Mr BEAZLEY (5:45 PM) —We are debating the Telstra (Transition to Full Private Ownership) Bill 1998 at this time because a weak Prime Minister (Mr Howard) has decided that he needs to grab Australia's premier business, Australia's most significant public asset, and dispense with it for tawdry electoral purposes. He has performed this act without consultation with his coalition partners. He has performed it in order to attempt to change an agenda which has decisively shifted against him because he is unable to maintain normal ministerial standards in this place.

Without consultation he thought that the Australian public would stand idly by, that the opposition would stand idly by, and witness the privatisation of a public asset which has been built up over years—an asset that does not require a subsidy from the taxpayers; an asset which, in many aspects of the market, is substantially in a monopoly position; an asset upon which Australian electronics industries rely; an asset upon which our bush substantially relies for decent services; and an asset upon which small business relies not to be exploited on a monopoly basis. Having arrived at the conclusion that all these interests and views could be jettisoned for his one ambition, he now presents to us in this place a bill.

I have this to say about the Prime Minister: anybody who thinks that he is able to deliver on the community service obligations that he talks about; anybody who thinks that he is able to ensure, on the basis of his undertakings, a company that works in the interests of Australia and Australians as a whole; anyone who thinks that we will continue to have what we have enjoyed for the last decade and a half—a vibrant Australian electronics industry which has taken its export performance from $50 million a year to $1 billion a year, largely off the back of Telstra purchases—anybody who thinks that the Prime Minister can guarantee all those things will be, if the government gets its way, a sadly disillusioned person. This Prime Minister cannot effectively operate the Australian health system. How will he be able to deliver five years or 10 years from now any of the undertakings that he has given in regard to the operations of Telstra?

This bill symbolises another thing that Australians are coming to know about the Prime Minister and it is why they are so disappointed in him. They came to vote for him at the last election with a view that he was a man of substantial integrity and foresight and that he was a person who could make them feel relaxed and comfortable. It was a reputation which he was proud of. It was a reputation which he sought to exploit. It was a political bank of capital which he has spent royally since he has been in office.

The Australian people have come to know a different Prime Minister: a Prime Minister who disappoints them; a Prime Minister not capable of providing for his undertakings; and a Prime Minister who uses weasel words to weasel out of one commitment after another to the Australian people, be it to the Australian elderly in respect of their dental care and access to nursing homes; be it to Australian women in respect of their access to the work force on a basis that sees their children properly cared for; or be it to Australian students in respect of the undertakings that this government made to university students, students in technical and further education and students in public schools. One after another Australians are disappointed—disappointed with the Prime Minister's undertakings.

We see symbolised in this act the sort of weaselly interpretation and reinterpretation that we have come to be so familiar with in debates over the last fortnight on the code of conduct—an action that is equivalent to this action. Remember the code of conduct debate that we have had in this place? We will have it again here, I predict, before Easter is upon us. Remember the Prime Minister's words about how he would bring better standards to this country, about how his standards for ministers were new, about how his standards for ministers were unique to himself, about how his standards for ministers would be observed to the letter? Remember all that? What do we see now? He is saying, `Well, they weren't really my standards, they were the standards of the previous government,' and, `Really, they are guidelines, it is not a standard. They are guidelines.'

Think of the guidelines there and the guidelines here: the guidelines that will govern the government's attitude towards Telstra as far as the bush is concerned, as far as Australian industry is concerned. They will be precisely the sorts of guidelines that the Prime Minister now applies to his ministers. The Prime Minister has no standards on that front and he will have no standards on this. It is not that he says, `I find these things impossible and I walk away from them.' He has a weaselly interpretation. For example, instead of saying we are not permitted to divest to our kids, he says, `Well, I only meant dependent kids.'

We have it again with this bill. What did the Prime Minister say about Telstra at the last election? He said, `We will sell one-third; we'll sell no more. We will have a consultation with the Australian people before we sell any more.' This is how the Prime Minister observes it. It is true that, if this bill passes parliament and is dealt with on the basis that the Prime Minister says it will be dealt with, technically speaking we could say that the promise was fulfilled. But we could only say `technically speaking'.

The Prime Minister is putting in place a full-blown legislative regime which the Australian electorate has not had an opportunity to examine in detail or influence through the normal course of an election campaign. It is there on a `take it or leave it basis' for the Australian people as they go into the next election. It may even be utilised—it is not altogether beyond the bounds of possibility—by the Prime Minister as a double dissolution issue. The Prime Minister goes down the road of saying, `I would not do another thing without consulting the Australian people, but I'll stack a double dissolution on you with this particular piece of legislation, which you were entitled to expect—given the undertakings I made—would not be coming forward in the life of this parliament.' This legislation is conceived in weakness, it is conceived in the tendency that this Prime Minister has developed to weasel out of his undertakings and it is conceived against Australia's national interests.

