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Tuesday, 13 September 2005
Page: 113

Senator SANTORO (8:37 PM) —Right from the outset let me put on the record that, as a member of the government backbench in this chamber, I do not regard myself as duped or deceived—and I am sure that I am speaking on behalf of all of my colleagues on the backbench. I therefore beg to be contrary to the claim made by Senator Lundy. I also go on the record as saying that the Minister for Communications, Information Technology and the Arts, who has principal responsibility for the carriage of this legislation, is, in our view, a person of great honesty and integrity and someone who is fulfilling her responsibilities to the government and, more importantly, to the people of Australia whom this government seeks to represent without fear or favour. She is certainly one of those people for whom we have the utmost respect and who discharges her responsibilities honourably.

One wonders, after not just the last 10 days but really the last 10 years of debate on the appropriateness of selling Telstra, whether there is anything genuinely new that can be said. But I would feel remiss, given the apparent levels of media and public interest in the views of Queensland senators on this issue, if I did not make my views known. From the outset—and I presume this will provide little surprise to those here—let me say that I am a supporter of selling Telstra. I am, in fact, consistently bemused that the question is asked as to why we should sell Telstra. I come from a school of thought that is more likely to ask why a government should own commercial assets in the first place. I am convinced that there is no greater justification for ownership or retention of this asset than there was for the government to own a print shop or any of the other businesses which were sensibly and profitably disposed of in the early years of the Howard government.

It is of course one of the great luxuries of government, compared to private enterprise, that—to edit a well-worn phrase—we can sell our cake and continue to eat it. The capacity of the government to regulate Telstra to deliver particular policy outcomes is in no way diminished by the disposal of the government’s shares. Telstra is an independent, publicly listed company in which the government is the majority shareholder. As anyone with even the most cursory understanding of corporations legislation is aware, the existence of even one shareholder outside the majority means it is illegal for the company to act in the interests of the majority shareholder where such action is contrary to the interests of the shareholders as a whole. So ownership does not confer any special regulatory benefit—which is not to say that I am blind to the political realities of the situation.

The government has a preference to retire a substantial portion of the national debt through the sale. At the same time, the sale of Telstra would have a number of attendant benefits for the stock and the stock exchange. I am indebted in my understanding of the benefits of selling Telstra to the excellent article by the Minister for Finance and Administration which appeared last week in the leading journal of Australian political thought, the conservative. And yes, I am shamelessly plugging that outstanding new publication.

Senator Barnett —An excellent document.

Senator SANTORO —I take that interjection from Senator Barnett, and I appreciate his support for that initiative. To paraphrase that article, alongside the retirement of debt, the sale of Telstra will do three things: it will allow the company to act commercially for the benefit of shareholders, albeit within a continuing regime of public regulation; it will remove the fundamental conflict of interest wherein the government can stand accused of a biased attitude to regulation, where there is a conflict between community benefit and dividend returns; and it will allow the government to diversify its portfolio, like any other investor, to gain the risk management benefits which flow from diversification. I am confident, that after a decade of discussion, those arguments are broadly understood and accepted in this place, at least by those able to vote without the approval of the trade union movement.

I noted earlier that we are dealing here with political realities. One of those realities is that, while the sale of Telstra will deliver benefits to the government as a whole, and consequently to the Australian people at large, those benefits will inevitably be purchased at a cost. In this case, I must say that I am somewhat sympathetic to that cost. It seems in no way unreasonable to me that a company which has built its wealth in monopoly public ownership should be faced with a series of community service obligations such as the imperative to serve that part of the public which lives outside metropolitan Australia. As I say, this is a cost. An unfettered Telstra would inevitably reach a higher price on the market. But it has been our task across the coalition to ensure that the historical role of Telstra as a universal service provider is not compromised through the sale.

The level of media and public scrutiny around the sale process has been unprecedented. There is no question that the sale process and the service reform initiatives which complement it have been, over the past decade, the most inquired-into pieces of policy in the history of Federation. Expectations have been raised, and they must be met.

I am proudly a senator from Queensland, which is distinguished in Australia insofar as it is the only state where the larger part of the population lives outside its capital city. I live in Brisbane but, like my coalition colleagues, I take very seriously my representation of the entire state. That is why I am happy to say that the sale of Telstra is justified and that I support it. I agree with the people of my state and with my National Party colleagues that there is value in the community service obligations of Telstra. People, regardless of where they live, should expect fundamental access to communications, including good standard telephone services at a reasonable price. And it goes further than that. The business of the land, the coast and the regional cities is critical to the Queensland and Australian economies. Domestic and international competitiveness of farmers, fishermen, rural doctors and North Queensland builders is greatly enhanced by the same technology which has made business faster, simpler and cheaper in Brisbane and the other capitals.

