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Thursday, 14 August 2003
Page: 18522


Mr TANNER (9:54 AM) —This legislation empowers the government to privatise the remaining government shareholding in Telstra. It empowers the government to ensure that Telstra becomes a fully privatised company and ceases to have any government ownership. It also entails a number of other provisions, which I will make comments on later in my contribution. But, at the outset, let me make one thing plain: the Labor Party is absolutely opposed to the privatisation of Telstra and will fight this legislation tooth and nail in the parliament, both in the House and in the Senate.

It is worth reminding the Australian people that there is only one political party that is represented in this parliament that has stood steadfast in its opposition to the privatisation of Telstra. The government want to privatise it. The National Party have cravenly buckled to pressure from the Liberal Party, have abandoned their rural constituents and are going to support the privatisation of Telstra. The various minor parties, such as the Greens, the Democrats and One Nation, have all had the wobbles on the issue at various times in the past year or two. The only party that have consistently opposed the sale of Telstra are the Labor Party, and we will continue to oppose this legislation.

We do so for some pretty fundamental reasons. Our starting point in this debate is that telecommunications services are essential services. All Australians need telecommunications services, particularly the traditional telephone, in order to function and participate in our society as equal citizens. They need them for work, for staying in touch with loved ones, for recreation and for safety. Telecommunications services are essential services. In that context, Telstra is still, in spite of the fantasies of some of the people who run it, largely a public utility and, indeed, it is a public utility which is still predominately a monopoly, because it presides over a natural monopoly asset: the fixed line network. Telstra delivers essential services to all Australians. It is still predominantly a public utility. It is a monopoly in most respects and, for those reasons in particular, the Labor Party continue to support government ownership of Telstra.

A privatised Telstra would be a giant private monopoly, too powerful for any government to effectively regulate, that would dictate policy on regulatory issues and would seek to exploit its monopoly power both in telecommunications and in other sectors. Equally significantly, such a privatised giant would inevitably focus on the most lucrative markets in the major cities, following the dollars as its private shareholders would inevitably dictate, at the expense of less lucrative markets in regional Australia and of lower income earners. A privatised Telstra would be a giant private monopoly that would leave town faster than the banks. It would denude country Australians of the opportunity for equal access to services, which they are entitled to and which they seek relative to Australians living in the cities.

Under the Howard government, we have been able to get some indication of what Telstra will be like if it is privatised. If you look at the recent track records of the Minister for Communications, Information Technology and the Arts, Senator Alston, and the Prime Minister with regard to the control of Telstra, we can see in gory detail precisely what a Telstra in private hands is going to look like. In the past four years, capital investment by Telstra has dropped from $4.5 billion to $3.2 billion and it is going to drop further. Similarly, staffing in Telstra has plummeted. Over the same period, from 1999-2000 to 2002-03, jobs in Telstra have dropped from 50,761 to 37,627, and more job cuts are planned. These jobs are predominantly those of people working out in the field: maintaining and fixing the network, upgrading the network, installing lines—doing all the traditional work that is required to deliver telecommunications services to people. They are not predominantly the people in offices and the people managing the organisation; they are the people who are hands-on and directly involved in delivering services.

Over that period, Telstra has managed to lose somewhere in the vicinity of $2½ billion in investments in Asia—for example, by owning a Hong Kong mobile phone company. What business the taxpayers have in owning a mobile phone company in Hong Kong is, of course, an interesting question. The very unfortunate thing is that Telstra has not learnt its lesson from these investments. It does have some defence in that every major telecommunications company in the world was following the dotcom and the expand-globally fads in the late nineties but, unlike others, it has not learnt its lesson. So it is still pouring money into investments in Hong Kong and other places when experience should have taught it that this is simply a route to disaster and is totally incompatible with its responsibilities to Australians, to Australian taxpayers and to its majority owners—the Australian people.

