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Thursday, 14 August 2003
Page: 18533


Mr CREAN (Leader of the Opposition) (10:44 AM) —The debate on the Telstra (Transition to Full Private Ownership) Bill 2003 is one of the most important debates that will be had in this parliament this year. It is not just a debate about whether to sell a national icon; it is a debate about what sort of country we want to be: one in which our institutions benefit all of us or benefit just the lucky few. It is a debate about whether we believe that the money that Australians have put into Telstra over generations was an investment in the nation's future and should continue to be invested in its future, or whether it was just a cost to the budget. It is a debate about whether every Australian, no matter where they live or how much they earn, should have access to a phone, a fax and the Internet. It is a debate about whether the government is prepared to listen to the Australian people or to arrogantly ignore them.

The Australian people overwhelmingly do not want Telstra sold. It is not just our opinion in the Labor Party; it is the opinion also of members of the government's own backbench. Yesterday, the member for Hume, Alby Schultz, said that 96 per cent of his constituents who had returned questionnaires to his office were against the sale but that arrogant ministers in his government would not listen to them. We heard Alby Schultz in a doorstop interview yesterday saying that the government was trying to silence him. He said that the ministers were only interested in using the funds from the sale of Telstra to pork-barrel their way back to power. That is not acting in the Australian interest, and the member for Hume has the courage and decency to acknowledge that. Why? It is because he has gone out and listened to his constituents and he has brought those views back here. The government has to listen to those views rather than just pursue its mindless objective.

The only people in Australia who want Telstra sold are 29 government ministers who want to get their hands on the proceeds of the sale but who, amongst themselves, are divided as to what those proceeds should be used to do: to improve services or to pay off the debt. Also there are a few bankers, consultants and executive fat cats who may stand to make a killing from the sale. They are the only ones who want Telstra sold. Ordinary Australians know instinctively that they will not benefit, and that is why they are against the sale. The government will pay a mighty electoral price if it continues with this plan to sell out the people of Australia. In this debate today three things are clear: selling Telstra is bad for the bush, selling Telstra is bad for the nation and selling Telstra is bad for the budget. Only Labor will keep Telstra for all Australians.

The central question in this debate is whether ownership matters. The central contention of those opposite is that ownership does not matter. They believe that we can achieve, through regulation and government handouts, the same outcomes more efficiently than ownership delivers. It is simply not true. Labor believes that a majority public-owned Telstra is the best means to deliver the latest in accessible and affordable telecommunications services to all Australians, regardless of where they live. The government has repeatedly told Australians that it will not sell Telstra until it is `fully satisfied that arrangements are in place to deliver adequate services to all Australians, including maintaining the improvements to existing services'. If that is the test, it is not met. Australians know, having witnessed the Besley and Estens inquiries whitewash on regional telecommunications services, that the government is deluding itself that it can be so fully satisfied.

Before the last election, the Prime Minister told the faithful at New England, on 5 November 2001:

... we believe that people in the bush are entitled to the sort of services from Telstra as their city counterparts.

Where is that comparison now? Hundreds of regional Australians wrote to the Estens committee complaining of poor regional telecommunications services, poor mobile phone coverage, faulty telephone lines, poor broadband coverage, inadequate dial-up Internet data speeds and constant Internet line drop-out. The rosy picture of regional telecommunications services painted by the Estens inquiry was a sham and in complete contradiction to the hundreds of submissions to the inquiry. Ask the member for Hume, who has gone out and questioned people again.

Even in many urban areas Telstra's services are totally inadequate. As I discovered first-hand in recent trips up north, in towns and cities in Queensland—in your area, Mr Deputy Speaker Lindsay—this year three out of 10 faults were not repaired within the one day required by law. And yet the government has the gall and temerity to say services are up to scratch. Many areas of our cities simply cannot access the latest in broadband Internet technology because Telstra-installed pair gains systems mean that ADSL is unavailable.

