Mr MARTYN EVANS(10.35 a.m.) —I rise to oppose the Telstra (Dilution of Public Ownership) Bill and to support the amendment the opposition has moved at the second reading stage. Ultimately, if it comes to that, I will support the amendments to be moved in subsequent stages of the proceedings. I do that because this is not a policy for all Australians. This is a policy for a narrow, ideologically driven government which supports the option to provide a policy for this country which will not deliver the telecommunications standards which we have come to expect.

It will not deliver the public communications standards which this country will need to develop not only our information technology and telecommunications industries, but also the wide range of business and manufacturing, agricultural and public ownership areas that our future development depends on. It is, as the amendment to the motion for the second reading says, an ideological obsession with ownership issues rather than a focusing on the competitive features of our telecommunications market.

Unlike the government, this side of the House is not caught in this ideological ownership trap between public and private sectors.

Mrs Bishop —Really?

Mr MARTYN EVANS —No. The honourable member for Mackellar (Mrs Bishop), who formerly had some interest in the area of privatisation but perhaps has less these days, certainly has failed to deliver to the public a policy in this area of privatisation which will actually meet the demands of this country into the next century. The reality is that this bill is probably the worst of all worlds for telecommunications ownership. The bill does not pass the appropriate tests which the public of Australia will come to impose on this government on the way in which its ideologically driven decisions in this area actually supplant public interest.

The reality is that Telstra is not the same as many other areas of government ownership which have been privatised in the past. Telstra is in quite a different category, as the debacle over the joint venture agreement during the election campaign showed. The then opposition, now the government, regarded as quite unacceptable the joint venture arrangements between Telstra, IBM and others over information technology sourcing. It regarded those arrangements as quite untenable. It said that they reflected a part-privatisation of Telstra by the then government, which in reality turned out to be quite incorrect. It was simply a better way of Telstra doing business, and the government now has been forced to concede that point. The government has now been forced to allow that to proceed.

Of course, that exposes the sham which we saw during the election campaign when that indeed was said to be unacceptable. The Treasurer (Mr Costello) and the Minister for Communications and the Arts (Senator Alston), while in opposition during the campaign, ruled out those very measures which they now endorse as appropriate business practice. I think that draws the distinction between the opposition and the government on this matter. We are prepared to support privatisation, commercialisation, where that represents sound public policy and sound ultimate business practice.

That is not the case in the example of Telstra, as members of the government would well know. There are substantial differences between the sale of Qantas, the sale of the Commonwealth Bank and the sale of Telstra. I think some of those differences have already been well highlighted. They relate to the market dominance of Telstra which is to be contrasted with the position of the Commonwealth Bank and Qantas. Indeed, while Qantas has some half of the domestic market and a substantial part of the international market, it does not service a very substantial part of the Australian community. I think some five per cent of Australians fly regularly.

While the Commonwealth Bank served a very useful and significant purpose to be publicly owned in the early part of its life cycle, that did not apply at the time the Labor government privatised the Commonwealth Bank. Circumstances had changed dramatically. We used the opportunity of public ownership to create the environment in which the Commonwealth Bank could flourish initially and then, when it was no longer necessary or essential for it to be in public ownership, the opportunity was taken to privatise it. It is, of course, a very important part of our banking fraternity but not a dominant part of it. It is no longer critical to the public ownership test.

But Telstra is quite different. Not only is that the dominant carrier to the extent of some 90 per cent of telecommunications traffic in this country, but it is also in a transition and a deregulation phase. One of the important parts of the Labor government's telecommunications policy over the last decade was to ensure that the telecommunications industry was properly deregulated in a phased and measured way, the public performance standards were there and the service delivery was there but that the benefits of competition flowed through to the public. Telstra, and indeed the whole industry, is still in that transition phase. It is still pre-1997. We do not yet have the complete picture of where an open telecommunications industry will take this country. Telstra, Optus, Vodafone and others which will be entering the market shortly are not yet in a mature and settled position in relation to their industry.

Quite clearly there are many issues still outstanding in that dimension of the deregula tion of the telecommunications industry, issues which are quite properly still to be settled. I understand that the Minister for Communications and the Arts, Senator Alston, has torn up the initial draft post-1997 regulatory bill and is starting afresh. That might be his right as a minister, but I think it indicates just where we are in this process. There is still a very long way to go. To impose on the telecommunications industry—and indeed its dominant carrier, Telstra—at this stage in the deregulation process the additional uncertainty which part-privatisation will bring, I think is a very negative aspect of the overall approach that this government brings to telecommunications policy.

