Senator CARR (10:03 AM) —It is only eight months since the Senate voted against the full privatisation of Telstra. Today we see once again the government spouting outrageous claims of doom and gloom as well as outrageous claims being made by coalition members as to the benefits of privatisation. We have seen nothing new in the package that is being presented, other than the fact that the National Party in a most grovelling manner has capitulated once again to the interests of city capital and, in this case, to the interests of foreign capital. You have gone right around this country claiming that you are the champions of regional Australia, only to find that the One Nation Party has been waiting for you, expressing quite clearly the view that you are not capable of adequately representing the interests of rural Australia. What you have done here today has proved yet again that you are not capable of representing the interests of your constituents.

The ACTING DEPUTY PRESIDENT (Senator Ferguson) —Order! Senator Carr, please address the chair and not the senator.

Senator CARR —What we have is a package before this parliament which I would have thought even the National Party, with all their limited abilities, would have been able to appreciate is nothing more than tinsel dressed up to present an image of something that glitters. We all know that not all that glitters is gold.

What we have here is tinsel in the form of inadequate safeguards to accessibility and affordability, and tinsel in the form of a proposed independent inquiry into the performance of Telstra which every independent body in this country has demonstrated has declined under privatisation. We have seen report after report coming forward saying that the standards of service have declined as a direct result of privatisation. Directly as a result of this government's policy of privatisation, job cuts have ripped the heart out of regional Australia and ripped the heart out of the infrastructure of many of the great towns and cities.

What we have heard from this National Party yet again is the notion that some sort of technological El Dorado will be the saviour for regional Australia. But, in fact, under this proposal already disadvantaged people will be further disadvantaged. The National Party has failed in its duty to defend those interests of regional Australia by supporting this government in these measures.

What Senator Boswell and the National Party have quite clearly missed the point on is that there is a fundamental difference between the issue of ownership and the issue of competition. I agree with Senator Boswell to this extent: whoever owns Telstra has an obligation to provide consumer protection. But that has nothing to do with the privatisation of Telstra. In fact, under public ownership the opportunities to ensure public accountability are greater.

As we have seen with the Casualties of Telstra cases, which both Senator Boswell and I have been working on, it is only as a result of our capacity to intervene through the political process, through the public process and through the parliamentary process that we have some measure of accountability being held up to protect consumers, the citizens of this country, from the enormously unequal market power that comes with the concentration of political power that arises from such organisations as Telstra.

There is no guarantee that we can see anywhere in this legislation. There are no guarantees of change in the face of dangers that such privatisation of Telstra holds for the people of this country, particularly those in our rural and regional areas. The reasons for opposing privatisation, in my view, remain the same. Now, from examples based on experiences with the partial privatisation of Telstra, we have seen what those dangers involve.

We have seen employment levels drop, and continue to drop, in Telstra. One-third of the company has been sacked. We have seen a greater emphasis, in fact a complete shift in the culture of Telstra, as we now concentrate on the issue of private shareholder value—irrespective of the consequences for community values; irrespective of the consequences for social infrastructure values; irrespective of the obligations of Telstra, as a telecommunications corporation, to the 18 million Australians who currently enjoy majority ownership of that corporation.

What we have seen is the quality of service continuing to decline. We have heard all sorts of spurious arguments; the apologist for privatisation has come into this chamber and argued that it has been the drought, it has been bad weather, it has been some catastrophe or another. I can tell you that in Victoria there has not been heavy rainfall or drought; there has been, however, quite substantial job losses and massive declines in the standards of services that are being provided. We can say that that is quite clearly and irrefutably the case.

Incorporated in this bill we have alleged safeguards which do nothing but confuse the poor simple-minded members of the National Party, in that they can agree to a proposition for the full privatisation of Telstra without ever coming back into this chamber—because that is what this bill does. It proposes a sham inquiry, which will see no return to the parliament, as some sort of stitch-up deal is done behind closed doors to allow for the full sale of what is probably one of Australia's greatest companies.

With this proposal we are looking at the privatisation concerns that have been raised throughout the community—and those concerns have not been answered. Telstra has been completely unwilling to fund uneconomic services; it has been reluctant to contribute its fair share to research and development. Telstra has, of course, seen the fall away of skill formation in terms of its training commitments. We have seen employment conditions in the industry plummet, and we have seen employment opportunities throughout rural and regional Australia also plummet.

