Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 26 November 1998
Page: 830

Mr MURPHY (9:59 AM) —The Howard government's attempt to sell a further 16 per cent of Telstra is nothing less than public theft. On 2 May 1996, the Howard government introduced the Telstra (Dilution of Public Ownership) Bill 1996. The effect of this bill was to sell one-third of Telstra, 35 per cent of which float could be purchased by foreign investors. Let us recall the facts of the first Telstra float. The Bills Digest 1997-98 notes:

The Telstra share offer opened on 15 October 1997. By the close of applications on 3 November 1997, 1.8 million Australians applied for shares. Of the employees eligible to subscribe for shares under the employee share scheme, 92% took up the offer. Shares were issued at $3.30 and that price was payable by two instalments; the first, $1.95 ($2.00 for institutions) and the second $1.25 ($1.30 for institutions).

. . . . . . . . .

Telstra shares were first traded on the Australian Stock Exchange on 17 November 1997. At the opening of trading on 9 April 1998, the partly paid Telstra shares were priced at $3.80.

As at 25 November 1998 Telstra shares closed at $6.81 per share. We see that the float price of $3.30 was less than 50 per cent of the current market value. It is interesting to note that, of the one-third of shares which were sold, up to 35 per cent—that is, 11.67 per cent of all issued shares—could be purchased by foreign investors. At the end of 1997, the actual figure was 19.5 per cent—that is, 6.8 per cent of all issued shares. This is so despite the fact that, in light of these facts, we can safely say that the first Telstra float was priced at a substantial discount.

The next and final phase is the Telstra (Transition to Full Private Ownership) Bill 1998 . What expectations can we have with respect to the forthcoming 16 per cent float? It is a rule of thumb that a discount of 20 per cent is applied to floating additional stock of pre-listed shares. Based on the 25 November 1998 closing price of $6.81, a 20 per cent discount would price the next float of 16 per cent of Telstra's equity at approximately $5.45 per share.

Anything less than this price would be to blatantly sacrifice public assets to the open market. But then the last Howard government has a history of flogging public assets at bargain basement prices, including the first Telstra float, so why should it stop now? That is not to say that this sell-off is justified. I totally opposed the first float, and I totally oppose this float as well. The point being made is that the last Howard government fundamentally failed the people in its custodial trusteeship of administration of public assets. Any trustee duly appointed carries a wide range of responsibilities. Principally, these responsibilities surround the maintenance and preservation of the trust assets for the benefit of the trust's beneficiaries.

If I were the trustee appointed by will to a deceased estate and I sold a significant asset in that estate at something like 50 per cent below its fair market value, I would be hanged from the rafters by the beneficiaries and/or the creditors. I would be in serious legal trouble and would be held accountable for my actions.

Let us not mince words; this government is hell-bent on flogging these shares to the cashed-up big end of town, sacrificing a further 16 per cent of Telstra and ripping off the battlers and the taxpayers who have made Telstra the strong, public utility it is today. However, merely selling the 16 per cent of Telstra at its proper discount value will not solve the ethical implications of this immoral sale. It is not enough that Telstra has been deliberately and grossly undervalued, depriving the public purse of its fair and reasonable consideration for sale of a valued asset.

There are three implications of this bill which are immoral: (1) impact on jobs within Telstra and diseconomies in my electorate through flow-on scaling down of economic activity; (2) decrease in service levels to existing Telstra customers; and (3) economic surrogacy—substitution of the rights attaching to Telstra's political accountability with a mere contractual promise.

The first immoral implication of this sale is that of employment impacts. I wish to bring to the attention of this House the plight of employees in Telstra, particularly in my electorate of Lowe. Let us look at Telstra's employment record against the history of privatisation and profiteering. In 1996 Telstra employed approximately 76,500 employees. Today, the number is approximately 54,000. It is anticipated that Telstra will further reduce staffing levels to 51,000 by mid-1999 and that levels will plummet to 49,000 by July 2001. These drastic cutbacks represent a 36 per cent decrease in employment within Telstra from July 1996 to July 2001. These callous cutbacks must be juxtaposed against the decrease in service standards and the words of the Chief Executive Officer of Telstra when he states:

It has as it must, a strong focus on delivery of increased shareholder value to our over 1.5 million shareholders.

The technical ability of Telstra to switch traffic between service centres means that Telstra service centres can be located almost anywhere. Hence, the ability to distribute employment opportunities in areas of greatest employment need is an important moral responsibility; a responsibility that large employers face as good corporate citizens.

Telstra has already demonstrated its ugliness as a privatised entity. It has lost its ethic of social responsibility in favour of its newfound ugly Wall Street attitude. There are significant Telstra facilities that service my electorate of Lowe. These are located at Burwood, Strathfield, Greenacre and Ashfield. What is their future? What guarantees do we have that these centres will remain open? What impact will their demise have on our local economy?

We are forced to accept job losses, as well as a collapse in service standards, as the new masters of Telstra demand profitability, not equitable distribution of services. My party and I remain committed to an equitable distribution of employment and retention of such regional sites. There is more at stake here than a mere profit line; there is the wholesale destruction of the vitality of regional industry in the heart of Sydney.

