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Monday, 23 November 1998
Page: 449

Mr SNOWDON (9:24 PM) —I am pleased to be able to make a contribution to the debate on the Telstra (Transition to Full Private Ownership) Bill 1998 this evening, and I do so not only as a member of this parliament but also as a shareholder in Telstra. When the original debate around the privatisation of Telstra was under way, I vociferously opposed the part privatisation then, as I will oppose this bill today.

Unfortunately, the member for Moreton and, I think, a majority of people on the government benches have not cottoned on to what this argument is really about. I speak with a bit of knowledge about what it is to live in a remote region in Australia and how important telecommunications infrastructure is for the people who live in those communities.

I will give you a bit of personal history. I started working in the north-west of South Australia in a little Aboriginal community called Pipalyatjara in 1978. I worked there on and off for about three years, and I spent a lot of time there. The only means of communicating with the outside world from that small community—which is basically at the junction of the Northern Territory, Western Australia and South Australia—was through the Royal Flying Doctor Service schedule on the radio. That meant that conversations about business or private matters were there for everyone who tuned into the Flying Doctor schedule to hear. Privacy was not an issue, because there wasn't any; but, importantly, that schedule was available a couple of times a day. There were no fax machines and no access to computer technology or the Internet. When I was working out of Alice Springs, if someone wanted to deliver a message, it invariably meant a 10-hour drive in the hope that they might see someone to have a meeting, and often, as is the case in these remote communities, the person they wanted to speak to was not there.

In 1985, the Labor government, through Telstra, initiated quite a magnificent program for rural and remote areas. The purpose of this rural and remote area program was to provide a basic telephone service to people in the bush through the USO—the universal service obligation. Telstra used a system of microwave bearers—the digital radio concen trator system, or DRCS—and gradually, over a five- or six-year period, the world was opened up to people who lived in regional and remote Australia.

I know this to be a fact. Prior to the introduction of this technology, basic though it is, people had no access to telephonic services or fax. All of a sudden, a modern office could be born, and people could actually communicate with one another privately. People who lived on pastoral properties, in Aboriginal communities or in mining camps could talk to their spouses a long way away, check up on the family health and access information from universities and other learning institutions.

I argued at the time, and I maintain that this argument holds true today, that the positive externalities of providing that infrastructure far outweigh the capital cost of its provision. The savings that were made through efficiency in servicing those communities and the social and economic outcomes that were delivered by that infrastructure are very hard to measure, but if they were measurable—and they are—they would demonstrate very clearly that the investment in that infrastructure, expensive though it was, paid handsome dividends.

We have moved on from 1990 when that infrastructure rollout was all but completed. Remember that this was the period when Aussat was not travelling too well and satellite communications were very expensive. Telstra had difficulty getting customers and the technology was not the best. It basically put all its eggs in one basket by using the DRCS system—a terrestrial system.

Unfortunately for Telstra, and unfortunately for the people who live in remote Australia, they have done very little to it since. That, I think, is a real issue here. Whilst people on the other side of this place can argue about the efficiencies that might be gained in the marketplace in Sydney or Melbourne, or up the fringe of the coast, and the cost reductions that can be brought about as a result of competition—and I am an advocate of competition—that cannot be said for the bush.

These other organisations are not breaking their necks to deliver services to really remote regions. Let me tell you: they are not. You do not see alternative carriers marching around remote communities offering their wares. There are a number reasons for that, and I will come to those in a moment. The bottom line is that, whilst we have a universal service obligation, which is legislated, and whilst we have a carrier that is majority public owned—to my way of thinking it should have been retained in total public ownership but, nevertheless, it is still majority public owned—we have an influence over that company which we would not have if we were to pursue the objectives of the government, and that means a great deal.

I will come in a moment to the debate which has emerged within Telstra and within the telecommunications industry about the universal service obligations and Telstra's obligation as a company that is majority public owned. The statements which were made by the chairman of that company were widely reported in the business press. I have in front of me an extract from the weekend Australian Financial Review of November 7 and 8 in which Telstra Corp Ltd's chairman, David Hoare, basically lambasted the government and the Australian taxpayers, who are the majority shareholders of Telstra, when he said that the company ought to be privatised. The extract states:

Mr Hoare also called for the government to sell its remaining two-thirds of the company after the Australian Shareholders' Association queried how the board intended to deal with an apparent conflict of interest relating to Telstra's obligation to the government to provide a national service. "You have highlighted the conflict of interest, where the Government remains the majority shareholder and carries the responsibility for competition policy—that's a very compelling argument for the total privatisation of Telstra."

Well, is it? What is that code for? That is code for saying that the commercial interests of the shareholders are more important than the social and political interests of the government. In effect, what they are saying is that they can cut themselves loose from the universal service obligations under this process—that is, at least in terms of the commitment that they currently make. They are thereby saying to those people who live in rural and remote areas in Australia that, although there has been a diminishing service since we went through the part-privatisation, they will get an ever increasing diminishing service as a result of full privatisation. The facts are very clear.

I notice the adviser nodding his head, and well he might, because it is very clear that the standard of service for people who live in rural and remote Australia has declined substantially since 1996. Let me quote some figures which have come from the Australian Communications Authority telecommunications performance bulletin. These figures reflect a position where services connected over five different areas have decreased in every one of those areas since the December quarter of 1996.

For the December 1996 quarter, the figure for services connected on or before the ACD was 82 per cent. For information, this is the percentage of new services connected on or before the agreed communications date, ACD. This is a date agreed between the customer and Telstra which is acceptable to the customer and realistic in terms of available work force. The figure in December 1996 was 82 per cent and for the June quarter of 1998 the figure was 73 per cent. For faults cleared within one working day, the figures were 74 per cent for December 1996 and 62 per cent for June 1998. For faults cleared within two working days, the figures were 90 per cent in June 1996 and 81 per cent in the June quarter of 1998. For pay phone faults cleared within one working day the figures were 67 per cent in 1996 and 48 per cent in 1998. For pay phone faults cleared within two working days the figures were 84 per cent in 1996 and 68 per cent in June 1998.