I say this at the outset of this debate. As far as the opposition is concerned, we understand thoroughly that the Prime Minister cannot deliver on what anybody in regional Australia would regard in contemporary terms as a community service obligation. The Minister for Finance and Administration (Mr Fahey) made great play yesterday of $10 million dollar penalties—no benchmarking of that, I might say, and no process attached to it—that would apply to people who did not uphold community service obligations. Well, big deal. What are those community service obligations to? They are to a telephone and a copper wire to regional Australia. You will get fined $10 million if those telephones do not keep working. Well, bully for him, bully for the government.

Everybody in this country understands—and the bush understands in particular—that the communications system of this nation is deeply embedded in the next generation of Australian industrial development in information technology. Everybody in the bush and everybody elsewhere understands that Telstra is critical not just to phone calls between families; Telstra is critical to the next generation of industrial development in this country. Everybody in the bush comprehends that if the service they obtain does not permit them to use the sorts of on-line services that people can use in the metropolitan area they are competitively at a massive disadvantage. If they were not convinced of that before today, seeing the peregrinations of the Deputy Prime Minister (Mr Tim Fischer) over the weekend in that otherwise completely incomprehensible interview that he did with Laurie Oakes would mean that they would comprehend this: that ISDN does not reach the farms. No matter what the Prime Minister might have indicated during the last election campaign, ISDN stops seven kilometres from every telephone exchange. That is where it stops. The farmers do not get it.

Read that experience dramatically for what is going to occur over the next five to 10 years. In one sense, the Prime Minister faces an impossible task. It actually is impossible to legislate for community service obligations in this area in any meaningful way and to expect that legislation to have any meaning five or 10 years down the line, because we all comprehend that the services—both in terms of what is capable of being provided down the line and the technical equipment that goes to it—that will dominate the industry a decade from now have probably not yet been invented or, if they have, they sit in the R&D labs of AT&T, the Bell operating companies, Siemens and all the other suppliers—they probably sit in Bill Gates's head. That is where the next generation of service lies. The notion that you could legislate for it now is, of course, a complete nonsense. So the Prime Minister, while trying to give assurances that he is capable of doing that with his community service obligations, knows full well that no Prime Minister could give—in fact, that no opposition leader could give; nobody in Australian politics could give—the assurance that he is seeking to give in any meaningful way.

What you can say, however, is this. If the government owns the system, if the people own the system through the government, when those developments come on stream, when they occur and there is an issue in relation to whether or not they are capable of being provided to regional Australia or affordably to people in the metropolitan area—they are included in all of this because it is not just a debate about regional Australia—and there is a feeling that a section of the community is being hard done by, it is possible for a government to direct, provided the government controls.

This legislation does not only eliminate the people's shareholding in Telstra; it also eliminates the minister's power to direct Telstra. That was all that lay in the contemporary legislation—and cleared off, I might say, in the prospectus for the one-third sale of Telstra—that actually had the potential at least to deliver a fair outcome in relation to the provision of those communications services down the line. And that has gone.

Why has it gone? The government want a $40 billion poultice for election purposes. The government believe and have said that they will get from that, firstly, savings in public debt interest—they say it is about $4 billion. On top of that, they say they are going to get, as a result of this exercise, a certain amount that they can slap around the districts, as they have managed to do in that blatantly political exercise, the Natural Heritage Trust.

But there are one or two things that I think ought to cause people a bit of pause for thought as far as that is concerned. I note a cautionary piece of correspondence from one James Riley, who has written an article headed `Premature Telstra sale will damage the industry'. He is looking at it from the point of view of the relationship between telecommunications and the information technology industry. He says this about the government's view of how useful it is to dispense with Telstra:

If you were Bill Gates, for example, and you owned, without significant debt, a two-thirds majority in one of the world's largest companies in the world's fastest growing sector, would you sell it? (Prime Ministers and Liberal Party leaders are excused from answering the question.)

It is a nonsense policy which will become an obstacle to the growth of competition in telecommunications—the backbone in large part of our economic growth—long after John Howard has retired, and flight paths are restored over his Bennelong electorate.

That is a pertinent point, I might say, on a number of fronts. But will the Prime Minister get that $4 billion saving? Here is something that ought to be contemplated in this debate. By the year 2000, independent estimates project the government's two-thirds share of Telstra's earnings to reach $2.3 billion per annum. This is $2.3 billion for the benefit of all Australians in dividends to the government or in better telephone services. If John Howard's scheme succeeds, that $2.3 billion will be there every year not for all Australians but for fewer Australians, some big companies and foreign interests.