For one thing it completely ignores the vital industry development aspects of the telecommunications industry itself. As a recent Bureau of Industry Economics report indicated:

Australia has a long tradition in the manufacturing of TE. Much of this industry originally developed under the protective umbrella of the Postmaster General and later Telecom. A number of firms mentioned in interviews with BIE that Telecom acted as an effective leading-edge customer, with stringent technical and quality specifications, stimulating the development of local capabilities. In line with the general industrial restructuring and deregulation of the telecommunications market, this section of the industry is becoming increasingly internationally competitive and export oriented.

I think that illustrates very nicely just what role the Postmaster-General's Department and ultimately Telecom and Telstra have played in ensuring that Australia has a viable, active and effective telecommunications industry export regime. We have been able to develop a substantial export market under the guidance of Telecom and Telstra to ensure that local firms know exactly where they stand in this market, that they have to meet the highest world best practice standards in the provision of this equipment, and that they have a leading edge purchasing authority to guide them in this very difficult process of becoming world competitive. They have taken on that challenge and they have succeeded.

In 1983, some 10 or 12 years ago, the industry had very minimal exports of about $50 million a year. However, it is now up to nearly $1 billion a year and heading beyond that. I think the reality of that transition over the last decade, from $50 million in exports to over $1 billion in exports, is very significant and shows us just what an important role Telstra has played in guiding that industry, which is vital to Australia's future development in this region, through its formative stages.

To impose privatisation, to impose deregulation, and to impose them both together and therefore remove the industry development and national interest constraints that Telstra has always operated under, will be very damaging to that emerging industry, one which is set to take Australia as part of the overall information technology and telecommunications industries into the year 2000. It has put that very much at risk.

It is worth noting that the total IT and telecommunications business in this country will be worth of the order of $10 billion by the year 2000. That prediction is a very substantial one. It shows the magnitude of the combined IT and telecommunications industries, where they have still to go and what potential they have, and this government puts much of that at risk. That is very sad for Australia, very sad for a vital sunrise industry which has contributed so much to our export growth and which has the potential to make this country a leading edge exporter of IT and telecommunications. The government has done that by creating this climate of uncertainty about telecommunications and information technology and, in many ways, for industry in general.

The harsh reality of that was brought out by something I read recently in the Financial Review. A leading information technology industry representative said that the impact of the government's proposals on the withdrawal of the tariff schemes and many of the other things that they have done since they took office `is very uncertain'. He said:

One thing people were comfortable with under the previous Government was that you knew what the policy was.

That is quite instructive about the way in which this government has introduced a climate of risk and uncertainty into the public and private sectors of this country which we did not see under the previous government. I will remind you of the last phrase:

. . . under the previous Government . . . you knew what the policy was.

Unfortunately, that is no longer the case following the changes which this government has already started to implement in relation to telecommunications and information technology.

It has promised to withdraw $1 billion in capital expenditure over the next triennial period. That has placed the IT industry under severe threat and created a great amount of uncertainty in the industry. The part-privatisation of Telstra will do the same in the vital telecommunications industry area.

Meanwhile, question marks hang over important tax concessions, such as the research and development 150 per cent tax concession, which has been vital to establishing our export oriented research and development industries and to ensuring our large domestic base in R&D. The question mark that hangs over that concession—ministers tell us that we will have to wait till 20 August to find out—also creates the kind of uncertainty which the extract I just quoted to the House refers to.

There are question marks over the partnerships for development program, fixed term arrangements, the R&D grants which the previous government put in place, and the multi-media scheme promoted by the member for Dobell (Mr Lee) when he was the minister for communications, and by the former Prime Minister. Those question marks do not ensure a good result for Australian industry, particularly in the vital high-tech areas. Stability is one of the things that small business and small- and medium-sized enterprises need more than anything else.

The Prime Minister (Mr Howard) talks about issues like unfair dismissal laws and other red tape questions—those things have their impact, for sure—but not about the fact that small- and medium-sized industries need stability in policy making more than anything else. They need the kind of stability which will ensure that tariff arrangements and tax concessions stay in place and which will deliver the low inflation and solid growth that the previous government delivered. That is the kind of stability those businesses need above all else to ensure that they grow and flourish. The Howard government, unfortunately, has taken all of those things away from them. That is a very sad commentary on a government which has been in office for such a brief time.

The industry also needs to note that this part-privatisation is quite possibly the worst of all worlds for it. If this bill makes its way through all stages of the parliament, Telstra will be one-third privatised. I suspect that that outcome will be followed only by full privatisation, perhaps in a phased program, perhaps not. The Prime Minister has given a commitment that that will not occur during the life of this parliament. But while I assume that is one commitment that will be honoured—no doubt one of few in the long term—the reality still is that Telstra will be one-third privatised, if this bill is successful, for a substantial period of time.

