me. They were in love and eventually they got engaged.
It wasn’t long after their engagement following the annual general meeting when I reported that the debts at that stage were still there and that it was taking a little time to financially turn the Mission round, that I found out what happened next. The General Manager at the time brought me a list of staff members who should be dismissed in order to cut costs and at the head of the list was the name of Ron Schepis. He said with a shrug of the shoulders as though to test me “the last one on should be the first one off.”
I knew I couldn’t allow my daughters love for the young man stop me making a right decision. I called Ron into my office and told him that because of the financial position he would either have to be terminated or else I would do my best to relocate him in another area of our Mission work. Ron with characteristic good nature understood and accepted the situation. It was a much more difficult task to announce and explain to Jenny at the tea table that night. I explained to her and to the other children as best I could the trouble we had with our finances and how I was working to overcome them. But in the meantime I had to cut our head office costs and this meant that some staff would either have to be retrenched or else moved to another section of our work where there may be a vacancy. It was not a very happy tea table discussion. The children naturally thought that because I would have to make the decision I could favour Ron whom they all loved greatly. They didn’t realize that in leadership one has to show fairness and impartiality even when someone you love is involved.
As it happened I was able to place Ron in our work with the homeless. The young administrator now began to work with social welfare. Ron was to go on and go to TAFE and night school to do courses and eventually graduate in the field of social work. This was a much better outcome than working as an administrative assistant in head office. But Ron had no sooner graduated in social work than he felt he wanted to be closer to people and so started studying nursing. He graduated from his general nursing course at Concord Hospital as a registered nurse. He worked at Concord Hospital and now had dual qualifications in social work and in nursing.
A couple of year’s later Ron felt the call to train for the ministry and with my son David went to the Carlingford Theological College of Churches of Christ. Over the next three years they studied together, worked as student ministers and eventually graduated with their university degrees in theology. By this time Ron and Jenny married, shifted to Keilor in Melbourne where they undertook a ministry in a local parish, returning later to serve at the Church of Christ, Pendle Hill and is today ministering in a dual role as a psychiatric nurse and a chaplain to our Wandene Private Hospital.
I never knew the end of the story about the year when we were so much in debt at Wesley Mission that I had to move staff to other positions, until just before their wedding. Shortly before their wedding Beverley said to Jenny, “You remember your bankbook we gave you when you turned 21? Where is that now? I am wondering how much money we have saved over the years?” Beverley and I had started the bank account for each of our children when they were born. Throughout their early childhood we had put money into the bank accounts every week. They also saved their school bank money and put it into the same bank account and as the years went by with accumulated interest and deposits regularly throughout their teenage years from their own pocket money and from other gifts that we had placed there, the bank accounts had grown substantially. Now Jenny was being married and as her parents our great delight was to be able to see that the money saved over the previous 21 years would help in the start of their married life.
Jenny mentioned she didn’t know where her bank book was. It was just somewhere in her room. Beverley insisted that she find it and find it she did. When Beverley opened the book her expression changed. Stamped across every page was “cancelled” “account closed”. What happened? Jenny blushed and appeared very embarrassed. Ron explained, “Do you remember when Wesley Mission was in such dire financial stress that you had to cut back on staff?” I nodded. “Well, Jenny told me that she had this money in her bank account. We talked it over and she has decided to give it all to the Mission so that the poor and homeless would not suffer. It was not much compared to the need but…….”
We couldn’t believe our ears. We had hoped that they would be able to start off their married life at least having a substantial amount in the bank so that they would not have to scrape and save as we had when we were married. We were immensely proud of our kids. It was her money and she had decided to give it to Wesley Mission to help us out of our financial need.
It was only through the sacrificial giving of many people that we eventually turned our financial position around. I got a cash flow going through hiring myself out to speak to corporations. We improved our congregational support by running a stewardship campaign. We built a better image through our radio, television, magazines and videos that we sold. We also sold our services, those things that we could do well in caring for people.
I also developed a program to encourage people to leave us something of their estate through their will. And I wrote many letters asking people to donate to our work. As our teenage family grew over the years, they were quite used to Dad sitting of a nighttime in the lounge room while the family watched television signing, hundreds of letters personally. Because I always used a fountain pen and ink laying out each one so the signature would dry without being smudged.
Beverley also did her bit to help us out of the financial crisis. She became the honorary Chairperson of the Spring Fair Fundraising Committee and built a body of 400 volunteers who knitted and sewed, made and cooked to sell goods to raise money for every part of our work. Over the next 17 years she and her team of dedicated and wonderful volunteers raised more than three and a half million dollars to help us meet the needs of people in Sydney.
The work at Wesley Mission continued to flourish and grow. I remember well the year we reached an income of $5 million and it has continued to grow every year until this current year our income has reached $125 million. We have built Wesley Centre and redeveloped the whole of our Pitt Street and Castlereagh Street properties at the cost of $300 million and opened them debt free. We have built more than a hundred million dollars worth of retirement villages to house retired people in our community and we have opened them debt free. We have bought and built and leased more than 400 buildings and we have no debt on any of them.
We are today the largest provider of community services to people in New South Wales and our work stands debt free. The fear of debt made my mother work hard and I absorbed her commitment to be debt free.
I believe that responsible debt such as for a house is OK.
But as for the rest I prefer to pay cash!
The city of Sydney would grow to be one of the world’s great cities and Wesley Mission would grow to be one of the world’s great churches and I was privileged to spend each day in the heart of both.