Dr NELSON (10:23 PM) —The Telstra (Transition to Full Private Ownership) Bill 1998 and the related Telecommunications (Consumer Protection and Service Standards) Bill 1998 will enable the Commonwealth to sell 49.9 per cent of its equity interest in Telstra. This will leave the government owning 50.1 per cent. What we are looking at here is effectively three pieces of legislation that are relevant to the sale. One brings together the consumer protection and service standards of the existing Telstra legislation and combines them with the new power of the minister to direct the company to comply with those standards, which is something that is long overdue. The legislation makes clear the government's intention, which is that only 16.6 per cent of Telstra will be sold in the first tranche. The sale of the remaining 50.1 per cent will be conditional upon an independent review of Telstra's service standards. Rural Australians in particular would have an interest in the outcome of such an analysis.

Those opposing the privatisation of Telstra should think long and hard about their opposition to these bills. This company is now one-third privatised. About 1.6 million Australians bought into the first float. About 600,000 of them made their first foray into the share market. Ninety-two per cent of Telstra employees invested in the company, which might say something about the opposition of the union movement to this sale. This now leaves the company what could be described as half pregnant, in one sense. The regulator, the Commonwealth government, is also the majority shareholder. Already board tensions suggest that the sooner the government gets right out of its share the better for Telstra, its competitors and, importantly, its customers.

The way to deliver improved and more affordable telecommunications services is not through government owned monopolies subject to the meddlesome interference of politicians but through market based competition. As both the regulator and majority shareholder, it could be argued that the government has a conflict of interest. Minimising competition in its crudest sense would potentially increase Telstra's profits. The overall interests of country Australia lie in having a low cost, modern telecommunications service that can ultimately be delivered only by competition in the market, not job creation programs that are designed to appease those coming to terms with painful but inevitable changes in both our country and the world in which we live.

Whilst I strongly support the universal service obligation, which is that all Australians must have access to standard telephone services and pay phones, that there be a levy on all phone companies and that there be a customer service guarantee, opponents to these bills should be aware that if they continue to impose costly social objectives on the carriers, including Telstra, both the companies and their customers will ultimately suffer. If social obligations need to be met, as I believe most certainly they must, perhaps it would make more sense for governments to provide them in a transparent way funded by general revenue raising activities. Telstra, like its competitors, is trying to compete with the rest of the world. Those who want to place more lead in its saddlebags in the form of unprofitable obligations beyond what is responsible jeopardise not only shareholder returns but the capacity of the company to grow in an intensely competitive industry. Just look at BHP if you are in any doubt as to the social impact of big companies getting into trouble, whatever the reason might be.

The nation building days of government funded and fully government owned infrastructure are all but over. They are the days when it was believed that only government could build and maintain a national telecommunications network. However, service complaints about both the PMG and the government monopoly Telecom were legendary until the introduction of competition in 1992 with the advent of Optus. With one-third of Telstra now sold, we have Australians to whom management must answer. Shareholders have a say in how the company is run and by whom. One argument that is continually put by those opposing the privatisation is that Australians already own Telstra. The fact is that at the moment Australians cannot decide who runs Telstra. They cannot decide how the company is going to be directed. Now at least one-third of the company is owned by Australians who have a very direct interest and a direct input into that process.

Another staggering impact of the first one-third privatisation is upon the value of the company itself. When in opposition in 1996 the government first publicly proposed a one-third sale of Telstra, it was valued at around $24 billion. In March this year, when the Prime Minister announced the government's intention to sell the remaining two-thirds, the value of Telstra was estimated at $60 billion. By moving Telstra from public to private ownership, the government created around $40 billion in wealth for us all. Not only is that additional wealth now available; it has materialised in the form of shares. The market clearly values Telstra more highly than the public sector ever did. Today's market prices for Telstra shares value the remaining two-thirds of the company at around $80 to $85 billion. In other words, the 16.6 per cent proposed to be sold in the first tranche through these bills is worth as much as the first one-third of the company privatised.

Commonsense would also suggest that delays will create uncertainty in the market and heighten risk. As the market is relatively strong and stable, it makes sense to move sooner rather than later. There are important social dividends to be gained from the further privatisation of Telstra. There is $250 million, for example, for the Natural Heritage Trust of Australia. We are selling telecommunications infrastructure to repair environmental capital upon which we have lived. In that sense, I find it extraordinary that the Greens senator, Senator Brown, who has spent a lot of his life chaining himself to log trucks and bulldozers to protect the environment, seems to now consider that the government owning the phone company is far more important than protecting and repairing Australia's environment

The second part, totalling $421 million, is comprised of other elements of the social dividend package, which include rural transaction centres. Around $70 million over five years is allocated for them. There will be extended access to untimed local calls worth $150 million over three years. There will be Internet access for people in regional and rural areas worth $36 million over three years. It is noteworthy that 93 per cent of Australians have access to broadband digital services such as ISDN.

Debate interrupted.