Country Australians know one thing instinctively: if Telstra is sold, Telstra will leave their town faster than the banks. Outer metropolitan Australia is just starting to hear the same call. This government will sell Telstra regardless of the standards of regional telecommunications, which is completely contrary to what it was saying when it went to the last election. We have seen an example this week of `truth overboard' by the Prime Minister in relation to ethanol and whether he had meetings. This is a Prime Minister whose words simply cannot be believed. He went to the last election promising that there would not be a sale until services had been improved, but he intends to persist with that sale. We will oppose it.

The government will sell Telstra, as I said, regardless of the standards of regional telecommunications and, despite promising to do so, the government has provided no mechanism to future-proof Telstra services. The Telstra (Transition to Full Private Ownership) Bill 2003 actually provides for the Minister for Communications, Information Technology and the Arts or the Australian Communications Authority to make licence conditions requiring Telstra to maintain a local presence in regional, rural and remote parts of Australia. Those are fine words and it is an essential concept, but there is no definition in the legislation as to what this means and no guarantee that that presence will in fact be guaranteed.

The bill also requires regular reviews of regional telecommunications every five years by an expert committee appointed by the minister. We have already seen a few examples of those expert committees under the Howard government. You can see the future ones!


Mr Tanner —It will be Estens again.


Mr CREAN —Exactly; they will be as `independent' as the Besley and Estens inquiries—one was chaired by a man who believed the banks were a model for services in the bush, and the other was chaired by a National Party member and a mate of the Deputy Prime Minister. The Prime Minister has even appointed the member for Hinkler to chair an interim inquiry to ensure that Telstra's services are up to scratch before the full privatisation of Telstra proceeds—a safe choice for the Prime Minister because the member for Hinkler voted for the full privatisation of Telstra in 1998. The fact is that this government will appoint the committee it wants to produce the report it wants. Nobody can take this approach seriously.

As soon as Telstra is sold, the political incentive to impose tough regulations on Telstra's service delivery will dissipate. Blanket regulation of this type can quickly become grossly inefficient. There will be no more Telstra billions to spend on improving the network. That can only mean one thing—without an increase in taxes, there will be no money to fund future telecommunications services. So what is it: higher taxes or lower services? That is what Australians are being asked to decide on the basis of this government's proposals.

Despite the hundreds of millions of taxpayers' dollars being poured into the company by the government through the social bonus spending, Telstra's investment in its network has fallen from a peak of $4.7 billion in 1999-2000 to an estimated $3.2 billion in 2002-03. Over the same period full-time staff numbers have fallen from 50,700 to an estimated 37,600. Many of those employees cut were involved directly in customer service and network maintenance activities in regional Australia. That is happening with Telstra 51 per cent owned by the government. Imagine what it will be doing if all of it is sold, and under John Howard Australia is getting a taste of how Telstra will behave if it is allowed to be fully privatised.

Telstra is abandoning its broader responsibilities to the Australian community but still exploiting the competitive commercial advantages it derives from its background of monopoly public ownership. Because of the Howard government's obsession with privatisation, Telstra is failing to fulfil its broader obligations of national development and social inclusion. But at the same time that Telstra is reducing network investment, it is charging you more just to own a phone. Line rental increases have more than doubled, from $11.65 a month just a few years ago to as much as $23.50 to $26.50 a month today. That is a doubling! And despite government claims that these changes have just constituted `rebalancing', Telstra is pocketing hundreds of millions of dollars in extra revenue because of the government's flawed price control regime. These deficiencies have been compounded of course by inappropriate corporate behaviour, such as loaning free $12,000 plasma televisions to the Prime Minister and the minister for communications. Then of course there is the signing-off of chief executive Ziggy Switkowski's $1 million-plus golden handshake if he is sacked, while the same government comes into this House and argues for no more security of entitlement to ordinary workers and that the eight weeks under the legislation is sufficient for them. What sort of double standard is that?

