Mr CREAN (5:34 PM) —Labor believes that Telstra should remain in public ownership and, in the way in which we opposed the sale of the first third, the simple reality is that we cannot afford to lose the remaining two-thirds. In government, our privatisation of Qantas and the Commonwealth Bank involved publicly controlled companies operating in a very competitive environment. Many other players in these industries provided the services. But in the case of Telstra we are talking about the communications network for the nation: it is an essential service and a virtual public monopoly. A private monopoly will not and cannot have the same interest in meeting the community service obligations, and that is why we oppose the further two-thirds sale.

If Telstra is sold, we will see within a very short period of time timed local calls, community service obligations thrown out the door and 35 per cent ownership by seven overseas telecommunications companies—with no guarantee that the 35 per cent will not be watered down at some future stage, aside from the word of the Prime Minister (Mr Howard), which is worth less than nothing these days.

Mr Abbott —Mr Deputy Speaker, on a point of order: under standing order 75 I take offence at that. I think it would help the House if the member desisted from using that kind of language.

Mr DEPUTY SPEAKER (Mr Andrews) —I invite the honourable member for Hotham to withdraw those words.

Mr CREAN —The sensitive little Abbott. Abbott and Costello! This is the comedy team! I will withdraw, in the interests of getting this on the record.

Full privatisation will also result in the slow spread of new technologies, particularly to the regions, higher charges for new services and a society sharply divided between the information rich and the information poor. This bill repeals the minister's right to give Telstra directions in the national interest. Without this sanction, Telstra will act in the interests of its shareholders and its creditors, not the public's and not those of the people in rural and regional and remote Australia. Finance minister Fahey admitted as much last week when he told Fran Kelly on ABC Radio National that the ministerial direction:

. . . is not [in the] interests of minority shareholders . . . that type of direction . . . cannot be persisted with when the Government owns less than 50 per cent of the shares. It's not fair to the minority shareholders.

Senator Alston, while reneging on his promise of jobs for Tasmania to secure support for the sale of the first third, said this yesterday:

If you think that I can make promises on behalf of Telstra then you have another think coming.

If he cannot and will not do it with two-thirds control, what hope is there with zero control?

Mr Fitzgibbon —None at all.

Mr CREAN —Absolutely. As the member for Hunter says, none at all. While the government remains the majority shareholder, it retains the capacity, through ministerial direction, to ensure that the dominant network provider continues to meet the government's social and economic objectives. The delivery of services both in terms of quantity and quality is a major role of government. The partly privatised Telstra has already failed the test. Last week the Australian Communications Authority released its Performance Monitoring Bulletin for the December quarter. It found that Telstra's new service provision since the one-third sell-off declined for nearly all customer categories. In particular, performance for country customers declined by nine percentage points.

I want to turn also to the question of the universal service obligations. Under a fully privatised Telstra, the best guarantee the government is prepared to give to rural and regional communities through the universal service obligation is that they will receive a standard telephone service. All it has written into Telstra's universal service plan is that a standard telephone service is accessible in rural and remote areas. This is a service that will carry slow speed fax and data services that operate in the voice band. It does not support high speed data services such as ISDN which are not included in the definition of a standard telephone service or operate outside the voice band.

The government's bill does not provide a single extension to the services which will be offered to rural and regional Australia under the universal service obligation. It is a further betrayal of regional Australia. It does nothing to improve the range of telecommunications services to rural and regional Australia and it is not going to deliver broadband and on-line services to those communities. The latest technologies simply have not been written into the universal service obligation by this government. When new services come on line, there is no provision for ensuring that regional, rural and remote areas will get access to the same technologies.

