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Thursday, 14 August 2003
Page: 18575

Ms JULIE BISHOP (1:39 PM) —Let me start by putting the significance of this debate—and it is significant—on the Telstra (Transition to Full Private Ownership) Bill 2003 in a historical context. It is the conceit of every generation that it is in the midst or at least on the cusp of momentous events that dwarf the experiences of those who have gone before. The examples are obvious. The baby boomer generation continues to view the 1960s as the crucible of great historical forces, a time when things profoundly changed in society. Their parents saw the Second World War as the great clash of world views, a time of challenge and triumph, unprecedented for centuries. In fact the Americans even have a term for that: the `greatest generation'. Yet their parents too, the veterans of Gallipoli and the Western Front, saw the world transformed by a unique cataclysm. And so on and so forth.

One is entitled to be sceptical then, when a person—least of all a politician—describes events as epochal, or a contemporary period as transformational. Yet that is precisely what we have witnessed over the past decade and what we are witnessing at every moment. It began with the crescendo of victory in 1989—the dissolution of the Soviet bloc, not into blood but through peace. A tyrannical system collapsed in the wake of its own contradictions and unmet expectations in the face of a prosperous and powerful free world. At the time it was difficult to think outside the orthodoxy and see in the new world, ordered or otherwise, a global environment fundamentally different from the near century that it followed.

There were indications. I remember that, at the time of the last gasp of communism during the abortive coup of 1991—a coup that accelerated the forces at work, despite the coup's architects—a now forgotten pop band wrote of the evening news, `Bob Dylan didn't have this to sing about.' They were right. A world was delivered from the stalemate of mutually assured destruction. People were unchained from the misery imposed by treaties negotiated before they were born. Yet the transformation was not limited to the other side of the wall. We were changing, too. We had been changing for a decade.

In this country there had been bipartisan agreement that Australia's particular circumstances—its workplace disputation, nationalised services, stagnant industry and uncompetitive practices—needed to change. Throughout the 1980s, Australia followed a course of market based reforms, echoed but not necessarily mirrored in the United States, Britain and across the Tasman. Those reforms were sometimes painful, but they were pertinent. Australia emerged a stronger nation for the experience, surer of our place in the world and better equipped to make the next generation of Australians all they can be. Unemployment has been reduced, inflation conquered, budget deficits forgotten and growth accelerated. But there is more to do.

In coming into office, this government identified a series of much needed reforms, reforms not necessarily addressed during the Hawke period: reform of the labour market, reform of the taxation system, reform of government financing and reform of our nation's telecommunications system. For the revolution of the 1980s and 1990s—the revolution that propelled the West into the information age and broke down a tyrant's capacity to resist—was built largely on the incredible growth in telecommunications, data transmission, computing power and networks. Nations across the globe have recognised that only through free, unimpeded telecommunications can their businesses be as profitable as possible and their living standards as high as possible. This government shares that awareness.

Of course, there had been tentative reform moves before 1996. Members would be aware that upon Federation the powers of the states with regard to postage, telegraphic communications and telephones were consolidated and handed to the Commonwealth. Under the terms of section 69 of the Constitution, their existing services were brought within the management of the federal government through the Postmaster-General's Department—the PMG. As the Bills Digest notes, through progressive constitutional interpretations by the High Court the Commonwealth's authority was extended in this regard until it acquired an effective monopoly on telegraph and telephone services.

In 1975 Telecom was formed as the statutory authority responsible for telecommunications and 14 years later it was corporatised as the Australian Telecommunications Corporation. In 1992 Telecom became Telstra with the merger of Telecom Australia, the domestic service provider, and the Overseas Telecommunications Commission, otherwise known as OTC, the international carrier. It is important then to reflect on what Telecom, Telstra's predecessor in the age of nationalised communications, was actually like. In short, it was a bureaucracy uncommitted to customer service, terrified of change and improvement and unresponsive to the demands of Australian businesses or families. There were even standing national jokes about the government business enterprise. I recall that in my rural area in the Adelaide Hills it was better known as `Bastards Inc.' Things were even worse way out in the bush. Many members will recall the standard `party lines', for example.

