Mr FAHEY (Finance and Administration) (12:35 PM) —in reply—I have listened with great interest to all the contributions to this debate that have been made by members over the past few days. I think it is fair to say that there is, in fact, some common agreement. There is an issue which all elements of the House agree upon: that our future prosperity depends on Australia having a first-class telecommunications network. That is what we all want. That is a theme that has run throughout all the contributions that members have made. Where the government and opposition differ is how that can be achieved.

The Labor Party believes that first-class telecommunications can be achieved only through government ownership, and government ownership by one carrier, Telstra, despite the fact that we have a competitive market. I would like to point out what that competitive market consists of. When that competitive market regime commenced on 1 July 1997, last year, there were about four licences for telecommunications in this country. I think all honourable members would know those major companies. Of course there was Telstra; there was, as had been arranged by Labor when it was in power, the grandfathering in of Optus; Vodafone also had a licence; and there may have been one other. At this present time, I understand—it changes at a pretty rapid rate—there are some 26 telecommunications licences in this country of ours. Four only a little over 12 months ago; 26 today. That represents a very competitive market, that represents a very competitive field, in which all are seeking to provide the service in this growth industry.

Throughout this debate something has been missing: no-one has canvassed what Telstra thinks. We now have Telstra, which, on its share value, is the largest company in Australia by a considerable amount. Simply on the value of all the shares out there in the market, it is a company worth close to $80 billion—significantly above other large Australian companies like News Ltd and the banks up there on the top line.

It is interesting to note that the day after the successful float of Cable & Wireless Optus on the Australian Stock Exchange, the CEO of Telstra, Mr Frank Blount, spoke to the Committee for Economic Development of Australia on Telstra's view of creating the challenges in the Australian telecommunications market. I believe that it is important for Telstra to have a voice in this debate. I would like to quote what Mr Blount said to CEDA on 18 November, just a short time ago:

Basic telephone and other core business products now account for just 55 per cent of Telstra's revenue. Aggressive and agile new competitors are emerging on an almost daily basis, especially in the international long-distance products market and the area of newer services, such as the Internet. The result, from management's perspective, is a rapidly changing mix of risks and opportunities.

In our open, competitive environment, the argument for private ownership is a powerful one. We now operate in a global market against the world's largest companies, and to succeed in this environment, to grow Australia's most important information technology company, we need to have the highest level of commercial focus—a focus which naturally governments do not aspire to and cannot possess.

It was the decision of the former Labor government to expose Telstra to full and open competition that created, in Frank Blount's words, a powerful argument for private ownership. We were inexorably moving down that course right throughout the 1990s as a result of Labor's decisions in the earlier part of this decade.

If Telstra is going to be one of the companies delivering first-class communication solutions to Australia, then it must be able to do so unfettered by the risk of adversity approach of a government business. It is worth expanding on just what that means. A government owned business is reluctant to make business decisions that expose taxpayers to commercial risk. That is fair enough. While this reluctance assists in reducing the exposure of taxpayers to potential losses, it also constrains the company's ability to take commercial decisions that have the potential to further enhance shareholder value.

I noted in this morning's paper some reference to Telstra looking at markets offshore—looking at Korea, Hong Kong, the United States and a number of other countries. None of us would argue, from the point of view of expanding this great Australian company, that it ought not to take its rightful place in this competitive world—this growth area of the world of telecommunications—and that it ought not be confined to the Australian mainland or to Australia itself. But I think all of us, as taxpayers, with our responsibilities, would argue fairly strongly that a company that wishes to expand in this nation should not expose the taxpayers' dollars to events in other countries, to systems that we have no control over, to systems that we do not even understand and to economies we cannot predict to the extent that you can do here. At least this is within our country and that is our responsibility.

Telstra was unshackled by Labor back in the early 1990s, told to become competitive and is moving down that path of being a great world company—not just the great Australian company which it already is. Public ownership gives taxpayers no choice about whether they want to be exposed to commercial risk. Private shareholders are able to make assessments. They can make up their mind if they want to invest in the company or not. They can assess whether they want to and to what extent they wish to be exposed to the risks through their ownership. The transfer of Telstra from the Commonwealth to private shareholders will protect taxpayers from those risks which I have spoken about—the risks attached to owning a large commercial enterprise, operating in a changing and competitive market that the former government invited Telstra to jump into.

