Mr TANNER (5:13 PM) —The telecommunications legislation that the House is debating this evening was introduced this morning. I have been a member of this parliament now for over 12 years and the situation we are facing in the chamber today is almost unprecedented. The fact that I can only recall one instance vaguely comparable to this suggests that the government is in panic mode on the privatisation of Telstra. The only occasion I can recall of an instance similar to this related to the infamous Tampa incident which was used and misused by the Howard government to establish a platform for its campaign for re-election in 2001.

In that instance an atmosphere of high drama was generated by the Prime Minister in question time. The announcement was made about the Tampa being sighted and that there was a prospective invasion by a substantial number of boat people. The government then used the processes of the parliament to force debate on a bill, which included complete immunity for public servants to do anything they liked without any recourse by anybody affected by it to the laws of the land, and forced debate on the parliament almost immediately. Other than that instance, I struggle to think of another occasion in my 12 years in the parliament where we have had legislation introduced and then put to debate so quickly. It is particularly offensive in this instance as we are dealing with highly complex pieces of legislation that cover a very wide range of complicated issues.

It is, of course, true that everybody in this parliament has a well-established position on the broad issue of the sale of Telstra, but underneath that a plethora of specific issues need to be dealt with—issues where it may be appropriate for members of parliament, including the Independent members, to move amendments or take issue with very specific points. It is extremely difficult for anybody in the House to do that when we are dealing with legislation that we have not even had an opportunity to read. That is the reality that faces us in the chamber today.

I want to deal with the key issues that have been brought into stark profile by the events of the last couple of days and, indeed, the events of 11 August, which were until recently relatively unknown, to illustrate the substance of the opposition’s case against the sale of Telstra. Essentially, what emerged in the parliament and in the broader community yesterday and today is a stark illustration of precisely why Telstra should remain in public ownership and a stark illustration of what the government did during the election campaign last year, when it went to the people saying that it intended to sell Telstra and that everything was fine out there with telecommunications services.

The claim that was repeated ad infinitum during and well in advance of the election campaign last year by both the Prime Minister and the then Deputy Prime Minister, Mr Anderson, the member for Gwydir, was that telecommunications services in regional Australia are up to scratch, that the hurdles that had been identified in the privatisation of Telstra in that regard had been met, that everything was fine, that Telstra was ready to be sold and that, subject to the requirements of getting an appropriate price, the government was going to proceed to sell it. In the debate on this issue the Labor Party put forward a very different point of view. We had Senate committees uncovering all sorts of horror stories with respect to the dilapidated state of Telstra’s network, the true level of faults in the system, the fall in investment, which had plummeted from about $4½ billion per annum to below $3 billion per annum over four or five years, the continuing reduction in field staff, the ageing of the work force and the lack of new people coming in and being trained. All of those issues were highlighted by the Labor Party during the course of the election campaign. The government, of course, steadfastly refused to acknowledge these things and simply reiterated its mantra that services were up to scratch.

The document which the new Telstra management provided to the government on 11 August and which the government has sought to cover up shows the true extent of the story and, in some respects, almost indicates that things are worse than even the Labor Party suspected. The Australian Communications Authority statistics about the level of faults that are released on a monthly basis were put out in a highly misleading way a couple of years ago. The monthly averages were averaged—if that makes sense—to produce a completely misleading and unreal figure of 98 per cent of fixed lines across Australia being fault free. This was a Saddam Hussein referendum kind of result, which we challenged at the time. We suggested that the true figure was well over 10 per cent and possibly as high as 15 per cent.

What has now been revealed, of course, is that 14 per cent of Telstra’s lines have faults. Also revealed was the fact that there has been a gap in investment of approximately $3 billion, which, coincidently, is the figure that was taken out of the company by the government in 1997 contemporaneously with T1. Three billion dollars was taken out in the form of a special dividend in order to rebalance the capital—the gearing—in the company. We are now told by the new management of Telstra that, lo and behold, there is a $3 billion gap in its investment, its network, its infrastructure, its training and its services. So it is absolutely clear that during the course of the election the Howard government deliberately deceived the people of Australia about the state of telecommunications infrastructure and services, particularly in regional Australia.

If ever you wanted a confirmation of this fact, you only have to look at what has occurred since the election. The National Party, who prior to the election were saying that services were up to scratch and that Telstra was ready to be sold, had to be bought off with a package of over $3 billion, which by definition implies that services are not up to scratch. If services were up to scratch, why would we be spending $3 billion on telecommunications services in regional Australia? The answer is: they are not up to scratch and the National Party was able to extract this rather embarrassing bribe in order to provide its support for privatisation.

