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Thursday, 14 August 2003
Page: 18529

Mr BAIRD (10:24 AM) —It is particularly interesting to follow the member for Melbourne and to listen to someone who, outside this parliament, would masquerade as an economic rationalist but who, inside this parliament, gave a speech worthy of Karl Marx or Leon Trotsky in terms of returning to the Das Kapital days of the good socialist period. What we have today is clear evidence of an ideologically retro party. They talk about the ideological obsession of this government when in fact the member for Melbourne shows his own ideological obsession. The obsession that he shows against the privatisation of Telstra is not borne out in the rigour of going through the factors involved in this issue.

One of the big points that the member for Melbourne made was about staff numbers. He said that there is clear evidence that unless you have a status quo in the numbers in a corporation it is inappropriate, anti-Australian and not how mates behave. This is modern corporate life. Every corporation around the world looks at the number of their staff and at their need for an effective return on investment. With the use of technology, staff are often made redundant. It is a natural order; it happens in government owned enterprises and it happens in the private sector. To use that as the basis on which to oppose privatisation is not borne out by the current economic reality.

The member for Melbourne talked about Telstra shareholders and our need to look after them. If there is one group of people whom we should be looking out for in particular it is the shareholders. The editorial in the Sydney Morning Herald of 5 May 2002 said:

Telstra will never be a growth stock while half government-owned.

If you are looking for growth in the stock, you free it of government controls and enable it to operate as an effective private sector telco instead of it being under the constraints of government ownership. There is also criticism of how much the government would get. If it were not for the Labor Party's opposition in the Senate and in this House, on privatisation we would have secured a price which would have been far above what it is today. The loss to the government in terms of what we could do with those funds is clearly the responsibility of those who sit opposite. I believe that the shareholders would emphatically endorse the need for Telstra to be privatised to maximise the returns on the shares that they hold.

On the trade joint standing committee's visit to eastern Europe it was amazing to go to countries such as Poland, the Czech Republic, Slovakia, Croatia, Hungary and Slovenia and look at what is happening in respect of privatisation in those countries. They are awash with privatisation. They have first-hand experience of centrally planned economies. The restriction in their economic growth and the low per capita income that they have experienced compared with those of the rest of western Europe have illustrated to them the need to move as fast as they can to privatise. That has been the experience across the board and it is borne out in their growth rates. The average growth rate in those countries is 3½ per cent. They have experienced the old socialist model that the member for Melbourne would hold out as the great panacea whereby the government holds everything. They have found the vibrancy in today's modern economy—a fully privatised organisation which is competitive with other private sector organisations.

To think that in 2003 we are debating the privatisation of Telstra—it shows that members opposite have a long way to go. Let us look at the sheer hypocrisy of the track record of the Labor Party. When they were in government, if they had continued to uphold the principles of Karl Marx we would have understood. But when they were in government they put together Qantas and Australian Airlines and privatised it. They privatised the Commonwealth Bank—at that stage the largest bank in this country.

Without any explanation, all the arguments I heard the member for Melbourne outline today could equally be applied to the Commonwealth Bank. This side of the House supported the proposal of those opposite. The Commonwealth Bank is stronger today, it has a strong share price and it continues to provide an effective service for the people of Australia—and it was privatised by the members opposite. It is hypocrisy to oppose privatisation in opposition simply because you think it is a populist line. It is for the benefit of people in the country. You whip up the fear and tell them that they are going to pay far more for their phone connections. If you whip it along enough, you will be able to get their support and you will get back to those grand, glory days when you occupied this side of the chamber. So the second point I wanted to make referred to the hypocrisy of the opposition.

The third factor I want to raise is the need for the organisation to be flexible. Instead of having government regulations across the board, the flexibility of a private telco in the marketplace is obvious. Commentators state that you need a private sector organisation with flexibility.

Mr BAIRD —The member for New England knows what an inflexible organisation is. When I was a minister in the New South Wales parliament, I was responsible for the railways. You can compare private sector run railways with the railways in New South Wales that were run by the government. The member for New England was one of the people who were constantly complaining about how inflexible government run organisations were. I am sure we will hear from the member for New England all about how it is great to have government run organisations. However, when he had the chance, he was most critical of government run organisations because of all the things they did and because they did not respond to the marketplace. Of course, in many cases he is right.

In terms of the use of funds, is it appropriate for government funds to be held up in ownership of a telco such as Telstra, or is it appropriate to reduce our debt and use those funds on hospitals, schools, roads, airports, social security payments, provision of carers—the whole gamut, across the board? The government could do a range of things with those funds. They could be directed to desalinisation of our waterways or the provision of infrastructure, which is so appropriate. We want to see how we can use these funds better instead of their being involved in propping up ownership of Telstra.

There is also the question of improving services. If we have a problem in terms of the provision of services, you can put in a community service obligation—a CSO. I recall that in relation to transport in New South Wales there were CSOs where the government provided assistance to the bus operators or others in the private sector to run services which may not have been profitable but which the government considered appropriate. We still have the ability to do that. We can still have community service obligations.

We must also consider competition. If there were only one provider in the marketplace, fine; however, there is a range of competition in the marketplace. Those companies are well able to compete effectively with Telstra, and they have shown their capacity to do that. Competition in the marketplace provides cheaper prices, efficiency and greater service to the community. That is what we are all about. We are not about a hegemony of monopoly which is just strangling service and provision. From experience, I know how long you had to wait to get a phone connected when I was growing up during my parents' generation. You could wait months for those types of services. Costs were high, including the cost of ringing overseas. However, competition is magnificent in this country now. We are not talking about monopolies in Tasmania; we are talking about real competition.