In the 1990s, the truth is that voice and data transmission are essential business requirements and are going to become more so in coming years with technology such as interactive video transmission becoming standard requirements, as that technology becomes widely available, as the prices drop, as the uptake rises and the community's expectations rise. The most relevant factor for the consumer is that these functions be readily available, and at an acceptable quality and affordable price. The sale of Telstra will mean that, in terms of the services provided to them, rural and regional communities will be frozen in time. The government has no intention of ensuring that the community service obligation keeps up with new technology. Again Senator Alston was sprung on this point last week when questioned in the Senate. He said:

It is obviously a commercial service that Telstra operates. [Are you saying] everything that Telstra does should be made available to everyone? Is that what you are arguing? That is the ultimate in socialisation, isn't it? . . . You would tell them how to run the business and which services ought to be made available across the board.

Ensuring services to the regions is not socialisation, as Senator Alston would have it. It is their entitlement, and a government not prepared to ensure it is selling them out.

Privatisation will inevitably place the ongoing provision of the universal service obligation under increasing pressure, along with other regulations, such as those on pricing, which are presently imposed on Telstra. Companies have obligations to shareholders to provide the best possible return on their investment, and the best possible returns do not come from the smaller regional and more remote communities. Over time, abandonment of these obligations is inevitable or will only be provided at a huge cost to those wanting the service. Either way, the regions miss out. The threat of the $10 million fine that the government has paraded around will not change it.

Mr Fitzgibbon —It is a farce.

Mr CREAN —It is a farce, because the fine itself can only be levied against existing obligations. There is no commitment to the new technologies and no commitment to new obligations. The $10 million fine means nothing in relation to the sorts of things we are arguing for. There is no point in increasing the penalties without a parallel commitment to increase the obligations over time, let alone the apparent dilution which is currently under way.

Under the government's current legislation, the Telecommunications Act 1997, there is no obligation for Telstra or any other telecommunications carrier to provide untimed calls for data to business customers. Labor supported an amendment in 1997 to give an ironclad legislative guarantee that both businesses and residential customers would have access to untimed local calls for both voice and data. The government voted against the amendment and it was lost. Under a fully privatised Telstra, it is only logical that timed data calls for business will become a reality. Timed data calls would send some small businesses to the wall, and introducing STD-like charges on the Internet would see many small businesses shy away from using the technology. In rural and regional Australia in particular, time charging local fax calls would be a disaster and a significant additional cost for these businesses. If as a government you are serious about encouraging economic development, the most important ingredient is infrastructure, and one vital element of infrastructure is communications technology. The new approach being proposed means less access and availability and higher charges. Regions and their economic development needs will be the losers.

A great Australian success story has been the outstanding performance of our service and manufacturing industries over the last decade, and at the very heart of that export performance has been the Australian telecommunications equipment industry. We have a dynamic electronics industry that is innovative, forward-looking and has a commitment to excellence and an established research and development base. Telecommunications equipment industry development arrangements assisted in the growth of a successful and expanding manufacturing and export industry. It directly employed 10,700 people in 1995-96—an increase of 21 per cent over 1992-93; a huge growth in employment. Exports have also grown strongly since 1988-89, with total value increasing fivefold from $100 million to $606 million in 1995-96—again, the latest figures available.

This is a significant positive contribution to both employment and improving our trade balance. But where did the growth come from? According to the Industry Commission:

The single most important influence on the development of the local telecommunications equipment industry has been Telstra—through its role as regulator of the telecommunications network, its purchasing behaviour, its dominance as a buyer of many products and its product marketing functions.

Telstra had always seen its role as being to foster a vigorous telecommunications manu facturing and development capability in Australia. But with the move to increased competition, which occurred under our government, we strengthened that obligation, that commitment, to ensure that the other carriers as well as Telstra had a formal industry development plan as a condition for holding a licence in 1991.

The telecommunications equipment industry in Australia is sustained by Telstra's purchasing arrangement, and the commitment of all carriers to the local equipment industry is the product not of the free market but the prudent application of public policy; an interventionist industry policy for the sector. Telstra in its current form has demonstrated a capacity to build networks of suppliers and then pull them through into export markets. Telstra directly contributes to the technological infrastructure of the country by funding cooperative research centres, graduate scholarships and its fund for social and policy research in telecommunications.

