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Tuesday, 31 March 1998
Page: 2004

Mr LEE (6:30 PM) —It is hard to believe the coalition would put up someone like the member for Cowan (Mr Richard Evans) as the government's first speaker after the Minister for Finance and Administration (Mr Fahey) in one of the most important debates we will have in the chamber. At least we have got a better coalition member about to contribute as their second speaker but I really have to say it was a shocker. The member for Cowan seems to be showing an obsession with animals—furry or otherwise—and the conclusion of his speech was consistent with past contributions he has made in this place—particularly about cats.

First of all, I want to express the Labor Party's concern about the timing for the Telstra (Transition to Full Private Ownership) Bill 1998 . Just as we had the work for the dole scheme pulled out of a hat when the government was in trouble with the Bob Woods affair, we have had this Prime Minister (Mr Howard) pull the full Telstra privatisation rabbit out of the hat as the Prime Minister was copping an enormous amount of flak over his inability to enforce his code of conduct on the minister for coalmines, who happened to have $2 million worth of coalmining shares. That is the real reason why the government has made this announcement today. The reason why this legislation was introduced yesterday, is being debated today and will be voted on in the House of Representatives tomorrow is that the Prime Minister is feeling the heat from community concern about Senator Warwick Parer having $2 million worth of mining shares in complete breach of this government's code of conduct. That is why the Prime Minister announced, at the Liberal Party convention in Brisbane, that he would sell off all of Telstra.

Even if that was the Prime Minister's intention, wouldn't you think that he would allow the people's house, the House of Representatives, a sufficient amount of time to debate the merits of his proposal? And yet we have the finance minister rising in this chamber late yesterday introducing the legislation, we were allowed overnight to study the detail of the legislation, and it will be voted on in the House of Representatives tomorrow. It is a disgrace. Few bills brought before this parliament will receive such scant analysis and such scant examination and debate. It says something about the way this parliament is being run under this Prime Minister when such important legislation is, as I say, introduced yesterday, debated today and voted on tomorrow. We can assure the government that it will get much more detailed scrutiny in the other place—in the Senate—and it certainly deserves to be debated thoroughly before final decisions are made, before the next election.

I will run through the reasons why the opposition is opposed to this government's plans to sell off the remaining two-thirds of Telstra. The first point I would like to make is the obvious one. The government has put a limit of 35 per cent foreign ownership on the Telstra shares. Foreign ownership of Telstra today is about 12 per cent, I understand—certainly 12 per cent is the maximum limit—but we have gone from zero foreign ownership less than a year ago, to 12 per cent with the first slab sold, then to a maximum of 35 per cent if this government wins the next election! Then, quite clearly, 35 per cent of the dividends of Telstra will go offshore. That means there will be a cash flow of 35 per cent of Telstra's enormous profits which will leave this country year after year after year. The member for Northcott—or, rather, Boothby—is going to have to be very persuasive—

Dr Southcott —Northcott has been abolished.

Mr LEE —They have not named the seat after you yet, haven't they? The day will come when they can name a seat after him, but not until he dies. The member will have to be very persuasive before he can persuade me that it is a good thing for Australia to have up to 35 per cent of Telstra's profits sent overseas each year. Some in the government claim that this is going to be a good thing because all these overseas investors will have to bring money into the country to purchase the shares, so there will be a net capital inflow before the money leaves.

Dr Southcott —You're a One Nation, are you?

Mr LEE —I am certainly strongly opposed to your attempts to allow 35 per cent of Telstra's profits to be sent offshore each year. And whether or not the honourable member is opposed to the views of One Nation, I would have thought that there are some members of the Liberal Party, and I bet there are one or two in the National Party—starting with the member for Kennedy (Mr Katter)—who are opposed to this government selling off 35 per cent of Telstra shares to foreign owners.

Dr Southcott —Only if you want it.

Mr LEE —If you are going to interject, you will have to interject clearly and not mumble, so that we can respond. Let me say to the member for Boothby that one of the problems you will face is that many of the companies and subsidiaries that will purchase those shares, which will be in the hands of foreign companies or foreign individuals, will be funded by overseas borrowings. We will actually see an increase in the level of overseas borrowings to fund the purchase of these shares. Australia's debt will go up as a result of the privatisation of these shares.

Dr Southcott —What? No!