The difficulty with the three amigos and their boss, Mr Trujillo, is that, however crudely, however brashly and however rudely, they are telling the truth. They have exposed the circumstances that apply with respect to Telstra—they have blown the whistle on the government. They may be brash Americans who get up people’s noses, but that does not mean what they are saying on this point is wrong. They have actually blown the whistle on the government and have indicated the true state of Telstra’s network, its services and its work force.

In the briefing to the government of 11 August, they also indicated that Telstra has been running on the base of a completely unsustainable dividend policy. It is true to say that, from time to time, various companies will draw on reserves to pay dividends. The Prime Minister pointed that out during the course of question time today and he is absolutely correct. But companies doing that do not usually also indicate that this is an unsustainable approach. The Telstra management has indicated that to the government. It has told the government that its dividend policy, as has been in place for some time, is unsustainable—crucial information that the government chose to sit on. The Telstra management has again blown the whistle on what is happening.

Why is the policy unsustainable? Because what Telstra has been doing at the government’s behest is trying desperately to prop up the share price to maximise the prospects for privatisation. In other words, every issue in telecommunications in Australia for the past nine years has been hostage to the government’s extreme obsession with privatising Telstra. Rather than fixing the problems, rather than dealing with the faults, rather than investing in the network, rather than ensuring there is a good balance between investment and dividends to shareholders, every single issue has been hostage to the government’s privatisation agenda. The end result is the disaster that was highlighted to the Prime Minister by Mr Trujillo on 11 August. That is where it has led.

We had the extraordinary spectacle a week or two ago of the Minister for Finance and Administration, Senator Minchin, seeking to blame the Labor Party. He claimed that, had the government been able to sell all the remaining shares back in 1999 during the second tranche of the sale of Telstra—T2, as it is known—the government would have cleared an extra $54 billion. In other words, according to Senator Minchin the Labor Party has cost the government $54 billion.

Leave aside the fact that the National Party were equal partners with the Labor Party in stopping any further sale of Telstra beyond 49 per cent at that time, that it is clearly ludicrous to assume that had all the shares been on offer rather than only 16 per cent then the government would still have been able to get a price of $7.40 per share, that Senator Minchin is really seeking to blame the Labor Party for his and the government’s poor stewardship—they have been in charge of Telstra, they have been the majority shareholder, they have been appointing the board and it is to them that Telstra has owed its accountability since that time—and that Senator Minchin is essentially seeking to blame Labor for not stopping the government from mishandling Telstra and for not taking away from them the ability to control and administer Telstra; leave all that aside and look at the message that the government is sending out to the people who bought shares in T2 for $7.40. Effectively, the implication of Senator Minchin’s message is: ‘We wish we’d fleeced you more. We got away with selling these shares for $7.40, and since that time, partly because of the end of the tech wreck, partly because we allowed Telstra to go on some mad adventures buying things in Asia and losing billions of dollars, partly because we allowed them to head off and try to buy Fairfax and Channel 9 and to take their eye off the main game and partly because we have been stripping them of dividends to try to prop up the share price as much as we can, your share price has gone down substantially from what you paid for it, and we really wish we’d sold you more.’ The government would have been much better off. By implication, what the finance minister is saying to people who bought shares in T2 is, ‘We made a good deal out of that and we wish we’d got into you for some more.’

As a would-be finance minister, at one level I can applaud that sentiment because that is the finance minister’s job. But the thing that makes it appalling is that this is occurring in a situation where the government has had access to crucial information from Telstra itself about the state of affairs with respect to Telstra’s dividend policy, its network and its broader investment that has indicated that things are much worse than has previously been publicly portrayed by Telstra or by the government. This was highly market sensitive information that is relevant to the interests of shareholders, and the Prime Minister has done absolutely nothing about it. He has made no attempt to get Telstra to disclose this information to other shareholders.

Even if the Prime Minister’s dodgy legal advice is correct and he is legally precluded from revealing the content of this advice from Telstra to the minority shareholders—and I make no comment on that; I have not even seen the advice—what is to stop him, when he is meeting with Mr Trujillo, saying: ‘Mr Trujillo, all this stuff you’re telling me is very worrying, it’s very serious and it’s information that should be in the public domain and available to all other shareholders. What are you going to do about that?’ and, unless he receives a satisfactory answer, contacting the relevant authorities—in this case, ASIC or the ASX—and saying, ‘We have an issue here that you need to deal with’? Why didn’t he do anything? Why didn’t he act in the interest of the minority shareholders, who he claims as his creation? The answer is that his obsession with privatising Telstra takes precedence over all other issues in telecommunications, and in this instance he did not want to do anything that would get in the road of that. It is time for this farce to end. The great lesson of what we have seen over the last couple of days is simply that everything has been hostage to the government’s extreme obsession with privatising Telstra. Every other issue in this crucial sector has been hostage to that obsession and it is now unravelling.