Conditions improved somewhat in 1991 when an effective duopoly was created by Optus's entry to the market and their purchase of the Aussat satellite. But improvements did not really come until the market opened up even further and the first two tranches of Telstra were sold to Australian shareholders, bringing to bear on the company not only consumer pressure but corporate pressure. Prices have come down and services have expanded. Remember that less than two decades ago Australian families would actually post their expatriate sons and daughters audio cassettes of conversations rather than incur the prohibitive cost of an international call. I remember it well, as our family did it. My two sisters were living in North America at the time, so we would sit around and tape a conversation and post it to them. How the world has changed—and for the better.

These reforms—that is, the sale of the first two tranches of Telstra—came honestly. The Liberal and National parties went to two elections promising that those sales would occur if we were elected or returned to office. It is likewise with the initiatives to be implemented in this bill. The coalition have been up front with the Australian people. There will be no unforeshadowed privatisations like those of Qantas or the Commonwealth Bank. We have taken the Australian people into our confidence because we have good faith in their judgment and their commitment to economic reform. We have stated without reservation that the sale of the remaining tranche, leading to the effective full privatisation of Telstra, would only occur when we could be satisfied that arrangements were in place to deliver adequate services to all Australians. This commitment was expressed through the regional telecommunications services inquiry, otherwise known as the Estens inquiry, undertaken in 2002 following earlier recommendations made in 2000 under the chairmanship of Mr Tim Besley AO. This is an explicit recognition of the particular circumstances of this country and its telecommunications network, its often disparate population and the important role that Telstra and its predecessors have played in building a national network.

It has been profoundly disappointing to listen to the arguments of the opposition. The member for Melbourne, for example, said, without any evidence, that Telstra will abandon rural and regional Australia and will deny country Australians access to quality telecommunications—and so on and so forth. I say to those listening to this debate: make no mistake. Do not believe the hype. The Telstra (Transition to Full Private Ownership) Bill 2003 does nothing to weaken the capacity of the Australian government and, through the government, the Australian people to make laws on telecommunications, to mandate service requirements or to give guarantees. Governments—local, state and federal—safeguard the Australian people through regulations and laws every single day without recourse to the nationalisation of services, and this is how it will be with telecommunications once Telstra is a wholly private company.

If anything, the Australian government will be in a better position to specifically regulate the activities of Telstra. At present the Commonwealth Minister for Communications, Information Technology and the Arts is charged with setting the rules for a company of which he is the effective owner. This is the grand flaw in the nationalised profits dream imagined by some members of the opposition and some of the minor parties in the other place. The nationalised profits they crave come only through a regulatory system skewed away from the public interest towards the state interest. In a free market Telstra will be just another player—better able to act flexibly to meet customer demand and required, like its competitors, to meet certain standards of service but unable to use the state as its dedicated advocate.

The bill itself leaves open the date for sale. This will, after all, be a long and involved process. The government accepts that fact. This is the subject of much public interest and debate—and so it should be. Such a debate in the other place has already been foreshadowed. Furthermore, the government is committed to obtaining the best return possible for taxpayers in terms of sale conditions. As the Minister for Education, Science and Training noted in the second reading speech, the bill gives the Commonwealth the options to pursue a conventional sale, sale through a number of different tranches or some alternative arrangement—for example, hybrid securities—and it gives the Commonwealth the authorisation to make any borrowings necessary for the sale process.

Let me refer for a moment to the option of hybrid securities in addition to the release of ordinary shares. Hybrid securities were not part of the first two tranches. However, this bill introduces a sale scheme arrangement whereby the Commonwealth may transfer some of its shares to a wholly owned Commonwealth company that would issue hybrid securities. I will not attempt an expert explanation of this category of securities. Suffice it to say, they are a combination of equity and debt. I believe they provide a set dividend rate for a five-year period and can later be converted into shares at a set ratio of one hybrid to one ordinary share. There are different types within this broad group, varying in characteristics and degree of flexibility.

