Mr McARTHUR (7:28 PM) —I was interested in the member for Fraser's comments on the Telstra (Transition to Full Private Ownership) Bill 2003. As usual, he makes an interesting contribution—and he should not leave the chamber until I respond to some of his arguments. He did not fundamentally address the argument of whether privatisation of Telstra is a good thing or in the interest of the Australian people whether in private or public ownership.

The member for Fraser talked about the debt dividend and the $1.4 billion dividend that the government will receive. I note that that was never a great issue when the Keating government wished to privatise a number of assets, which I will talk about a little later. I am somewhat sympathetic to the proposition put by the member for Fraser in relation to the cost of the fees that will be involved in the sale of Telstra. I do think that the fee regime in the privatisation programs of both governments has been fairly extravagant in the way in which the broking fraternity charge their fees. The figure of $650 million certainly seems a fairly big figure to me.

The member for Fraser put forward an argument about public debt and the interest received. However, I note that the Keating government had no compunction about using capital moneys received for current expenditure. There was no concern under the Keating regime that there was a total public debt of $96 billion or that the sale of public assets was not used to reduce the level of public debt. So I totally reject the member for Fraser's arguments that this is a question of finance or of calculating the figures for the budget. This is a fundamental argument over the best way that Telstra can operate for the benefit of all Australians. The bill before us amends the Telstra Corporation Act 1991. I remind the House that the Telstra Corporation was set up by the ALP in 1991. It was well supported by those in opposition at that time. We thought that moving to a corporation was the right thing to do, that it would put Telstra in a corporate structure and give it the ability to compete in the market and provide better services for Australians. There was no great argument at that time about privatisation or corporate structure; the then Labor government moved to that position, which we commended.

We are now recommending to the people of Australia that the 50.1 per cent of Commonwealth ownership should be sold to the market. There is no merit in retaining the one-tenth of a per cent share majority that gives the Commonwealth so-called majority holding on the board. The directors have a commercial responsibility to serve shareholders, be they the Commonwealth government or individual shareholders throughout Australia. The bill has a framework for regular and independent reviews of regional telecommunications services, and that has been mentioned by other speakers. Australia is a big continent and telecommunications are important for regional Australians. Obviously this parliament and this government want to make sure, by way of legislation, that regional Australians are well looked after and well serviced. We want to do this by way of regulation rather than by way of owning Telstra as a company. This bill amends the Telecommunications Act of 1997 to enable the minister and the Australian Communications Authority to establish administrative arrangements for the placing of conditions on Telstra for the preparation of local plans.

The longstanding policy of the Howard government has been to transfer Telstra to full private ownership subject to a regulatory framework. I think members of this House ought to be quite clear that the regulatory framework is the key issue here rather than the ownership of this particular company. The regulatory framework can protect consumers, no matter which party is in government; promote competition amongst all players; reform the telecommunications sector; and ensure that there is genuine competition between private sector operators. With the sale of Telstra, Australians can have access to high-quality, innovative and low-cost communications services. Members would be aware of the Estens independent Regional Telecommunications Inquiry report of 2002. That was an effort by the government to ensure that the concerns of rural Australians—who do have difficulties with telecommunications because of the size of Australia and the distances involved—were taken into account. That followed the Besley report of 2000 where a number of these concerns were raised, and I think those concerns were genuinely taken on board by both the government and Telstra.

The bill allows the sale of Telstra on an open timetable so that the government will not be committed to an immediate program. Contrary to the member for Fraser and those opposite, the government will be seeking to ensure maximum returns for its investment. Telstra shares are standing at about $4.70 at the moment. I guess the market will judge Telstra somewhat on the outcome of this bill and on commercial criteria such as Telstra's ability to perform in the marketplace here in Australia and around the world. So the market will make a commercial judgment. The market would like the company to act in a commercial way, not to keep one hand behind its back because of the 50.1 per cent shareholding held by the government. The bill allows a conventional single tranche sale so that the sale can meet the market's expectation and its ability to absorb this fairly big sale. It also allows other market instruments, such as hybrid securities, to make the sale of this very big corporate entity.

The argument we have heard on both sides about the sale of Telstra and its impact on consumers is not the real point here because the government, of whatever political colour, can protect the interests of consumers, competitors and the public generally. The safeguards will remain, such as the universal service obligation or USO. Those of us who have been in the parliament for some time have heard arguments back and forth as to what fully constitutes the USO—be it in Telstra, Australia Post or one of the other instrumentalities where the commercial profit motive is not the key element. The customer service guarantee has improved. Telstra have given a customer service guarantee, but this has not always been the case. The government have moved to put legislative pressure on Telstra to ensure that customers are well looked after. We have the network reliability framework. Again, there has been an argument in rural Australia that some of the services have not been as reliable as they should be—that they should be repaired on time and maintained—and that a telecommunications industry ombudsman should be appointed to take up some of those issues in an independent way on behalf of the government for the Australian people. So there will be further safeguards for regional Australia and the minister can impose licence conditions on Telstra to ensure that some of the local conditions are fulfilled.

We have a bill here that looks after the political interests of regional Australians who do not live in capital cities, remembering that those Australians who live in capital cities have good communication systems in terms of mobile phones and landlines which are close to their local exchanges, whereas rural Australians, especially those in remote Australia, are somewhat disadvantaged by modern communications because of the sheer distance and the sheer cost of ensuring that they are connected. The bill ensures that there will be an independent review every five years to make sure that the aims and objectives of the bill are carried out and that the commercial imperatives of Telstra do not override the importance of looking after both those urban and rural subscribers. The bill also ensures that those people who will be on those committees of review will have experience of rural and regional Australia.