In responding to the competitive regime begun by Labor, it must be recognised that Telstra has reduced the size of its work force. That was determined long before this government moved down the path to obtain legislation to sell the first third of Telstra. That was part and parcel of the charter which Telstra had under the competitive regime which the Labor Party set in place. To compete, it had to be competitive, and that meant looking at the way it did business, including the size of its work force.

However, the value of the communication sector output grew by 11.2 per cent in the year to June 1998, compared with a growth rate of only 3.9 per cent for the economy as a whole. Industry employment has risen on an average of 4.2 per cent per year since 1993. I think the honourable member for Hinkler very properly pointed out that there is an opportunity in this growth area, that we are seeing massive expansion. We are seeing it through the competitors that are coming into the field to create jobs and the figures show that this area has more than twice the growth in employment than the economy as a whole.

The government's approach to privatisation of Telstra has been consistent and it has been transparent. We have taken it to the people in two elections. It is as simple as that. There is none of this cloak and dagger stuff that we saw in the earlier parts of this decade in respect of Qantas and the Commonwealth Bank.

I noted that the opposition's spokesman for communications stated that the government had engaged in some sleight of hand. This phrase, `sleight of hand', seems to have come up in the contribution of everyone from the Labor Party to this debate. He alleged that the government had engaged in some sleight of hand about its intention to ultimately sell all of Telstra. That is sheer effrontery from the party that said, `We will never sell the Commonwealth Bank.' That is what you said. You also said, `We will never sell our airlines.' You say we have engaged in sleight of hand—when we went to the people twice with this clearly on the table. We so cleverly hid our plans that there was a communications policy document released publicly during the course of the last election campaign for all of the Australian people to see. So do not talk about sleight of hand. You invented the phrase and you practised it throughout the early 1990s in the lead-up to your privatisations at that time. The Labor Party's current opposition to the legislation is simply a policy of convenience. We know that. We know that you would abandon that policy without blinking if you were in government, and that is the only conclusion that anyone, including the Australian people, can draw from the way in which you dealt with Qantas and the way in which you dealt with the Commonwealth Bank.

The bills before the Main Committee will enact a comprehensive telecommunications regulatory regime with a range of consumer and competition safeguards unequalled anywhere in the world. Yet, of course, all of these bills are opposed by Labor. You do not want the protection that is contained in a number of those bills. You just oppose the whole lot because of the ideological bent you take to this particular debate. You have not identified any of the major deficiencies in the framework. You have not even suggested that it needs change. You have simply dismissed the proposed improvements as unremarkable. Wow. Unremarkable. But you are opposing them, of course, as I said, for the sake of it. You have a clear option in this case to support them regardless of your position on sale. You can assist us in tidying up, but you do not even want to look at that aspect. You can assist us in strengthening the consumer protections, but you are not interested in that either.

We have clearly separated the regulation of telecommunications from the ownership of Telstra. The opposition has failed entirely to make a case why Telstra should be retained in public ownership. You have not made a case on that in any of this debate. You have demonstrably failed to indicate what ownership can achieve what industry regulation cannot. The umpire is still there. You do not have to be a player as well. The umpire controls the game, not the players.

No opposition speaker in this debate has advanced a cogent public policy argument for the need to retain Telstra in public ownership. The opposition complained about service standards—we have heard a lot of that—and infrastructure shortcomings—we have heard a lot of that—which in many cases were features of the fully publicly owned monopoly when it was Telecom. It was there then and that is what you continue to debate at this point in time.

You bemoaned the loss of the ministerial power to give directions to Telstra in the national interest—a power that has never been used and yet you have spoken at great length about it. It will of course be retained whilst ever the Commonwealth has majority ownership. It will be relinquished only when the Commonwealth does not have majority ownership as it should under Corporations Law. It is an entirely sensible principle at that point in time. The facts are that it was the Labor Party which removed Telstra from direct ministerial control when Labor corporatised Telecom in 1989 and reinforced it through incorporation under the Corporations Law. Labor installed the board and gave it the responsibility for running the company and ensuring that Telstra had a commercial focus rather than a public service mentality.

The government has heard concerns expressed by the community about service performance. Of course we are interested in that. We have listened to those concerns that have been expressed. We have moved to address them through refinements to the regulatory regime and by phasing the sale. Under the legislation, government will retain majority ownership until there is very clear confirmation that Telstra's service performance is meeting reasonable community expectations.

The opposition has claimed that if the legislation were passed the government could move to full sale without further reference to parliament. That is not correct because the regulations establishing the performance criteria will be assessed by the review and will be disallowable instruments. There is a power for the parliament to assess those regulations and to disallow if it is not satisfied. Parliament will have the opportunity to examine the regulations before we proceed to any sale beyond 49.9 per cent. We have not specified the performance criteria in the legislation because we want to get it right. We want to make sure that there is full consultation and that we get it right before those regulations are promulgated.