Mr LEE —People opposite might laugh, but they might care to have a look at some of the debt structures that have been established to allow investments by overseas entities in existing Australian businesses. There are many examples that I do not need to go through here which demonstrate that the net result of these changes could well be an increase in the total level of foreign debt—not government debt, but the total level of Australia's foreign debt. This government already has a track record of backing away from foreign investment limitations in the telecommunications industry. At the last change of government there were restrictions on the level of foreign ownership in Optus, the second carrier. This government, under this Treasurer (Mr Costello), has watered down those foreign investment restrictions on Optus shares. I suppose the government could claim that is partly because Optus has not had a very successful time in the last few months. But you can clearly state today that the foreign ownership restrictions on Optus are much weaker than they were when this government was elected. I will predict that even if this government is re-elected, and there is a limit of 35 per cent on the total foreign ownership of Telstra shares after the sale of the remaining two-thirds, it will not stay at 35 per cent for long. You can bet your house, Mr Deputy Speaker, that within one term this government will water down those foreign ownership restrictions. It will shoot from 35 to a number much further north than 35 before very long.

One of the difficulties that will flow from that is that there will be no-one there to look after the interests of Australia's telecommunications manufacturers. When we were elected in 1983, there was a very small telecommunications manufacturing industry. It was basically looking after the domestic market. It was inward looking. It was not looking for export opportunities. During the Hawke and Keating governments, we ended up with a whole series of initiatives that encouraged the development of an export oriented Australian telecommunications manufacturing industry. It has gone from exports of $50 million a year to almost $1 billion a year these days, in no small measure due to the industry development arrangements which all of the carriers were required to put in place under the former government.

The great concern that we have is that industry that is crucial to the future development of our country will be at risk. It is no secret that pressure has been exerted on the telecommunications companies in the past to make sure they are sourcing their materials from Australian manufacturers, which then gives those companies the domestic base they need to look for export opportunities in other countries.

I will give an example that is very topical for tonight—and I am sure some of the advisers in the box are well aware of this—and that is when the President of Argentina is speaking in the Great Hall later tonight I will bet that someone will mention that an Australian company provided the expertise to deliver remote mobile telephone services in Argentina. It was an Australian company which used software developed by Australians to make the Argentinean telephone system work. That company would not have been able to get that sale of Australian expertise to Argentina without our domestic base giving that company sufficient cash flow to develop that new and innovative technology. Where will the future sales to Argentina, the United States, Britain, Japan or Indonesia come from if this government simply says that we are just going to let the market forces rip in the way our telecommunications carriers source their materials?

In making sure that Telstra stays in majority Australian ownership, it will be the government of the day that will be responsible for answering in this parliament to the Australian people. It will be the government of the day that will have to explain what Telstra's policies will be in sourcing its materials. That is one of the major concerns we have about this government selling off the remaining two-thirds of Telstra.

It has also been quite instructive to watch the way the National Party has been squirm ing ever since the Prime Minister chose to unilaterally announce the sell-off of the remaining two-thirds of Telstra. It is quite clear now that there was no consultation whatsoever with the National Party before this decision was announced. You can understand why the National Party was not consulted: the Prime Minister would have had a bit of trouble looking some of those National Party backbenchers in the eye and assuring them that he could give his personal guarantee that rural services would not be affected by the sell-off.

These National Party members, like us, have seen some of the Prime Minister's other personal assurances come to grief. We had not only the personal assurance from the Prime Minister that he would establish a much tougher code of practice or guidelines for ministerial behaviour. That has gone by the wayside. We had the Prime Minister today in question time slipping and sliding all over the dispatch box trying to avoid his personal assurance to older Australians that he would maintain the entitlements for pensioners—entitlements to things such as Commonwealth dental care, pharmaceuticals and access to public hospitals. These are the personal guarantees that the member for Bennelong, the Prime Minister of Australia, has given in the past. He has had no compunction whatsoever in walking away from them.

Why would a National Party backbencher accept the personal guarantee from the member for Bennelong that cross-subsidies to rural services will continue? It is a bit of an issue if you live in a remote area because the cross-subsidies are quite enormous. There are cross-subsidies of up to $6,000 or more for Australians who live in remote communities.

You can imagine what will happen if Telstra is fully privatised. The directors of Telstra will be making decisions every time they meet about the amount of capital they will be spending and the types of services they will be delivering in electorates right across in Australia—in country towns and in remote and isolated locations. In the past, ordinary Australians have been able to contact their local member and get them to stand in this House and raise issues of concern if people have been getting poor service, but the people of Australia will not be able to turn to the Australian government if there is inadequate service to people who live in rural areas. There will be no-one to make sure that those cross-subsidies continue to Australians who live in remote and isolated communities.

In fact, the directors of those companies will be under a legal obligation under the Corporations Law to do whatever they can to maximise the profits to be distributed to their shareholders. Once the remaining two-thirds are privatised, there will be a legal obligation on the directors of Telstra to focus on and spend money in the areas that generate the greatest profit return.