The other key element of the bill is that Telstra will remain Australian owned and controlled by Australian directors. Again, it is very important that Telstra cannot be sold off to overseas interests and that we have genuine directors who will have an understanding of the unique Australian conditions and continue to serve the subscribers and their shareholders, being aware of both demands. The maximum aggregate foreign ownership allowed in Telstra will remain at 35 per cent. We cannot have a major superannuation fund out of New York buying up Telstra because it is a good commercial investment. There will be a spread of the shareholding, ensuring that Telstra is not dominated by an individual group, and the maximum individual foreign ownership level will remain at five per cent.

I will summarise the arguments for why we should sell Telstra. The current arrangements provide a conflict of interest for the government, as it is a regulator of telcos and the major owner of the biggest telco in Australia. The government is a regulator and owner all at once. It is fairly obvious to anyone who has a commonsense view of these matters that there is a conflict between a government and their department setting the regulations and having an interest in the commercial outcomes. The government now regulates 89 telcos, but it has a major shareholding in one major telco—Telstra. As I have said, government ownership does not lead to better service in itself. It is really the genuine competition between those telcos that will drive the price down.

I go back to the point that it was the Labor Party that put Telstra on a commercial basis in 1991. This is just a further development of that basic concept that the Labor Party and those opposite who have argued so strongly in recent days against the sale of Telstra introduced. The quality of services is really affected by two fundamental factors in market forces: how many people want the services and what price will they pay? It is interesting to observe that the prices have in fact been reduced in this regime. From 1996-97 to 2000-01 they reduced by about 25 per cent. So we see the competitive pressure that has been brought to bear on Telstra by other market operators in the marketplace, competing in the various areas of mobile phones, untimed calls, landlines and trunk calls. They produced pressure to ensure that the consumer had a reduced price. That is a far call from the original concept of Telstra being a totally government operation.

The regulations will look at untimed calls, the universal service obligation, the customer service guarantee, time limits on phone installations—which is very important for a number of our customers—and time limits on fault repairs, which is very helpful to some country people. They are all things that will be decided by the government independent of their ownership of Telstra. I again emphasise that point. The review of future service guarantees could be done by governments, not by the ownership of Telstra. The maintenance of the future of Telstra Country Wide could be looked at in a regulatory process and regular reviews of performance.

I will quickly review the ALP's performance in terms of privatisation. Time is short, but it is interesting to note that they sold anything that moved during their time in government. They did not tell the people that they were going to privatise these instrumentalities, and I well remember the privatisation of the Commonwealth Bank. They never told anyone. They did not tell their own people. In fact, they had a troika of the cabinet—I think there were three members: the Prime Minister, the Treasurer and one other. They came into the parliament on budget night and said, `We're going to privatise the Commonwealth Bank. We want the money.' So it is strange that those on the other side come in here and talk about the ills of the privatisation of Telstra.

They also sold Qantas, Australian Airlines, the Snowy Mountains Engineering Corporation, the Moomba-Sydney pipeline, Aerospace Technologies of Australia, the Commonwealth uranium stockpile, the Commonwealth Serum Laboratories, Amdel, the Commonwealth Accommodation and Catering Services, the Defence Services Housing Corporation, the Defence Force home loan franchise and the Commonwealth housing loan assistance schemes. There we have it. That is what the Labor Party did when they were in government—they privatised anything that moved, and they did not tell the people. The Howard government have been very up front about their arguments regarding the privatisation of Telstra, yet the Labor Party come into this chamber and argue strenuously against a concept that they implemented quite rigorously when they were in government.

I would like to finish by talking about Telstra Country Wide. In my electorate, Telstra Country Wide has done a remarkably good job. I think country members would be aware of the success of Telstra Country Wide in the southern area, where the general manager is Laurie Paratz. In my own area, there is Andrew Sheridan at Geelong and Chris Doody at Ballarat. In the old days, Telecom were an impenetrable organisation in my view. They were not orientated towards customer service or towards members of parliament raising queries. Now they have Telstra Country Wide, where customer service is a very important part of their outlook and philosophy, where we have local management and where they are prepared to look at local problems. The key thing about Telstra Country Wide is that it is profitable in its own right. This new part of Telstra not only looks after rural and remote country people by providing customer service but is working as a profitable unit—so much so that the plans for Telstra Country Wide were improved and endorsed at the end of 2002.

The $187 million that has been allocated by Telstra to rural services is fixing up landlines, especially in areas with a high incidence of faults, such as in my area in the Surf Coast Shire and in Colac Otway Shire, where old cable and trouble spots have been repaired. Also in my area, approximately 300 exchanges have been transferred to digital technology, an upgrade at considerable capital cost. In Geelong, Country Wide have made sure that new base stations for mobile phones were put in the Bay City Plaza and in Deakin University. So we saw local knowledge and local understanding of the issues, and that capital investment took place. GMHBA, a health fund, had a new call centre put in which made the operation more efficient.

So I say congratulations to Telstra Country Wide. They are now in local management in the local community, they are improving telecommunications and making them better for local customers, they are providing better customer service and they are doing a good job. They reflect a new attitude in Telstra and they reflect what would happen if Telstra were fully privatised and had to meet customer needs, competition and government regulations. I strongly commend the bill to the House and I think that those opposite should remember what they did in 1991.