The government is committed in the legislation to explicit expenditures on practical measures which will enhance access and will reduce the cost of telecommunications services—$671 million to enhance telecommunications services throughout Australia, which, of course, Labor wants to deprive the people in regional Australia of. Failure to pass this legislation means that tens of thousands of Australians, and their children who will reap the benefits of that particular program, will simply not get those benefits.

In order to provide greater visibility and clarity, we have also brought together in one act all the consumer safeguards: the universal service obligation; the national relay service for hearing impaired people; untimed local call rights; the customer service guarantee; the provision of emergency call services; price controls; and the Telecommunications Industry Ombudsman Scheme. This is also being opposed by Labor. We are taking the opportunity to upgrade the consumer safeguards, to put the punitive powers in there to make sure that proper backup is there to deliver those services. We have also put in an important new power of a ministerial direction on consumer matters, and we are refining the competition provisions, based on experience since 1 July 1997.

One important aspect of the regulatory framework is its flexibility. This will enable the government to address issues as they emerge but always within a framework laid down in the law which is both transparent and equitable. Labor says that the best form of regulation is regulation through ownership. It does not make the slightest bit of sense and we know that they are really saying, `You can get things done by a quiet word in the right ear.' That is the theme that you are running through this entire debate—`When you own it, a quiet word in the right ear can fix any particular complaint that comes your way.' That might have been all right in the past and it might have happened in the past. For all I know, there might have been backroom deals in the past, when it came to the way in which Labor operated in government businesses. But I can say here and now that that is not the way this government operates, nor should we, in the context of the 1.6 million Australians who purchased shares in this company when given the opportunity to buy into the first tranche of Telstra when it was sold in November of last year.

It may have been appropriate for you to play those sorts of games when there were no other players but there are now a lot of other people in the industry—those competitors that I spoke of—and there is an obligation to the private shareholders. There are also the duty and responsibility of the board. The board is bound by law to act in the best interests of the company as a whole. In addition, we know there is constant scrutiny by the market of Telstra's actions, which makes the cost of management decisions much more transparent.

Policy making should not be captive, hankering for a simpler past, when all phones were black and were provided by the Postmaster-General's Department. Yet that is, again, what Labor want to see occur in this whole thing in the way in which they have approached this debate. They want to go back and live in the past. It has gone, and it has gone in this particular industry far more than in any other industry, with its growth and development and with the technology that is emerging on a very regular basis.

There was some reference to and debate on the Australian National Audit Office report. The report clearly concluded—and this is the overriding theme, the take-out of that report—that the completion of the sale was conducted in accordance with an ambitious timetable and in a period of significant market volatility. That was fact. The Auditor-General found that this represented a significant achievement, given the unprecedented scale of the offer.

That one-third sale of the first tranche of Telstra realised $14.3 billion. It realised in the course of that a recapitalisation of another $3 billion. That is a total of $17.3 billion, of which this government used almost the entire amount to pay off Labor's debt, to reduce the burden that was placed on all Australians as a result of Labor's management of this country over the 13 years prior to 1996.

Despite the numerous misleading comments made by the opposition, the overall sale cost, as a percentage of the proceeds, was very low when you consider and compare the established international benchmarks. I will state a couple of figures here. The overall costs as a percentage of the proceeds of Telstra one were 1.8 per cent. When Labor sold Qantas, in its initial public offering, the costs were 2.8 per cent—a whole one per cent more than we saw as a result of the sale of Telstra. What were the costs when Labor sold CSL, the Commonwealth Serum Laboratories, in 1994? They were 3.1 per cent of the proceeds. Yet we hear that there was too much spent in respect of the sale, with the commissions that were given and with the amounts that were paid to the advisers, et cetera. That comparison clearly indicates what is there.

This legislation gives this company a chance to grow. It gives this company a chance to make a significant contribution to Australia's economic growth, to expand its horizons as it wishes to, as it has done, as it did under Labor, as it will continue to do into the future, and as it must in the interests of its shareholders. The legislation gives this company a chance to enter a very exciting period in our economic history. (Time expired)

Motion (by Mr Fahey) agreed to:

That further proceedings on this bill be conducted in the House.

Motion (by Mr Fahey) agreed to:

That orders of the day Nos 2, 3, 4 and 5 be conducted in the House.