That will mean that the government is still in control of two-thirds of the company. But governments do not make good majority shareholders. Once you sell one share in Telstra you have effectively turned the company over to the one-third private ownership criteria. The private owners are the ones who will really control Telstra. Government, when it is only a majority public shareholder in what is a privately controlled company, is never in a good position to ensure accountability and the development of the national interest. The government will not be in a position to direct the company. It will not be in a position to use its two-thirds voting share to oppress the one-third minority shareholders. It is the commercial shareholders, including as it will foreign owners, whose interests will predominate.

The ability to impose checks and balances on that foreign ownership is further diluted by the government's abandonment of the promise to have A and B class shares to ensure that there is an effective manner of holding the overseas shareholders accountable for their prescribed limit in the company. Neither will there be the opportunity for the minister to direct the company, nor for national interest to play a very substantial role in the newly privatised Telstra.

Why should foreign owners allow Telstra to continue to provide development assistance to Australian start-up companies? In many cases those shareholders might be competitors of Telstra. They might be overseas interests with conflicting requirements for Telstra when it comes to exports to the Asia-Pacific areas, to India, and to other overseas developing markets. They will be almost certainly exerting pressure on Telstra to source its suppliers from elsewhere.

Why would Telstra continue to buy products in the Australian market when it can buy them cheaper from overseas on the back end of an AT&T, British Telecom, Sprint, Mercury or MCI contract? All of those things will be out there in the global marketplace. Why should Telstra continue to focus on the best practice in the Australian market when those other pressures will be very firmly exerted by the board of Telstra and the private shareholders' representatives on that board? That is the harsh reality of a one-third privatised Telstra. It is neither public nor private. It suffers from the worst constraints of both. To impose this change on the industry and on that particular company during a period of deregulation is perhaps the worst possible outcome in that regard.

I have always had a very strong interest in one particular aspect of the future development of the telecommunications industry here and that is the ISDN system. The former minister for communications would be well aware of my interest and no doubt the current minister will become so. The reality is that ISDN became something of an election issue, or an election token, when the Prime Minister, then Leader of the Opposition, promised the National Farmers Federation and all other Australians through his communications policy that ISDN would be at every front door, available on demand to anyone who wanted to make that request of Telstra and pay the market fee. Like many members of this House, many householders would not know exactly what ISDN is and that it is something they should be demanding. The Prime Minister promised it to them and they should look very closely—

Mr Brereton interjecting—

Mr MARTYN EVANS —Exactly; precisely what this will deliver to them is something they need to be very careful about. The rural areas, the backbone of our agricultural and primary resources industries, were very keen on the prospect of having ISDN services available at their front door or at the farm gate, as the case may be. But that is a very expensive promise. I am not certain that a newly privatised Telstra would want to endorse that promise and fulfil it. The test will be when the amendment proposed by the honourable member for Werriwa (Mr Latham) is put to this House. We will see then how the National Party members and regional members of the Liberal Party vote to ensure that the ISDN promise is kept.

I ask them to also examine this question: is this, in reality, the technology which they want to take rural Australia and outer metropolitan Australia into the next century with? The reality is that ISDN was very important in this country 10 years ago; it was leading edge technology then. Is it still leading edge technology? Certainly not. The reality is that to be at the leading edge in the next century you will need broadband services at your door and you will need the optical fibre with a capacity of an order of magnitude greater than ISDN can deliver.

While ISDN will make a very good computer data link for some people out in the rural areas, it will not provide them with state-of-the-art multimedia and broadband services. If the government is to meet its commitment to rural Australia and regional Australia to ensure that they are at the leading edge of broadband and data delivery services, then it needs to make a commitment in relation to broadband and not continue to pretend that ISDN will deliver these services to the bush. The reality is that it was a good leading edge service some years ago. Telstra did not pursue that service in the way which I personally think that it should have; but the reality is that ISDN is moving past its prime and will be a very ordinary service over the next few years and that people will really be looking for broadband services. Just what the reality of that promise is, we still need to know.

What is the reality of local call areas and the local call fee? Untimed local calls are guaranteed, but what about local call areas? What about the universal service obligation? How are we to enforce the accountability on the minister when he is no longer responsible to this parliament for Telstra? That is the harsh reality. That accountability will disappear once the minister no longer has the power to direct Telstra. That, I think, is the most important aspect of this.

Other colleagues have talked about the way in which the environment should not be linked to the sale of Telstra, and I strongly endorse those remarks. But I suspect that I can do no better than to conclude with one of the final paragraphs of the amendment moved by the opposition, which reads:

it represents an ideological obsession with ownership issues instead of focusing on the competitive features of the telecommunications market

This is the way in which we know it should be developed, but it is the way in which we know this government can never do it.