This government is prepared to put it on the line and take measures which we believe are in the interests of the people of Australia. It is very easy to run the cheap populist line. I am sure we are about to hear the populist line from the member for New England. However, if you were genuine about the long-term interests of telecommunications in this country, if you were about competition and about looking after people in the country and in the city and providing a range of choice, lower prices and more competition, you would support this bill.

It is also particularly interesting to see what the media has said about the issue. Terry McCrann put the argument succinctly in his column in the Daily Telegraph. He said:

Institutional disciplines don't work. The only way to really keep Telstra honest is to expose it to the pressures and retribution of the market, and the legal rights of its customers.

He went on to say:

A fully privatised Telstra would be directly and much more effectively answerable to its customers ... at the moment it's a classic example of all power and no responsibility.

Let us also consider what commentators from some of the large organisations have to say. ABN AMRO is one of the world's leading banks. It stated:

... without privatisation Telstra would continue to have funding constraints because while the government remained a large shareholder it would not easily be able to raise equity funds for investment.

That factor needs to be brought home. It involves the ability to raise funds in the marketplace, and it relates to a privatised Telstra's ability to outline its plans for expansion to the marketplace: the areas it wants to develop, the increased and enhanced services—

Mr Windsor —The Asian market.

Mr BAIRD —It is possible that it may go into the Asian market. The marketplace will determine whether or not that is an appropriate investment.

Mr BAIRD —The member for Bass may claim that she has a better understanding than the investors at ABN AMRO, UBS Warburg or wherever. However, they are not going to put their funds into an area that they consider to be inappropriate.

If you consider that some of the investments have been inappropriate in the past, in a fully privatised organisation it is a tough regime: you perform or you do not get the funds. It is quite clear. Of course, that will mean increased competition but it will also mean improved services. The private banking sector is saying that, if you want more funds for investment, this is the way to do it. You do not invest where there are government constraints or where there is a hybrid organisation which is half a government organisation—which is subject to all the constraints—and half private. What you need is a fully flexible, market driven organisation with the ability to go to the financial markets, outline its plans and say: `These are our plans for expansion. We are required to meet community service obligations, for which the government will provide the funding, but these are our plans.' The financial markets will respond accordingly. In terms of a vibrant market, the editorial in the Sun-Herald on 5 May 2002 commented:

Telstra will never be a growth stock while ... government-owned.

It is clear that that is the case.

Who are those who oppose this legislation actually in favour of? Is it about those in rural areas or in the cities who want lower prices? No. Is it about those who want better services and flexibility of services? Absolutely not. Is it about providing greater returns for the shareholders of Telstra? The answer is no.

Mr BAIRD —We know the member for Bass has a special relationship with the newspaper in her area but the Sun-Herald, in my area, said to shareholders that, if they wanted adequate returns, Telstra would have to be privatised. Never mind the Karl Marx ideology those on the other side come into this House with; they go along to the big corporate luncheons at the merchant banks and say: `That is all very well. We have to say that because Telstra is a popular issue out there. But really we agree with you. If we get into government we will do wonderful things in terms of privatising. Really we are economic rationalists.'

This is where the rubber hits the road. This is where the ideology of the Labor Party can be seen so strongly. I ask those who want to make out that they are independent, yet who follow the populist line: are you in favour of a flexible, privatised, market driven economy or are you still bound up in the old days of socialism? Are you in fact looking back to the glory days that the central Europeans abandoned with great relish? They said: `We are going to move on from centrally planned economies where the government decides everything. We have seen the disasters of this approach. We want a market driven, privatised economy which can deliver benefits.' The result is that they have had incredible investment in those countries. The Czech Republic, for example, has had some $52 billion worth of new investment in the last 10 years. That is remarkable and it sends a signal that they want to be an open economy and want to be market driven.

The privatisation of Telstra will be very effective for the Australian community. Firstly, it is going to increase the effectiveness and profitability of the organisation, which I believe everyone in this House should be in favour of. Secondly, it has no impact on the regulation of essential facilities, which is what we would all be in favour of. Thirdly, it has no impact on other markets and it will generate greater product and value.

We on this side of the House stand for providing greater services, more effective services and more market driven services that reflect the needs of the community and that will respond effectively. We also believe in services that will provide lower prices. Regrettably, those on the other side are still tied up with the ideology of the past. People I come into contact with in my electorate are concerned about ensuring they continue to have an effective service. We on this side of the House can guarantee it. Secondly, they want to be assured that the government will not interfere with it unnecessarily. We can assure them of that. But when the opposition had their chance in government to put in place their ideology, what did they do? They privatised Qantas and they privatised the Commonwealth Bank. Of course, it is a different position when they are in opposition. They simply say: `It was a different story. The Commonwealth Bank was different because it had competition.' Telstra certainly has competition. The Commonwealth Bank was the largest bank and we on this side supported it. The hypocrisy on the other side knows no bounds.

This is a great piece of legislation. The funds that would be raised can be used effectively. Those on the other side are always talking about all the great projects they want to put in place, such as the desalinisation program, the Murray River et cetera. This is a way of providing significant funds instead of having them tied up in areas, such as Telstra, which are not providing the benefit. In Telstra we can have an effective, market driven organisation. Let us support this bill and get on with providing decent telecommunications in this country.