I will round out this broad picture of telecommunications services under the Howard government and what Telstra will look like as a privatised entity by mentioning that, over that time, line rental fees—the price the average Australian pays for the privilege of having a telephone in their home—have skyrocketed. Three and a bit years ago, the price for getting a phone in your home—that is, just for the privilege of having a telephone there, without including a single cent for a call—was $11.65 per month. That figure is now between $23.50 and $26.50 a month. In the next year or two it will rise to over $30 per month. Within the space of four or five years, the price for the privilege of having a telephone in your home, before you pay for a single telephone call, is going to soar to well over $400 a year. That is where telecommunications services and supply are heading under the Howard government. That is where a privatised Telstra will take telecommunications services in the future.

Also over this period, Telstra has sought to expand its influence to other sectors, particularly the media, by attempting to buy the Nine Network. Again, we might well ask what business the taxpayer has owning a commercial media organisation—although, if recent suggestions are any guide, the government does have some ambition of turning the ABC into a commercial media organisation by introducing paid advertising. Nonetheless, my assertion—and I am sure it is the assertion of all members on this side of the parliament—is that Telstra, as a publicly owned organisation, has absolutely no business owning a commercial media organisation. There is no role for the public sector in owning a mainstream commercial television network such as Channel 9.

What has been occurring is very straightforward and simple: a reduced service, a poorer network and more problems, particularly in regional Australia. I get letters and emails from people all around the country literally every day complaining about these matters. There are fewer people doing the work, there is less investment and there are higher prices for line rental fees in particular. The money has not been given back in reduced call costs, contrary to the government's propaganda. In the first five months of the new line rental fees in the latter part of last year, Telstra reaped an extra $124 million from those increases. It returned a measly $43 million in reductions in call costs. So much for the theory that Telstra will take with one hand and give with the other! The end result is that over $80 million has been taken straight out of consumers' pockets for delivering precisely the same services and products that were previously being delivered.

Also during this period, we have seen Telstra get into the influence peddling game. It has supplied plasma TVs worth $15,000 for free, for months of use, to the Prime Minister and the Minister for Communications, Information Technology and the Arts, Senator Alston. The CEO of Telstra, Dr Switkowski, addressed the Liberal Party fundraiser for the Treasurer. It has also been revealed that, if Dr Switkowski is dismissed for poor performance, as well as his $2.5 million salary and any other entitlements he has, he will be given an additional bonus of $1 million-plus as he walks out the door after being dismissed. That is a pretty good incentive for failure. This is all part of the picture of what a privatised Telstra is going to look like. The Howard government is privatising Telstra from within. It is allowing the company to be run and administered as it were already privately owned.

I did say that Telstra is still predominantly a monopoly. The minister representing the Minister for Communications, Information Technology and the Arts sneered at that suggestion a little while ago. The facts support my assertion. Roughly 95 per cent of the profits made in telecommunications in Australia today are made by Telstra. Telstra constitutes over two-thirds of the entire industry. That looks pretty much like a monopoly to me. Telstra exerts enormous power in telecommunications and its reach is universal. That monopoly power must be constrained, because most of it is a natural monopoly which is one of the traditional bases for public ownership in our system of government.

Telstra's prices for its basic products have been going up, its performance has been deteriorating, its service in the network is deteriorating, jobs are being slashed, investment is being slashed and it is losing huge amounts of money in Asia and, while all of these things have been occurring, in the most critical area of new technology for Australia and the Australian economy—namely, broadband—Telstra is letting Australia go backwards. We are now 19th in the OECD in terms of the number of broadband connections in households. We are way behind equivalent nations like Canada. We are 19th because Telstra has been dragging the chain. Why? Because it is under virtually no pressure from its majority owner, the Australian government, to push hard to get broadband out to all Australians. It is so dominant in the marketplace that it is not under much competitive pressure within the market to do it, either. Because Telstra controls Foxtel, the main potential source of competition in broadband, it is able to protect itself from unwanted competition and ensure that its existing products, like ISDN, can be milked for all the revenue they can provide, even though they are outdated and do not deliver the kinds of speeds that Australians, and Australian small businesses in particular, will increasingly need.

This is not just a niche issue. It is a fundamentally important issue for the development of regional Australia. If communications access is equal in quality and extent in a location outside the major cities when compared with access within the major cities, the huge differential in land and rental prices will mean that many parts of regional Australia will have a tremendous economic advantage. They will be very attractive for many kinds of small and medium sized businesses, which could locate themselves in those areas. But the crucial thing is communications access.