Like the rest of the public sector impacts of privatisation, there are social contract implications on services. The fundamental reason why certain infrastructural assets and industries are held by government is that they serve some strategic purpose or that they are industries which, if left to the private sector, would result in inequitable distribution of services. Telecommunication services, if left to the private sector, will result in an unequal distribution of services with marginal and nonprofitable services being whittled away or cut out completely. Country services are one such example. Senator Alston and the Hon. John Fahey note in their joint press release of 22 July 1998 that:

. No further sale, beyond 49 per cent, will occur until:

the Government has established an independent inquiry which will assess Telstra service levels to customers in each of metropolitan, rural and remote areas against the prescribed standards. The new consumer protection legislation will specify the performance criteria which the inquiry will use in testing whether Telstra's performance on maintaining service levels has been adequate. Those criteria will build on those which underpin the current arrangements, and will be developed in consultation with all interested sections of the community.

. unless and until the independent inquiry certifies that service levels are adequate . . .

So how has Telstra performed in-service delivery since privatisation? The single greatest concern facing the sale of Telstra is the performance of service delivery, especially in country areas.

Let us examine Telstra's performance since the one-third sell-off. Concerns in respect of the standard of service provided by Telstra to country areas have been underscored by statistics contained in the most recent issue of the Telecommunications performance monitoring bulletin. Telstra's performance in the provision of new services in country areas on or before that agreed commitment date declined by nine per cent to 66 per cent during the quarter ended 31 December 1997. This was a 16 per cent reduction on the quarter ended 31 December 1996.

Telstra's performance in country areas in the number of faults cleared within one day also fell during the December 1997 quarter by seven per cent to 61 per cent. This was a 13 per cent reduction on the December 1996 quarter. The percentage of faults cleared within two days fell by six per cent to 80 per cent during the December 1997 quarter and by 10 per cent when compared with the December 1996 quarter. The clearing of faults with payphones in country areas is even worse. The number of faults with public payphones which were cleared within one day fell by 14 per cent to seven per cent during the December 1997 quarter and by 20 per cent when compared with the December 1996 quarter.

Of most concern is the application of the universal service obligation regime, USO, contained in part 7 of the Telecommunications Act 1997. The USO is the obligation to ensure that the standard telephone services, STS, and payphones are reasonably accessible to all Australians on an equitable basis. STS refers to a service that permits voice telephony or an equivalent service for a person with a disability. Regulations may be created which extend the definition of STS.

The definition of the STS was recently reviewed by the Standard Telephone Service Review Group with a view to determining whether, amongst other things, the STS should include integrated services digital network, ISDN, capability. The STS review group recommended that digital data capability, that is, the ISDN equivalent, should be provided through the operation of the market throughout most of Australia, and where the market does not operate to make this capability reasonably accessible to all people in Australia on an equitable basis it should be provided through the USO mechanism.

Under such a regime there is a risk that digital data services may not fall under the definition of STS. Digital data is the future as an increasing amount of telephony services rely on the ISDN protocol. It is submitted that the sale of Telstra means the distribution of services, including service delivery of repairs and provision of 21st century services in digital data, may not be equitably or efficiently distributed. A sinister by-product of this degraded service is to deliberately undervalue the value of the corporation, thus driving down the price of the stock and making it easy pickings for corporate bargain hunters.

Finally, there is the issue of absolute responsibility of Telstra in its service delivery. I refer to item 18 of schedule 2 of the bill which inserts new section 8AUA into the Telstra Corporation Act 1991. That section will allow the minister to amend Telstra's constitution, that is, its memorandum and articles of association, at any time between the commencement of the section and the day on which the Commonwealth's shareholding in Telstra falls below 50 per cent. The amendment must relate to the sale of Telstra, and the effect of the alteration must be to remove the requirement that a particular act or thing be done only with the consent of the minister. We see in the proposed section 8AUA the power to effectively remove political accountability from the operation of Telstra, that is, the requirement that a particular act or thing be done only with the consent of the minister.

In substitution of this political accountability we are offered provisions of a customer service guarantee of which I have already spoken. This government thinks it can give the people a surrogate, a cubic zirconium or fake diamond, in substitution for the real jewel in the crown called public ownership. This government has come to the people offering them a mere contractual promise in substitution for the full protection afforded through political accountability. It is no swap, no dice, no deal.

I leave this topic with these open questions for the House, questions I hope will be answered during the second Howard ministry in a full and competent manner: (1), is it appropriate to sell the remainder of Telstra given this poor performance in services in country areas; (2), how could any inquiry into service provision, which is proposed as a precondition to the further sale, be satisfied with Telstra's performance given the history that these independently assessed performance indicators appear to tell; (3), is service provision the only criterion upon which selling a strategic public utility is based; that is, do other strategic interests prevail, such as national security of a public asset, over other criteria? The ALP remains committed to its position of no further sale of Telstra regardless of the level of service provision.