There has been a massive deterioration in the level of services which have been going to the bush. The only people who have twigged on it on the government side of the House are those in the National Party. They did it before the election and no doubt they will give the government a bit of ginger before this debate is over. It is very clear that the people who will wear the impact of this absurd policy of the government are the people in the bush—the people I care about.

Let me go a little further. In the Northern Territory—these figures come from the Performance Monitoring Bulletin, June 1998 quarter—the figures for performance in rural areas are even worse. For rural areas in the Northern Territory, the figure for fault clearances within two working days was 58 per cent, whereas the national average in March of 1998 was 82 per cent. This is effectively handicapping people who need communications systems. Who is responsible? Well one might ask.

We have got the universal service obligation but what we have not got is a Telstra management committed to providing these services to people in the bush. What we have got is a debate about the level of this universal service obligation. I note with some interest this debate about what the level of universal service obligation should be. You will recall, Madam Deputy Speaker, that the government has, I think, put a figure of some $253 million on the cost of the universal service obligation. The Australian Financial Review of Wednesday 21 October makes the comment that there is a discussion in the telecommunications industry as to what the true value of this universal service obligation could be, because of course the higher the figure the greater cost burden there is on Telstra's competitors.

The minority shareholders, as has been pointed out by the chairman of Telstra, do not buy competition; they want dividends. That is what they are after—the dividends from their investment, not the policy outcomes that a government should want to achieve by providing this sort of infrastructure in remote and rural Australia.

It is interesting that when Bellcorp, a US telecommunications industry consultant, was appointed to devise a model based on what it would cost to deliver telephone services if the entire Telstra rural network was replaced today as required by law, when they inserted Telstra data into the Bellcorp model, it was revealed that roughly 493,000 rural Australian customers were unprofitable and being subsidised.

What would be the fate of those customers under the sorts of arrangements which are being proposed by the government? The government says the USO is only worth $253 million. But, if you use this Bellcorp model, the value of the universal service obligation is $1.8 billion. I do not accept necessarily that it is $1.8 billion because I believe there are other mechanisms and approaches to providing this telecommunications infrastructure that Telstra should be looking at, including mixed mode delivery, using a lot more satellite technology and using local closed loops. No problem—that is all open to debate. But what we have got is the board of Telstra trying to backslide out of their obligations by saying they want to sell the place.

You may think that this is all just about telephones and the Internet, et cetera, but it is about a lot more than that if you live in the bush. One of the small issues, but one which is very important to people like me, is Reach, the remote area access channel. Television coverage of news stories in remote parts of Australia will be limited under Telstra's plans to cut access to transmission points across the country. Telstra is closing its vast remote area access channel, the Reach network, which enables television stations to send video footage back to newsrooms in capital cities. There were more than 140 Reach sites across Australia. Telstra was to close them by mid-year, but this action was held off, no doubt because of the imminent election.

Most of the Reach network has now been closed. Currently there are 31 sites operating, and the final number will be 18, called itinerant Reach sites. All of those 18 to be left are in New South Wales, Victoria and South Australia, and they exist only because Telstra needs them to service Sky racing. Telstra is publicly saying it is leaving 18 of these units, but the 18 that are left—and the commitment—are merely window dressing because they are not providing a service to people who most need them.

There are no itinerant Reach sites left in the Northern Territory, Western Australia or Queensland. Important sites like Kalgoorlie, Alice Springs and Albany are without these services. The ABC and FACTs have been fighting these closures all the way. The Minister for Communications, Information Technology and the Arts has been trumpeting alternate technology, but the story being sold does not match the facts. The minister talks up the technology of sending video footage from PC to PC via ISDN phone lines, but the ABC says unequivocally that this technology just does not work. It may do so in a few years, but not now.

It would cost the ABC between $60,000 and $200,000 to set up a satellite linking site in a place like Alice Springs, and then they would have to pay $1,000 an hour to use it. In the case of the Katherine flood or some other big ongoing story, the only way to send out stories would be to fly them out. I do not know, but I would have thought it was in the national interest to have these linkages. It is in the public interest to have these linkages so the community can be aware of what is happening in regional and remote Australia. But no, Telstra withdraws.

I have a lot of friends who have been made redundant as a result of the management decisions made by Telstra. A lot of those people have gone west. They are no longer employed in the telecommunications industry. The pity of it all is that not only has their expertise gone, especially from remote communities, but the level of service that they provided has also gone. It seems to me that this government has to actually think a lot more about the key public policy issues, about the importance of this infrastructure for remote and regional Australia. Understand that you might have the benefit of this competition up the east coast of New South Wales, Victoria or Queensland but you do not have it in remote and rural Australia.

Unfortunately, most people who sit in this place, most people in the federal bureaucracy and most people in Telstra have got absolutely no idea at all about what it is like to live in a regional area of Australia and be without these services. You take them for granted. We are finding that this is becoming a real issue of democracy—the ability of people to communicate with one another; the advantages that one group of people have over another. This has not been thought through by this government—sell off the family silver; do not worry about the services they were providing; accept that the market will prevail and that these services will somehow emerge out of the ether. They will not. History tells us they will not.

The obligation on this government is to maintain the majority shareholding of the Australian community in Telstra and not sell any more of it off. This is a very important issue—a fundamental issue—to the future of this nation. It is very easy for those who sit in a catatonic state on the other side to mumble the jargon of the market, but they do not understand or, if they do, they do not care about the impact of their decisions.