Forget promises about $4 billion in annual savings in interest repayments. For a start, the current 10-year government bond rate of 5.7 per cent retiring $40 billion of Commonwealth debt reduces PDI payments by $2.3 billion annually, not $4 billion. If John Howard then shaves $5 billion off that $40 billion for his so-called social bonus, retiring $35 billion of Commonwealth debt will have reduced PDI by only $2 billion a year. What investor would give up $2.3 billion a year to get only $2 billion back? That is precisely what they are doing with this tawdry manoeuvre. Whether it occurs in the year 2000 or five or six years after that, there will be a crossover point between the PDI that you no longer owe and what you would have gained in dividends. There is no question about that. There is no question that this will be to the detriment of the budget.

What John Howard has managed to do with this ill-considered overreaction to his difficult political circumstances—on which he has not consulted his National Party colleagues—is in fact to place a question mark over his whole tax package. The government has made no secret of the fact that this interest reduction is supposed to go to paying for a substantial part of that tax package. Yet what every Australian will know at some point in time in the not too distant future is that it will have had a detrimental effect on the budget by getting rid of that dividend. The result of that will be, essentially, bad for the budget and it will call into question whether or not those tax cuts can in fact be sustained.

I will go back to James Riley's article again because it is a wonderful corrective to some of the nonsense that has been around. He says:

Although our society has changed dramatically in the past 20 years, taxi drivers are still as much a barometer of our country's battler-majority as they have ever been.

I have yet to meet a single cabbie who has not called the privatisation and its associated short-term "social bonus" stupidity. (And these are city taxis. Lord knows what a driver from the country might say.)

What we have had delivered by this government is the annihilation of a great Australian company, 100 per cent in Australian hands. They are going to sell it to some Australians and some foreigners. But the Prime Minister said, `Only 35 per cent to foreigners.'

The Prime Minister has never been a communications minister. If the Prime Minister had been a communications minister, he would comprehend this: if two or three American regional Bell operating companies or RBOCs got together and decided to acquire five per cent each and subsequently sat down with the institutions that are the dominant shareholders—or will be the dominant shareholders very rapidly as far as Australia is concerned—and said, `Look, these are our priorities; they will enhance your bottom line and your profit if you follow this guidance,' will the board do anything other than what those shareholders indicate they should do? Of course they will not.

What will they say? They will say things like this: `If you come for the purchase of your fibre cable, your multiplexes, your switches; if you come, off the end'—and therefore marginally priced—`of our order in the United States system, you will be able to acquire them for a half or a third of the price that you can acquire them for from Siemens Australia or Alcatel Australia,'—or any of the other domestically based Australian industries which have grown up to supply that market. Will a board of directors, with all the duties that are imposed on them under company law, do anything other than accept that advice? Of course they will not. They will do nothing other than accept that advice.

A massive part of a great Australian success story has been the performance of our service and manufacturing industries over the last decade when—at least when we were in office—they experienced 12 per cent increases per annum; and, at the very heart of that export performance, has been the Australian electronics industry. Fifty million was exported when we came into office in 1983. That amount is now over a billion and headed for $1.5 billion by the end of this century. It is headed down the drain if this particular bill manages to pass the parliament and the scrutiny of the Australian people.

Where is the real attitude when it comes to raising these sorts of issues? Where is the real attitude of this government? Where does it lie? We had Senator Harradine test that the other day. He tested the idea that you might actually expand a city based service out into areas of interest to him. Senator Harradine asked Senator Alston:

If the facility is available free of charge—

this is a particular service he is talking about—

to those users in the other capital cities, why is it not available to users in Hobart? Why is it not available free of charge right throughout Australia?

Senator Alston replied:

I see, so everything that Telstra does should be made available to everyone? Is that what you are arguing? This is the ultimate in socialisation, isn't it?

I would have thought that it was just about the ultimate in commonsense, and the ultimate in a bit of fairness around Australia. I do not think it is necessarily the ultimate in socialisation. If Senator Alston wants to characterise it that way, so be it. But go out there and tell it to the bush. Go out there and tell it to people in Tasmania. Have decency and honesty about you so that you are prepared to indicate to them what is actually coming down the line after them. They know, they know absolutely the truth of it, but they would like to hear it from your own mouths.

If you think, too, that you are going to be able to ensure what is actually delivered—that is, better prices to Australians over the last seven or eight years or so, which has, in fact, been competition—then have a thought to what was said by ATUG, an organisation which was the bane of my life, I must say, when I was communications minister; it is not an organisation opposed to privatisation but an organisation much devoted to the consumer interest. What do they say about it? This is what ATUG had to say:

Recent worrying examples of users' interests being ignored include comments by Telstra's regulatory affairs chief, Graeme Ward, warning that industry intervention by the government watchdog, the Australian Competition and Consumer Commission (ACCC), could have a "potentially chilling effect on investment" in Telstra.