It is quite apparent to me that what we have seen through the partial privatisation of Telstra is a narrow and short-term profit objective being pursued at the expense of the community as a whole. What we will see through this proposal, under this government, is more of the same. I am quite disappointed—although, I suppose, not surprised—that the National Party has been duped so completely by this government. That this should happen with the once great National Party is a great tragedy—the National Party which, in the past, has been able to see through things and defend interests in an effective way. We do not see that any more. What we see is this grovelling capitulation to measures that are designed quite clearly to advance the interests of the few at the expense of the many.

What is being proposed by this government, in order to cover up its intentions, is a bandaid measure. We have seen skyrocketing share prices which have risen in direct correlation to the decline in the number of jobs in Telstra. We have seen 22,000 jobs lost so far. We have seen, particularly in rural and regional areas, services decline. These things have occurred as a direct consequence of Telstra being able to do things much more cheaply and extend the profits arising through its activities. It is not for the benefit of the whole country as a whole, though. It is for the benefit of those shareholders who currently enjoy the minority shareholding. The share price is good news for those people, but bad news for the rest of the country.

What we have is a current valuation of some $US6,000 per access line. By international standards, this is overvalued. What we see is that there will be an attempt to maintain value by continuing to cut costs. That will mean still greater job losses. There also is the expectation that there will be some 27,500 jobs lost by 2001. There will be further centralisation of functions at the expense of rural and regional Australia. There will be greater outsourcing of operations and increased casualisation of work within the industry. We will see reduced investment in research and development—and mainly to keep up that share value. That, of course, is one of the great tragedies of the privatisation process.

We have seen job losses to date, particularly from commercial and consumer business units; these service residential and small business customers. Of course, that is directly related to the data on the decline in services that have been provided by the commercial and consumer business units. What is important is that there is a direct link between job losses and deteriorating service quality and increases in profit per access line. The Australian Communications Authority has stated:

An area of concern for the ACA is the apparent decline in service levels for the provision of telephone services and the repairs of faults, particularly in the country.

Results of consumer satisfaction surveys commissioned by the ACA showed that service provisioning and fault restoration levels were causing significant dissatisfaction among customers.

I would have thought Senator Boswell would have known that. I would have thought the National Party would have understood what the empirical evidence is, the hard facts, now on the table. It is curious that Telstra tries to deny that service quality has declined—but, based on those particular facts, it is quite irrefutable.

With the sale itself, there are serious implications for general public sector revenue. Revenue forgone from the sale of even 16.6 per cent, the figure being touted in press speculation, amounts to some $498 million. Savings from the sale of Telstra in terms of interest on government debt, according to the analysis in yesterday's Financial Review, were some $400 million per annum. This represents a net loss to the public sector worth some $98 million.

It actually costs money to sell Telstra. That is what I find quite extraordinary. As I say, even the National Party should be able to understand that. Indeed, it has been noted that, with the cost of government debt relatively low and profits growing, the loss has got bigger each year. We can see quite clearly that those in rural and regional Australia are being dudded by this proposal. The government has promised great handouts for the bush, particularly for Tasmania and Queensland. That is the carrot that has been promised—and we saw that last time with the way in which Senator Colston's vote was purchased.

You ought by now to understand the nature of this government. You cannot rely upon even their most shady commitments. Their quiet little deals in the corner amount to nothing. The sordid manner in which the partial privatisation of Telstra was organised last time ought be a lesson to you now. The government has promised some $671 million in funds for rural telecommunications infrastructure. What we have seen is the so-called social bonus—examples of initiatives to upgrade infrastructure and service outside the metropolitan area; initiatives which they say are only possible under privatisation.

If you look at the figures and the facts, you will notice that the funding initiative is only a drop in the ocean compared to what Telstra produces by way of profit every year. The total dividends are about $1.8 billion. The government's share of that is $1.2 billion. Dividends of 16.6 per cent of Telstra would be about $298 million. For 1998-99 the expected half-yearly result will be $1.8 billion, says the Financial Review today. On this basis, Telstra's full-year profits will be some $3.6 billion. Total dividends would be $2.1 billion.

Assume a 60 per cent payout of the ratio. The government's shares of that have to be in the order of $1.4 billion. Even with regard to the 16 per cent sell-off, this would mean a loss of annual dividend of some $358 million. This is clear evidence that the bush is being ripped off by this government, and you would have expected that the National Party would have understood that. The government's spending commitments for the 16 per cent sale amount to $671 million over five years. Some $421 million of that is for the rural telecommunications project. The rest is for natural heritage top-up funds.

Over five years, 16.6 per cent alone would generate some $1.5 billion in dividends, even without the growth of profit, and more than twice the total the government is committing to the sale bill and three times what it is giving to the telecommunications project. Further, we see from the expected half-yearly result that profits are growing strongly. So there will be even more dividends from this than I have already indicated.