It is worth considering what the government’s arguments are. We saw some of them very limply on display during question time today, when the Prime Minister was about a millimetre away from getting back to the good old days of the shoulder twitch, because he was clearly under pressure. He was floundering and really had no response on the key issue. The mantra that is becoming the dominant line from the government about why it is necessary and appropriate to privatise Telstra is that there is a conflict of interest: the government owns Telstra, Telstra operates in a competitive market and the government also regulates that market. There is a clear conflict of interest. How can you have the government both owning this commercial enterprise and regulating it? You can never get fairness. It is true there are some issues in this regard. It is certainly true that there are questions that need to be dealt with. The real issue here is the magnitude of their importance.

The question that I asked the Prime Minister and that he was unable to effectively answer today really illustrates the totally fallacious nature of the government’s position on this issue. If Telstra has to be sold because the government cannot both regulate and own it, then it also has to sell Australia Post. The position with Australia Post is virtually identical: the government owns it, it operates in competitive markets—85 per cent of its revenue comes from fully contestable and competitive activities—and the government regulates those postal services and draws substantial dividends from Australia Post. Australia Post is a well-run company, one of the best postal services in the world, and it delivers substantial dividends to the government. If the government is right about Telstra then it has to privatise Australia Post. If its argument that the crucial reason why the government should no longer own Telstra—namely, that it also regulates the sector and it is a competitive marketplace—is correct, it cannot continue to own Australia Post. But does it propose to privatise Australia Post? No, it does not. So that argument has been demonstrated to be totally fallacious.

When we look at what is happening on the regulatory front, the government is not in fact going to be the regulator; the government is allowing Telstra to be the regulator. We have pushed for several years for much stricter competition regulation and a much more level playing field for Telstra’s competitors. The policy that we took to the last election was operational separation. The government sneered at it and former minister Alston sneered at it, but guess what: after the election, under Senator Coonan, the government actually picked up that policy. We welcome that. But what it has also done is to sideline the ACCC—the policeman, the umpire which is there to protect the interests of consumers and ensure there is a genuinely competitive market. It has sidelined the ACCC and it is asking Telstra to write the new rules. Guess what Telstra is likely to do: Telstra will write a set of rules to suit itself.

The government is also arguing that, by putting in place the various slush funds that are available for National Party purposes, it is tackling residual issues associated with services in regional Australia. Pork-barrelling is no substitute for public ownership. National Party bribes will not solve the telecommunications problems in regional Australia. The irony is that they are already walking away from the deal. One of the things we have already picked up in the fine print of the legislation is that, contrary to the demands of National Party members like the member for Hinkler, the $2 billion Communications Fund that the government is establishing as part of its agreement with the National Party will be able to be provided by shares in Telstra. So in other words the government is under no obligation to provide $2 billion to then be the foundation for the fund. The legislation allows the government to provide $2 billion worth—in today’s prices; who knows where they will be next week or next month or next year—of Telstra shares in lieu of that $2 billion. It is also able to do this in a non-disallowable instrument form so the great people’s hero, who has blown himself to bits about a week after turning up in this joint, Senator Joyce, will not be able to do anything about it if the government does effectively renege on its promise. So already, before the ink is dry on the deal, the government is reneging on one of the key points and it is using a sleight of hand to undermine the content of that deal in order to ensure that it appears to do the right thing for the National Party but in fact is slowly wriggling out of it.

It has also been made clear by Senator Minchin and the Treasurer that there is every prospect, given the plummeting share price, that the government will transfer some or all of the Telstra shares into its Future Fund, which it is soon to create, resulting in two very interesting issues: firstly, an investment fund supposedly run at total arm’s length from the government that is massively overweight in one highly controversial stock and does not have a balanced portfolio, therefore creating a substantial initial problem for the administrators of the fund from day one; and, secondly, creating a situation where we continue to have government ownership of Telstra but no government influence. So, in other words, we continue to have 30 per cent, 40 per cent, maybe 50 per cent of Telstra government-owned through the Future Fund but no government ability to appoint board members and no government ability to use its shareholding to influence Telstra’s broad strategy or its commitment to the community. So we end up with government ownership without government influence, public ownership without public accountability.

The reality is that Telstra privatised will be a giant private monopoly, too powerful for any government to effectively regulate, particularly when you see that the government, in its current form, is letting it write the rules. It will be able to leave town in regional Australia faster than the banks. A privatised Telstra will pursue its interests only—its short-term interests—and it will not look after people in regional Australia. Partial public ownership is not ideal but it is a lot better than a private monopoly, and that is where the government is heading. At least with partial public ownership you still have the ability to appoint the board, to exercise government influence to ensure that all Australians get genuine access to decent telecommunications services and that, finally, Australia gets moving in broadband—the key technology of the 21st century. (Time expired)