Mr O'KEEFE (10:24 PM) —I signal that, as we move into the election this year, I am predicting that in rural and regional Australia there will be three hot topics on the campaign trail. The first of them will be the loss of jobs from the withdrawal of services, particularly in the public sector in these areas. The second will be the GST. Without question, an overwhelming third issue will be the proposed sale of Telstra by this government.

I tell you why it will be such an enormous issue in rural and regional areas. These people understand that they gain a very direct and substantial benefit which flows from public ownership of the nation's telecommunications carrier. There are four key reasons that they gain a direct benefit.

First of all, they know and understand industry policy. They know and understand that we have in Australia—and in a number of our regional centres—businesses that are suppliers to the telecommunications network, businesses that would not even have established in some of these country towns, with people who would not be employed in some of these areas, had it not been for the fact that the government owned and directed Telecom in those days—Telstra now—to take account of the need to invest in this industry strategy in rural and regional areas.

The second thing they understand very well is that it has been widely announced that part of the planned strategy to make Telstra more profitable to attract a higher sale price is to shed it of a further 20,000 jobs as quickly as possible. Many of those 20,000 jobs are in rural and regional areas, and those people understand that that is where the job losses will be.

The third thing that rural and regional people understand well is that there is no financial sense in this. Telstra is not only the biggest company; it is also the nation's biggest dividend and tax payer. No matter whether you sell it and no matter what you use the revenues to do, somewhere down the trail—and not very far down the trail, as Mr Beazley pointed out today—you reach the crossover point where the money that you would be earning in a continuing income to the government from dividends from Telstra in fact overtakes the funds that you have forgone by selling off the organisation and taking the capital up-front. Of course, when you reach that point, from that day on and forever the taxpayer funds the difference. Country people will understand that well.

The biggest and the most substantial issue that people living in rural and regional Australia know and understand well and will face during the next few months of debate about this is the community service obligation or what we describe as the CSO. For anyone who does not understand what the CSO is, I outline what it is. Put simply, Telstra invest and have always invested—and as they are now required to invest—in expensive new fibre optics and digital equipment. That is fine in city areas where there are lots of homes and businesses to pay for the services, short distances to cover, and lots of customers. They can charge for those services and they make a high profit from those services. But when it comes to investing in those new technologies in rural and regional areas where the amount of equipment required is over a much larger area and there is a smaller number of customers that you actually hook onto it you do not make the same profits; in fact, you make a loss.

When the government owned Telstra—or Telecom as it was then—the government directed it to do these things. It directed it to use the profits made in city areas to cover the losses made in country areas. You, Mr Speaker, have been around this place a long time. You will remember these debates and you will remember the former telecommunications minister, Minister Duffy, laying the papers on the table in 1986 demonstrating that that rural cross-subsidy then was $500 million a year. When you sell Telstra and it is owned by private shareholders you are expecting those private shareholders to say to the board of directors, `Yes, we are happy to forgo $500 million a year of profit. You don't have to pay it to us. We are happy for you to hand it over to the rural cross-subsidy.' Pigs might fly! Private shareholders do not have an interest in country cross-subsidies. This needs to be very well understood, and I guarantee that before this debate is over it will be well understood.

I know that my time is about to expire. I intend to continue developing these points when debate on this Telstra (Transition to Full Private Ownership) Bill 1998 is resumed in the House.

Debate interrupted.