If we look at the future growth potential, even at a 3.5 per cent return per annum, we see total earnings accruing to the public sector over five years at a minimum of $6.5 billion—10 times what the government are proposing to spend on their social dividend. Senator Boswell, you have been dudded; completely and totally dudded.

The ACTING DEPUTY PRESIDENT —Order! Senator Carr, would you please address the chair.

Senator CARR —Thank you, Mr Acting Deputy President. The National Party has been completely and totally dudded. What would one expect? You would hope for better, but one is constantly surprised by the depths to which they will sink in their grovelling to the Liberal Party, their grovelling to the city interests. Quite clearly, a simple analysis of the figures shows that the National Party has been completely and totally dudded by this proposal.

Senator Harradine has indicated in a number of speeches that he was interested in the privatisation of Telstra on the basis that he did not accept the economic theory that in any way justifies the sale of a natural monopoly and that to sell a natural monopoly is to sell a licence to tax. In fact, Senator Harradine is on record saying that the reasons he supported the one-third sale was to avoid a double dissolution and the possibility that Telstra would have been sold entirely.

The government's intentions have now become abundantly clear. Senator Harradine has been criticised in the press today for making his position clear. I would have thought anyone who had any knowledge of these issues would have heard Senator Harradine express these views that have been expressed in recent times on many occasions, particularly prior to the last election, when he stood before the people of Tasmania seeking their support to be returned to this chamber. This is what he said on 28 September 1998:

Now, on this particular occasion . . . the Government is suggesting that there will be an inquiry. Now, in my view, I think we've got to have certainty about these matters—I made that decision in August and I'm going to stick with it. So far as I'm concerned, there will be no sale of Telstra out of the hands of the Government.

. . . . . . . . .

On the last occasion where there was a third sale, and that of course doesn't mean it's out of the public's hands, there were benefits flowing to regional Australia, and there were substantial negotiations. On this occasion, I would think that there would have to be a very, very substantial bonus.

I will be keeping a very close eye on the nature of the negotiations that occur between now and when this bill is finally voted upon. I am sure every member of the opposition will be keeping a very close eye on those negotiations. I am particularly concerned about the nature of what is said to be `very, very substantial dividends', particularly to states like my own.

What we have seen in the last round of sordid arrangements which were entered into which were never honoured were claims made that there would be job savings in Tasmania and Queensland. Jobs have been lost in those states, contrary to those agreements entered into. What was the minister's defence? `Well, I did not enter into any agreement, it was Mr Blount. Mr Blount was the one who entered into agreements with Senator Harradine.'

We have seen disproportionate jobs lost throughout the rest of Australia, particularly in my state of Victoria. There have been disproportionate levels of removal of workers from regional centres. But we still have not seen the jobs created that are said to be created in Tasmania and Queensland. And there has been a decline in services. Speaking of Mr Blount, before he was replaced as the chief executive of Telstra, he said:

I think that there will be probably five large telcos long term. I know that people here don't like privatisation of their assets like Telstra—

he is dead right about that—

but they better get used to it, because in this industry we're going to see a lot of aggregation.

Aggregation such as we have seen between Vodafone and Cable and Wireless in recent times. We have seen once again movement of major assets out of Australian hands into the hands of international capital. This bill does not protect that. This bill does not stand against the movement of international capital. It is only through public ownership that there can be a means to protect Australian interests, particularly when it comes to the advance ment of powerful international telco companies which are seeking to gobble up all before them.

Finally, I turn to the issue that the government has placed particular emphasis upon—that is, the management of Telstra, who no doubt will enjoy huge benefits from the privatisation as their market share improves and as they are able to attract much larger salaries on the world stage. They have argued that hybrid systems of ownership do not work. I disagree very strongly with this proposition. In Telstra's answer to a question on notice that was placed before the telecommunications committee, they said that it was `not possible to comment on whether they have produced unsatisfactory outcomes' in terms of the international experience of hybrid forms of ownership.

The overseas experience again points to the fact that it is possible to get hybrid ownership models which actually do work. I do not support the privatisation of Telstra. I have never supported the privatisation of Telstra or even the partial privatisation of Telstra. Only a minority of OECD countries have fully privatised their principal telecommunications carriers. Most telecommunications carriers throughout the world do exist with a measure of public ownership. Despite the rhetoric, and especially because of Australia's unique social, geographical and demographic conditions, a measure of public ownership is required throughout the telecommunications industry. In particular, a major company, a very successful company, like Telstra should remain in public ownership. (Time expired)