I recently addressed a forum in Caboolture, where a small business person was talking about his experiences and his inability to get broadband services. He was regretting the fact that he had established in Caboolture, because of the fact that he could not get access to broadband, even though establishing his business in that area was good for that part of regional Queensland, outside the greater Brisbane area, and obviously very important in delivering jobs to a growth area in regional Australia.

There are many other examples of this problem. I met with the Wanneroo council in northern Perth a little while ago. They were lamenting the fact that Telstra refuses to provide ADSL broadband to most of the exchanges in their area. They are worried that a dormitory suburb will emerge, because enormous growth is occurring in their area, and that there will be very few jobs and people will commute en masse to Perth rather than work in jobs in the local area. In their view—quite correctly, I think—it is crucial to the development of that area that broadband is available so that small- and medium-sized businesses can have access to high-quality telecommunications services that will enable them to become established there rather than in the centre of Perth. So, once again, under the control of the Howard government Telstra is failing. Telstra is failing to deliver broadband at the level that Australians are entitled to. We are falling behind the rest of the world in what is an absolutely crucial part of Australia's future economic development.

While all this is occurring, other sectors of the telecommunications scene are also languishing, particularly services in regional Australia. Everywhere I go in regional Australia, I get complaints about mobile service standards and coverage and Internet drop-outs. These are issues that the Estens inquiry—which was run by a personal friend of the Deputy Prime Minister and a member of the National Party and which was a total whitewash—conveniently chose to ignore in its recommendations to the government on regional telecommunications services. The picture in regional Australia is dramatically different from the view that the government would have you believe. According to the government everything is fine, everything is up to scratch, there are no serious problems and it is now appropriate that Telstra be privately owned. The reality out there is actually the direct opposite of what the government says.

Over this period, contrary to its obligations to the Australian community, Telstra has been outsourcing information technology responsibilities increasingly to workers in India and has plans to ultimately outsource its entire information technology activities to India, bit by bit. It is imposing requirements on some of the Australian based contractors that effectively are forcing them to outsource their activities to India. If Telstra is a private company, it is perfectly entitled to do that. It is not a decision that I would welcome; nonetheless, in a globalised environment many private companies are sourcing their activities in various parts of the world. That is a reality that we all have to live with. We have to hope that in some respects it is a two-way process and that Australia is also providing activities for companies in countries outside our own. But in this case, Telstra is a government organisation that is at the very heart of the information technology sector in Australia. If it is allowed to proceed in outsourcing all of its information technology provision activities, that will gut the information technology sector in Australia. It will remove a huge proportion of the job opportunities and the skills development opportunities that people rely on.

Finally, I will turn to the question of the Telstra share price. The interests of the Telstra shareholders do matter; they are important. They are protected by law. The opposition respects and upholds those interests. Under the Howard government, many Telstra shareholders have taken a bath. Primarily, the reason they have gone backwards goes back to the delusions of the government and of the board and management of Telstra: that Telstra could be a growth stock, that it could be the world's biggest dotcom and that all of the exciting new things unfolding in the world of information technology would be a giant wave that Telstra could surf to double-digit growth performance. Of course, reality has set in, and the end result has been that the Telstra share price has plummeted. Fortunately, it has now started to recover a little; nonetheless, it is way down from its peak. The answer for the future is for Telstra to understand that it is still essentially a public utility and it has predominantly utility characteristics. If it focuses on delivering a good dividend to its shareholders then its share price will stabilise at a reasonable level and it will become a worthwhile investment for all Australians who wish to invest in shares.