Mr Deputy Speaker, you do not need me to tell you that it will not take long before the diversion of profit into the central business districts, into the business services that deliver the greatest return to Telstra—those high profit areas—will result in capital being starved. There will be less capital spent in rural and remote communities. There will be a clear inability of people in remote areas of Australia to keep up with the technological changes that are always taking place in telecommunications.

We also had a rather strange performance from the Deputy Prime Minister (Mr Tim Fischer) on the Sunday program last Sunday, and I will quote some of the things he said:

ISDN, for argument's sake, available not to ninety-three per cent of all Australians, but we're going to push that envelope further to ninety-six per cent of all Australians.

Within ninety days I am determined to see that the technology in the country is not equal, but in some areas better than the suburbs . . .

What the Deputy Prime Minister seemed to be saying was that, within 90 days, 96 per cent of all Australians would have access to ISDN. When we had someone translate his statements into English, we found out that what he was saying was that 96 per cent of Australians will be able to ask for ISDN and within 90 days they will be able to have ISDN installed if they are willing to pay a very large sum of money—I think it is $2,500 or more. If you happen to live in a city, I think it is several hundred dollars rather than several thousand dollars, yet we have the Deputy Prime Minister creating the impression that, within 90 days, whether or not you live in the bush or the city, you will have equal access to ISDN, which was a clear attempt to cause confusion and certainly led to many of the viewers being misled.

The Deputy Prime Minister also failed to mention to the viewers of the Sunday program that ISDN technically cannot be delivered to farmers who live more than seven kilometres from an exchange. Once again, it is quite clear that the Deputy Prime Minister was rabbiting on about things he clearly had no idea about. The Deputy Prime Minister then made some comments about his concerns about the time taken to repair some of the telephone faults after the recent floods in some parts of the country. Laurie Oakes said to him:

So if you can't fix it when you own it, how can you fix it when you sell it to someone else?

The Deputy Prime Minister replied:

Because we're in a competitive circumstance and there is the authorities which overarch the compliance of an Optus, of a Telstra, to a legal benchmarking.

Again, when you translate that into English, I think the Deputy Prime Minister is saying that, because we have strong competition, that will ensure that companies will be placed under pressure to provide better service.

This goes to the heart of my own personal concerns about the government's intentions here. Competition in telecommunications in Australia has been sacrificed on the alter of privatisation. Instead of the lead-up to open competition in telecommunications on 1 July last year, instead of that focus being on maximising the competition in the Australian telecommunications market, there was a focus from this government and the Minister for Communications, the Information Economy and the Arts (Senator Alston) on maximising the return to the Australian government from the one-third sell off.

I suspect that Senator Alston is not really the minister for communications today. The minister for communications in Australia today is the Minister for Finance and Administration, the member for Macarthur (Mr Fahey). We might as well have another person sitting in the advisers' box who comes from that department, because my suspicion is that they are the people who are really deciding what is happening within Telstra. That is the minister who is deciding what is happening in the telecommunications market.

During the time I had the honour to be minister for communications I had many people come to me and say that they were concerned about the imbalance in our market. Yes, Optus was new and growing and providing some competition on mobiles, international calls and long distance calls, but Telstra was the 600 pound gorilla. Telstra was the 600 pound gorilla that could set the prices in the marketplace. They also said that Telstra's behaviour had to be influenced by direct ministerial intervention and polite and persuasive discussions with the management of Telstra to have Telstra behave the right way in a whole number of areas.

I do not know if you have seen the latest trailer for a new movie called Godzilla; the member for Boothby (Dr Southcott) may have seen this trailer. The way this trailer works is that there is an elderly gentleman on the end of a wharf in New York and a wave of water starts to approach the elderly gentleman at the end of the wharf. The wave gets bigger and bigger and some enormous animal gets closer and closer to the end of the wharf. You do not actually see it in the trailer, but I am sure that when the film comes out we will see that there is a 600 tonne Godzilla loose in New York.

What has happened under this government is that the 600 pound gorilla has turned into a 600 tonne Godzilla. Telstra, the Godzilla of the Australian telecommunications market, is behaving in a way that restricts competition. You only have to look at the levels of service deterioration that have been reported today to this parliament and you only have to look at the complaints that are there from Optus and the other independent service providers that Telstra is not behaving in a way that delivers the cheapest prices and the best services to customers.

That is what we want to ensure. We want to ensure that the 600 tonne Godzilla is kept under control. We want to make sure that Godzilla delivers cheaper prices and better service to the customers. You do not achieve that by selling off all of the shares and abolishing the power of the minister to direct Telstra to do what is in the national interest rather than what is in the commercial interest of Telstra shareholders.