Senator ALLISON —My question is to the Minister for Communications, Information Technology and the Arts. I refer to the fact that the brokers used by the government for the first one-third sale of Telstra dramatically undervalued the issue price of the shares. Does the minister recall that, at close of business on the first day of trading, Telstra's instalment receipt stood at a premium of 67c, 34 per cent above the institution instalment price of $2, and that, since the sale, instalment receipts have risen by more than 160 times the all-ordinaries index? Will the minister now admit that this undervaluation by brokers short-changed Australian taxpay ers, delivering a $21 billion windfall gain to overseas investors and to just 10 per cent of the Australian population?

Senator ALSTON (Communications, Information Technology and the Arts) —I think Senator Allison has managed to get it wrong on every count. The great bulk of the investors in the first float of Telstra were domestic, not foreign. Of course, as you would be aware, around the world it is not just telecommunications stocks but those that use telecommunications platforms that have been going through the roof. So the notion that somehow with hindsight a couple of years later you can look back and say—

Senator Allison interjecting—

Senator ALSTON —I hear you say 160 times the index, but that does not sound intuitively right to me. You may mean 160 per cent. In any event, whatever numbers you are using, you simply cannot possibly look back now and say we should have asked for more. You make your judgment at the time. It is always going to be the case that you cannot be precisely sure what premiums investors will place on the dominant player in the marketplace.

This was a unique offering. No-one had ever had the opportunity to invest in Telstra before. There might have been many views around as to its likely potential and there were many who probably took the view that, having been a monopolist for so long, it might not be able to withstand competition in the way that it has obviously proven that it can.

There are all sorts of judgments to be made when it comes to listing. I know you have not the vaguest idea about the factors that drive the setting of an issue price for a float, but the fact is that no-one could possibly have known how that market would take off. It is not just Telstra; it is virtually every stock in the telecommunications sector. We do not have a very substantial Internet sector in this country but, again, we have seen enormous price rises off the back of telecommunications stocks.

The notion that somehow you can look back and say that this was clearly underpriced simply ignores the fact that the market makes its own judgments once the issue is on the table. That is exactly what happened here. Investors decided that Telstra had a lot more potential than anyone would have thought at the time. You just look at the estimates that were around. There were not too many people out there at the time saying it was worth anything like the amount of money that it is worth now.

Senator Carr —Yes there were. You knew there were. You ignored them.

Senator ALSTON —I see; we all did, did we? I can remember what Mr Keating had to say whenever we floated figures. I remember that we put $25 billion on the total value of the company back in 1993 and we were absolutely laughed out of court. The media swallowed Mr Keating's line hook, line and sinker.

There have never been accurate estimates of what the market would provide and that is precisely why you allow the marketplace to make a judgment. They take into account factors that you never could and never would, and they have judged in this instance, along with a number of other telecommunications stocks, that there is huge potential in this sector. They are dead right. The telecommunications sector has been growing at three or four times GDP. There is clearly enormous potential for the future. With those streams of earnings it is not surprising, looking back, that the price has risen in the way that it has. But I do not remember too many people at the time who were predicting anything like this increase.

Senator ALLISON —Madam President, I ask a supplementary question. Does the minister agree with the Sydney Morning Herald article written by Mr Mike Seccombe on the weekend which states, `The first part of Telstra privatisation was arguably the biggest rip-off of the public sector by the private and the worst handled float of a formerly public enterprise in Australia's history'? Why has the government appointed exactly the same brokers to manage the sale of the rest of Telstra? Can we look forward to your department defending another massive undervaluation if more of Telstra is sold?

Senator ALSTON (Communications, Information Technology and the Arts) —I read the first couple of paragraphs of that undergraduate bile. I did not bother going any further because it was boringly predictable. I do not think I have ever read anything that could vaguely be described as an impartial assessment of the political scene. I think it is a tragedy that the Sydney Morning Herald continues to employ people who have that sort of sizeable chip on their shoulder.

If you think that that is the source of objective evidence about whether the float was successful, it shows you have absolutely no idea. The judgments that are made about those who should be retained to assist in the second round of the float are very much based on their professional capacity and their ability to ensure that all the necessary processes are followed. I have to say that Mr Fahey deserves a AAA rating for the way in which that float went off. It was absolutely without difficulty. It was probably one of the best and most professional performances of any privatisation around the world. I can well understand why we have ended up with substantially the same people handling it the second time. (Time expired)