It is clear where the privatisation of Telstra will lead, based on this picture of Telstra and telecommunications under the Howard government and based on the privatisation by stealth that has been occurring in recent years. There will be higher prices—just as we have seen with line rentals over the last year. This will particularly affect people in regional Australia and people on lower incomes. There will be poorer services. The assets will increasingly be sweated by the new owners. They will not have much interest in investing more capital to upgrade the standard of the network, to improve the level of service or to employ more technicians to ensure that people in regional Australia get decent services. We will see more monopoly behaviour, more gaming of the competition regime and more efforts to win profits by keeping competition at bay rather than genuinely improving and competing. We will see Telstra buying up media assets to extend into other sectors the monopoly power that Telstra enjoys and ultimately seeking to completely dominate the information and technology sectors in Australia. We will see a tardy, slow, patchy and inadequate roll-out of broadband—the crucial arteries of future economic success for Australia. We will be lagging behind the rest of the world even more than we already are. The net financial outcome for the government that will occur from all of this will be negative. Added to the impact in telecommunications terms, we will also see a net negative outcome financially for the government, which I will turn to in a minute.

One of the extraordinary things about this debate is how miniscule and threadbare the government's arguments in favour of privatisation are. Senator Alston contributed a piece to one of the newspapers recently and advanced only four points in favour of privatisation. I will deal with them in turn. The first point was that the government has a conflict of interest in both regulating telecommunications and owning Telstra. Even within the communications portfolio—leaving aside any other areas of government activity—there are existing examples of this which the government appears not to worry about. The government regulates broadcasting and it has broadcasters—the ABC and SBS—which effectively compete with commercial broadcasters. SBS competes for advertising and, if the government gets it is way, the ABC will too. But apparently that is not a problem there. The government also owns Australia Post and apparently does not intend to privatise it, yet it regulates postal services and 85 per cent of Australia Post's revenue comes from fully contestable, fully competitive activities. Apparently the conflict of interest between owning and regulating does not matter in those areas. The second argument is that the government should not run businesses. The government runs a lot of things that can be described as businesses, such as Australia Post, but in this instance that is an argument for privatising Telstra.

The government's third argument is that we have a much more market oriented telecommunications environment, that there is not really any need for the government to own Telstra any more and that regulations are the issue, not ownership. The answer to that is: if we cannot regulate properly now, what hope have we got of regulating when there is a giant private monopoly as the dominant player in the field, able to exert enormous influence within Australia's public life and political system?

Finally, and perhaps most ludicrously, the government claims that we have a fully competitive telecommunications market: everything is okay and there is no need for public ownership because the market is now genuinely competitive. In support of this claim the government points out that there are now 89 licensed telecommunications carriers in Australia. Superficially that sounds very impressive: we have 89 businesses to choose from. What they fail to point out is that of those 89 there is one that makes 95 per cent of the profits and is well over two-thirds of the entire industry. They also fail to point out that, for the vast bulk of consumers, the effective range of choice in telecommunications provider is a fair bit smaller than 89 and, particularly for people outside the major cities, in many instances the choice is Telstra or no-one.

Labor's position on these issues and on the future of Telstra is very clear. Not only do we oppose the privatisation of Telstra, we will return Telstra to its core responsibilities of delivering high-quality telecommunications services accessible for all Australians regardless of where they live or what their income level is and diminish Telstra's involvement in speculative foreign ventures and investments in sectors such as the media. We will intensify the focus on the delivery of broadband services to ensure that Australia is leading the world in high-quality telecommunications access for our businesses as a crucial platform for Australian exporters and Australian businesses generally to be able to advance our economy, deliver jobs and deliver advanced services for all Australians.

We will ensure that Telstra is more strictly regulated and that there is a clear internal separation between Telstra's activities as the wholesaler, owner and manager of the network and its activities as a seller of telephone calls and communications capacity, so that we have a clear and genuinely competitive environment and a genuine level playing field between Telstra and its competitors as they use Telstra's network. Finally, we will be introducing strengthened protections for telecommunications consumers in a range of areas that apply not only to Telstra but also to its competitors. Under Labor, Telstra will be a carrier, not a broadcaster; Telstra will be a builder, not a speculator.

Looking at the specifics of the legislation it is worth noting a number of points that are causes for concern. The legislation removes various reporting obligations that currently apply to Telstra with respect to financial data once the government ownership goes below 15 per cent. It removes the ministerial power of direction, which although it has never been used does constitute a very significant constraint on the part of the government—the majority owner on behalf of the Australian people—on how Telstra conducts its activities. It removes Telstra from the scope of the freedom of information legislation.