I think those of us who have argued in years past that the time was right to harness the debt reduction and other economic flow-ons can take the opportunity in the current debate to dispassionately look at whether the delays of the past few years have delivered benefits—and there is no doubt that they have. The universal service obligation, the customer service guarantee and the network reliability framework are comprehensive responses to the political challenges which the sale of Telstra has presented.

The two tranches of $250 million and $171 million allocated to Networking the Nation and the $150 million spent to provide untimed local calls to 40,000 of the most isolated Australians have gone a long way to addressing the reasonable expectations of non-metropolitan Australians. Similarly, the more recent announcements of the Connect Australia package—which provides $1.1 billion through Broadband Connect, Clever Networks and associated programs—is a testament to the Howard government’s commitment to ensure the broad benefits from the sale of Telstra are not to the detriment of regional and rural Australians.

But this is not an endless process. Nor is there a bottomless pot of cash from the sale available to satisfy special constituencies. I would argue that we have reached a unique equilibrium point on this issue. We are at the stage where passage of the enabling legislation for the sale will fund the most effective package of investment in networks and consumer access which is ever likely to be put on the table. The fact that the passage of the Telstra (Transition to Full Private Ownership) Bill 2005 and related bills, the Telecommunications Legislation Amendment (Competition and Consumer Issues) Bill 2005, the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Bill 2005, the Telecommunications (Carrier Licence Charges) Amendment (Industry Plans and Consumer Codes) Bill 2005 and the Appropriation (Regional Telecommunications Services) Bill 2005-2006, despite several billion dollars in guarantees, is still no foregone conclusion merely evidences that some people make different judgments as to how far the government can be pushed on this issue. I would suggest that is a reasonable process within a strong and robust democracy such as ours.

One of the most often quoted moments in Julius Caesar is Brutus’s:

There is a tide in the affairs of men,

Which, taken at the flood, leads on to fortune.

This has perhaps never been more apposite than at the current moment. This legislation provides the largest bounty which will ever be made available to regional Australian telecommunications. We can take it at this flood and deliver the fortune or we can watch it ebb and rue the opportunity missed.

It would be a shame for our government if we were not to pass this legislation—not that we would still own a telco but that we were unable to fund the guarantees for which the legislation provides. I, for one, am not keen to explain to my constituents across Queensland why more than $878 million in Broadband Connect funding will not be forthcoming. And I say to those who sit opposite that it is your task, if and when this legislation does pass, to explain to the people of rural and regional Australia why you did not support the funding measures contained within it. I am sure an explanation of the sovereignty of the union movement in the Australian Labor Party will be most reassuring.

What the sale of Telstra means for public debt, what it means for the international competitiveness of the telco itself, and what it means for the people of regional Australia is staggering to comprehend. But, as with most things in life, the money is not everything. The last few years have seen the strengthening of competition regulators, including ACMA and the ACCC, to ensure the future telecommunications marketplace will be shaped by best practice with no prospect of reversion to the historic monopoly.

The operational separation of Telstra will be critical to this. The issue of price equivalence, wherein retailers and other on-sellers of telecommunications services are guaranteed a level playing field, is the single most necessary condition of long-term competition. Competition is perhaps more significant in telecommunications than in any other policy area. For some years, I have despaired of those who believe that a monopoly in communications is okay as long as we keep the price low. On the contrary, the soul of effective telecommunications lies not with the price, although it is important, but with constant renewal of the technology. Given the significance of communications ease and speed, particularly with new media and modes, the goal of any competition policy should be to create a premium and race for the most up-to-date technology.

I am satisfied and confident that the combination of competition oversight, the caps on Telstra’s pricing and the incentives for new market participants will create this race. But it will require us to be creative. The next few months, during which the details of the Connect Australia program are finalised, are a great opportunity. We need to take the time to focus on the often cited goal of technology neutrality to ensure the safeguard driven government assistance programs are sufficiently flexible to allow for innovation and alternative economic models. In particular, I believe we will need to look at subsidy for capital investment in new markets to compete with the native advantage which Telstra has from so many years as a public monopoly. This will be particularly important for regional broadband. I am confident that we will make the right choices and that those who oppose the sale of Telstra today will be regarded in years hence as a curious breed who were willingly blind to the promise this opportunity holds.