Telstra is not only vital to an equitable society; it is also vital to our national economic success. Connecting the nation is fundamental to future productivity increases and for increased opportunity for all Australians. It is the great infrastructure challenge that this nation faces. More affordable access to the latest telecommunications services for all Australians wherever they live—that is an objective we must commit to and strive for. It is necessary on a number of fronts. Firstly, because telecommunications is a major embedded cost for businesses today. Small business has identified the cost of telecommunications as its third highest concern, behind only tax and tax compliance costs. Also, more affordable access is a precondition for the emergence of vital new industries. It generates significant savings and efficiencies for existing businesses. More affordable access can also enable our families to access the latest in education, health, government and commercial services, no matter where they live. It can deliver the latest high-speed education services to our children living in remote locations. It can help put services back, where they have been taken away. More affordable access improves both efficiency and equity. It is essential to our opportunity and prosperity.

Telecommunications is now about more than just the standard telephone connection. It is about getting the nation connected to the information economy. The policy debate in Australia under this government continues to be excessively narrow, focusing simply on whether the telecommunications company should be sold or not. It has come at the expense of the more important issues of service, competition and access. Telstra has been allowed to milk its monopoly position at the expense of families and businesses. Mobile phones, text messages and Internet fees have all gone up. Some schools have had their Internet charge increased by up to 1,000 per cent. The poor service problems in regional and rural Australia persist. Over the past two years Australia has fallen from 13th to 19th in the OECD table of broadband access. For us to succeed as a nation, we need to be a leader in that field. Inadequate competition, not majority public ownership, is causing these problems. Telstra still occupies 75 per cent of the telecommunications market and earns over 90 per cent of its profits. The regulatory regime is simply not working. Privatising more of Telstra will not solve it, and I defy the proponents of full privatisation to prove otherwise.

The other point I want to make is this: selling Telstra is bad for the budget. The government deliberately and falsely inflated the Telstra sale price in the budget papers to try and hide that fact. The lie was only exposed by Labor through Senate estimates. The government valued Telstra at $5.25 a share, when the department advised them that $4.75—approximately the current market price—was the fair valuation. The government's own budget statements make clear that the budget is prepared on the GFS accounting standard. The GFS accounting standard explicitly requires that all assets and liabilities should be valued at their current market value. In falsely valuing Telstra, the government have breached proper accounting standards.

Even at $5.25 a share, the full privatisation of Telstra simply does not make sense. When we went to the last election, the government valued Telstra at almost $5.50 a share. During the campaign, the Treasurer specifically adopted economic analysis from Econtech that showed the sale was worth nothing to the budget—that was the government's analysis. Our analysis, done by Access Economics, confirmed that the sale would cost the budget $600 million over the forward estimates. If Telstra was a poor bet at $5.50 before the election, it cannot be a good bet fiscally even at the nominal and falsely budgeted $5.25. As the shadow minister for finance has pointed out, the dividend expectations for Telstra have risen since that time. Accordingly, market based projections of future dividend earnings, prepared by Macquarie and UBS Warburg, have indicated the full privatisation of Telstra will cost the budget at least $1.7 billion over the forward estimates.

This budget black hole comes before any account is made of the cost of any social bonus to appease regional Australia, the need to offer shares at a discount and with instalment receipts to attract small investments, the impact of early debt retirement, and the payment of the Commonwealth's superannuation liability to Telstra. The full privatisation of Telstra is fiscally irresponsible. The fact that the government is persisting with it shows its underlying ideological intent and its lack of understanding of good economic management. On simple economic grounds there is no justification for its privatisation. Telstra protects Australians from serious market failures in the provision of telecommunication services, and it promotes social inclusion.

Labor has proposed a four-point reform strategy designed to bring Telstra back to its primary role and maximise the benefits of telecommunications competition. First, Telstra will be asked to focus on its core responsibilities to the Australian community: better and more affordable communications for all. Second, Telstra will be asked to improve access to affordable broadband services for all Australians to help drive the next wave of economic reform. Third, Labor will improve competition and bring down prices to consumers by forcing Telstra to separate its wholesale and retail activities. Finally, Labor will protect consumers through stronger and fairer protection from sharp practices by telecommunications companies and through the price control regime. Labor believes in public ownership of Telstra because telecommunications services are essential services. Labor is opposed to the further sale of Telstra. The government's intention is bad for the bush, bad for the nation and bad for the budget. It is legislation that must be rejected.