Intriguingly, the legislation empowers the government to, rather than sell its own shares in Telstra, create what are called `sale scheme hybrid securities' against the shares in Telstra and to sell those securities. We are fascinated by the underlying plan behind this provision—which did not appear in the previous two Telstra sale bills—and what the government's strategy is going to be. If it is open and transparent and designed to maximise the return to the taxpayer then, although we oppose the bill full-stop, we do not criticise this particular point. But the government has to come clean about what its intentions are in essentially empowering itself not to sell its shares but to sell securities that are backed by those shares. My suspicion is that the government wants to use that to play the market and potentially use its market power to maximise its return at the expense of ordinary shareholders.

The government also proposes to empower the ACA and the minister to impose licence conditions with respect to telecommunications in regional Australia and provide for five-yearly reviews of telecommunications in regional Australia. This is attached with the government's response to the Estens inquiry, where it proposes to spend the giant sum—in telecommunications terms—of $180 million over four years for telecommunications in regional Australia! That is $45 million a year. That sounds like quite a bit of money, and in some respects it is, but when you compare it with Telstra's total capital expenditure on telecommunications in Australia of over $3 billion a year you get some idea of how trivial this particular tokenistic payment actually is. It shows the contempt that the government and the Liberal Party hold the National Party in. It shows how pathetic and weak the National Party has been in standing up for its constituents in regional Australia.

The sale will cost a huge amount of money to the taxpayer. The government previously estimated that each tranche of the sale would cost $218 million in fees to lawyers, investment bankers and accountants. On top of that, eventually—probably fairly quickly, depending on the price at which the shares or the securities are sold—the value of the reduction in public debt that will flow from the sale proceeds being used to pay off debt, in particular the loss of interest payment obligations, will be seriously outweighed by the loss of dividends that the government currently receives from Telstra. As well as being bad public policy, bad competition policy, bad for the market, bad for consumers and bad for people in regional Australia, the sale of Telstra is also particularly bad for the government's budget.

That pretty much sums it up. This proposal is being pursued by blind ideological zealotry on the part of the Howard government. It takes no account of the realities of telecommunications. It takes no account of the circumstances in telecommunications markets throughout Australia. It takes no account of the realities of telecommunications services for people in country Australia. It does not make sense for the public finances in Australia. It does not make sense for the delivery of telecommunications services. It does not make sense for genuine competition in Australia. It does not make sense for consumers and consumer choice in Australia. It is driven by an ideological obsession that has been overwhelmingly rejected by the Australian people, time and time again. Every opinion poll I have seen shows that only 10 to 20 per cent of Australians support the sale of Telstra. I note that one of the government's backbenchers, the member for Hume, recently ran a poll in his constituency and found that 96 per cent of his constituents are opposed to the sale. Similar figures have been found by the members for Calare and New England in similar processes of consultation with their electorates.

In regional Australia you can hardly find anybody who supports the sale of Telstra, yet members of the National Party—the once proud upholder of the interests of people in country Australia, a party that was prepared to stand up to the Liberal Party in the past—have cravenly come into this parliament, packed their cards, gone home and said, `We will accept the privatisation of Telstra.' As people who have a proud history of standing up for the interests of people in country Australia, they should hang their heads in shame. They are now led by quasi Liberals—by old `Gucci Gumboots', the Deputy Prime Minister. They are people who no longer can claim to represent the interests of country Australia. If there is one issue that country Australia is virtually unanimous on it is maintaining Telstra in government ownership to ensure that all Australians, no matter where they live, can continue to enjoy high quality telecommunications services.

Labor have been the only party to stand firm on this issue. We will not sell Telstra. We remain committed to opposing this legislation. We will oppose it all the way through the parliamentary process. I urge the minor parties in the Senate—the Greens, the Democrats, the Independents and One Nation—to join us and to give voice to the overwhelming view of the Australian people that Telstra should not be sold. If democracy means anything in this country, Telstra should remain in public ownership. It is still predominantly a public utility, it is still essentially a monopoly, it completely dominates the sector and it needs to remain in government ownership to ensure that all Australians continue to enjoy access to essential telecommunications services into the future. (Time expired)