It just happens to be the case that we have had some experience in these matters in relation to the communications industry and competition. There is no question at all that right throughout those who are telecommunications consumers in this country—including those who passionately believe that at some point of time Telstra ought to be privatised, among whom I do not count my self—most of those are of that view that at some point of time Telstra should be privatised, but they take this point and they take it absolutely. With competition so shaky, based on such an unsound footing as it is now in Australia, with that competition—which we were very proud to put into place but we knew would take decades to cement itself—as shakily based as it is now, the very last thing that is needed in this system is for the privatisation of Telstra to occur. It will only occur at the expense of competition.

The leadership of the organisation understand full well that they can put to a government concerned about a bottom line in relation to a shareholders' benefit, that they can put to a government concerned about getting a successful sale off, that the optimisation of Telstra's market dominance will be precisely the sort of thing they need for that $40 billion which the Prime Minister needs for his war chest. That will be absolutely what they need.

The thing that will be jettisoned most rapidly to achieve that will be the competitive climate. It is not just simply a matter of what the ACCC understands as the competitive climate. The truth of the matter is that Telstra understands far more what that competitive climate entails, far more than anybody else in the system, including the ACCC. They know precisely what to exploit and they will exploit it. They will exploit it as a monopoly.

We saw it again from the Prime Minister today. Having given, in the last election campaign, an absolute commitment to small business that they would get untimed calls at the local level on voice and data, he comes back on voice. Why does he come back on voice? He comes back on voice, of course, because that is the least expensive. You come back on data and that is precisely where a private monopoly in Telstra can get its hands on value-added in the small business community and rip it out for its purposes. That is precisely what it can do and they have to be protected from it. And the last piece of protection, the ministerial direction, this government rips away, absolutely rips away.

There is one other argument they make and this is the most spurious argument of all; that is, the argument related to the retirement of public debt. They say they have a situation that is extraordinarily difficult for them to handle in relation to public debt. What rubbish! This is a piece of deception on the Australian people that suits the interests of the government, no doubt, but it is a massive piece of deception nevertheless.

Before this government came into office, what was the Commonwealth's proportion of public debt to GDP in ratio terms? About 20. It is true, if this goes through and they spend it all on retirement of debt, that goes down to five or six. But was the 20 a problem? Is the 30 a problem when you add in state debt as well? Of course it is not. If we actually wanted to sign up, for example, to the Euro pean common currency under the Maastricht rules, we would be entitled to do so with 60 per cent as the ratio of public debt to GDP. Let us take a look at other countries, none of which we would necessarily describe as being in a situation of crisis as far as their fiscal management is concerned, and look at their percentages.

Australia is actually 28—I said 30. Germany—not exactly an economic pygmy, not exactly a cot case—is 48. The United States—that nation which is the giant engine of the world economy and an enormously successful economy—what is the US's public debt to GDP ratio? Remember, Australia is 28. The US is 48. Belgium has been one of those countries which have been regarded as an economic success. What is its public debt to GDP ratio? It is 124 per cent.

When you start to take a look at those sorts of figures, you know how bogus is the performance of the Treasurer (Mr Costello) here day after day when he boasts reduction in public debt. It exposes, however, the real motivation behind it. To argue on the basis of such untruth, to argue on the basis of such deception is merely the sort of cloud of misconceptions, lies and deception that you have to put around a policy which, at its heart, is damaging to the Australian national interest. It is no wonder that the country instinctively feels that.

The extent of the desperation of the government is that they clearly went ahead with this promise without properly testing it. This is a government which has stayed as close to the polls as it possibly can. On this occasion it forgot to and to its horror, after the enormous fanfare that it announced, it discovered by a two to one majority that the Australian people understood their interests. The Australian people thoroughly comprehend that they own Telstra. They thoroughly comprehend that they can place pressure on Telstra management through their elected representatives. Small business thoroughly understands that a monopoly provider of an essential service is not going to act in their interests.

What has the Prime Minister been trying to do ever since? He has been running around the place saying, `Whether or not you like what we are doing, if the opposition got into power, then they would do it themselves.' That is his defence: they would do it anyway.

Let me now give this rolled gold guarantee to the Australian people. We will not privatise the other two-thirds of Telstra. We understand that the Australian people value this company. We understand that it is no burden on them economically. We understand that their dividends will pay for very substantial benefits for the Australian people over time. We have done our sums on this and we have them right. In getting them right we are going to ensure that the Australian people do not put themselves in a situation where they make themselves hostage to a very substantial slab of foreign ownership and hostage to a set of private owners not interested in competition but interested in getting the most out of them.