The risks to local manufacturing if this bill proceeds are dire. The domestic market share for the local industry will fall if the purchasing patterns of the carriers change. The foreign shareholders allowed in under this bill will influence Telstra's behaviour in export markets and thereby diminish opportunity for Australian suppliers. This has been the overseas experience. When local preference arrangements in the UK ended, that country's trade deficit in information technology increased. The subsequent privatisation of British Telecom led to the carrier emphasising short-term commercial returns at the expense of research. In New Zealand, privatisation in the telecommunications industry has laid waste to that country's telecommunications manufacturing industry.

This government has no plan for the telecommunications industry. Where is the strategic action plan proposed by David Mortimer? Where is the plan promised by the Prime Minister (Mr Howard)? There is nothing from the government to support the manufacture of its other announcement—digital television equipment—despite the potential bonanza that could flow to Australian manufacturers from the 2001-08 change over. With the decision to introduce digital TV, we should be aiming to become a net exporter in digital technology, service and equipment, rather than being a major importer of foreign goods.

At worst, the government expect support for the privatisation of Telstra and will worry about a plan for industry later. At best, they are playing catch-up politics, but without the same leverage we had in place. Telstra has already reduced its work force. The loss of 16,400 jobs in the past 18 months helped deliver Telstra's interim net profit—$1.6 billion—but at what cost to communities? Many of those jobs have been lost in rural and regional communities—lines staff and technicians, for example. That was the experience in the UK immediately British Telecom was privatised and again in New Zealand, where we saw massive job losses and the consequent increase in difficulties being experienced by customers.

This bill also allows foreign owners to take up to 35 per cent ownership in Telstra. Individual holdings are limited to five per cent each. What that means is that seven owners could take a 35 per cent stake in Telstra, giving significant influence and, dare I say, effective control to overseas interests. Overseas shareholders will have no interest in supporting the Australian telecommunications industry. It will mean a reduced role for Telstra in export markets, in research and development and in buying Australian made equipment. And how long will the 35 per cent last? In 1991 and 1992, Labor granted Optus and Vodafone carrier licences which included foreign ownership restrictions. In August of last year, this government announced that it would do away with any foreign ownership conditions for our second and third biggest carriers. If that is its commitment to Vodafone and Optus, how long before it will give away foreign ownership restrictions on Telstra?

Part of the claimed benefits from the sale of Telstra is the so-called social dividend, but that is utter fiction. A government-owned Telstra can provide a dividend stream which will produce at least an equivalent social dividend from the enormous dividends that Telstra declared this year—$1.5 billion to the government, with the expectation of it being $2 billion to $2.3 billion next year. Why is it that useful social projects cannot be funded from a set-aside to this dividend stream if that is the argument being pursued? The truth of the matter is that, with respect to the forgone dividend to the government—currently $1.2 billion supposedly obtained by the sale and the consequent debt reduction—on a range of growth projections that have been put forward by a number of experts in this field, we will achieve the crossover between the loss of dividend and that so-called benefit in 2002-03 or 2004. Where is that in terms of lost dividend to the nation for the rest of our lives?

In conclusion, Telstra is Australia's largest government owned asset, and it is part of Australia's social infrastructure. It provides nearly 90 per cent of the nation's telecommunications services. The total privatisation of Telstra will see the transferring of a virtual public monopoly to a private monopoly whose commitments are to its shareholders, not to its unprofitable customers in rural, regional and remote Australia.

Since it was elected, this government has pursued one idea with perhaps more determination than any other: the idea that there is no role for government in regional Australia. It has done everything in its power to vacate the field and leave rural and regional communities to sink or swim. The sale of Telstra is but the latest act in the coalition's betrayal of regional Australia. Labor, for its part, sees a clear role for the government, and for this reason we oppose the sale of any more of Telstra. We will ensure continuing government control delivers the communication services, taken for granted in the cities, which the regions deserve. We will oppose the bill.