In any event, the government have decided to maximise the flexibility available in the sale arrangements for the remaining publicly owned shares, and I refer to the amendment contained in items 16 to 21 in schedule 1 of the bill which provides for these Telstra hybrid securities, issued in Australia and overseas, in Australian or foreign currency, to be exempt from state or territory stamp duty or other taxes. This will be a blessing. To re-emphasise, post-sale Telstra will, like its competitors, be subject to regulatory safeguards like the universal service obligation, the customer service guarantee, price controls, the network reliability framework and the jurisdiction of the Telecommunications Industry Ombudsman. To address the specific concerns of Australians living outside of the capital cities, the legislation before the House establishes a licence condition that requires a privatised Telstra to prepare and implement local presence plans for regional Australia. The minister or the Australian Communications Authority will be empowered to make administrative arrangements for the implementation and monitoring of those plans.

The bill also establishes an independent review of regional services, scheduled within five years hence. That will review the adequacy of services provided outside metropolitan areas and report back to the minister with its findings. This regional telecommunications independent review committee will comprise a chair and at least two other members. It can derive assistance in performing its functions from the Australian Communications Authority and the Australian Competition and Consumer Commission. We can also assure Australians that Telstra will, under the provisions of this bill, remain Australian owned and controlled. The maximum level of aggregated foreign ownership will remain at 35 per cent, with individual foreign ownership restricted to just five per cent. Finally, the bill makes provision for employee entitlements and rights such that employees of Telstra will not be disadvantaged by the transition of the corporation from government majority ownership to private ownership.

In conclusion, I refer back to my initial comments concerning the changes that are occurring within and between states across the globe. There is an increasing awareness that citizens in free, open nations like Australia are demanding different responses from their governments. Their expectations of the state are not necessarily shrinking or expanding, but they are changing. Increasingly it is the capacity of governments to maximise individual opportunities that is of integral importance. This sale, as the final stage in the reform of the Australian telecommunications industry, helps meet that challenge. As Henry Ergas argued recently in an article in the Australian:

There are many things that governments can be good at, but owning the means of production—be they steel factories, shopping centres or telecommunications networks—is not one of them. All too often, when these assets are in government hands, they are used not to produce wealth but to consume it—most notably by shifting resources from consumers and taxpayers to powerful constituencies with a claim on public resources. As these transfers occur within the apparatus of government they can be made without the transparency that sound public policy requires.

Australia's telecommunications policy has proved time and again just how harmful this can be.

So this sale, the final stage of the reform of the Australian telecommunications industry, is good public policy. It gives citizens the opportunity to benefit from a more open industry and a more responsive Telstra, whether they are a family interested in residential services or a small business concerned with commercial services. Listening to the opposition today—and on ABC Online we are getting a moment by moment update of the dire warnings Labor issues on a privatised Telstra—we heard the member for Melbourne suggest that Telstra is going to abandon rural and regional Australia and deny country Australians access to quality telecommunications. He threatened that there will be poorer services, higher prices and so on. The opposition have a choice: they can follow their usual dictum that the duty of an opposition is, very simply, to oppose everything and propose nothing or they can rise above their rusty industrial ideology and embrace change.

Telstra's full privatisation is a major step towards completing the micro-economic reforms which have contributed to Australian prosperity, and we have seen that with the sale of the first two tranches of Telstra. As I said earlier, the Liberal-National coalition went to two elections promising that these sales would occur if we were elected or returned to office. The Labor Party have form in this regard—the unforeshadowed privatisations of Qantas and the Commonwealth Bank—but we have taken the Australian people into our confidence. We trust their judgment and we trust their commitment to reform. We have stated that the sale of the remaining tranche and the effective full privatisation of Telstra would occur only when we were satisfied that arrangements were in place to deliver adequate services to all Australians. I reiterate that Telstra's full privatisation is a major step forward to complete the micro-economic reforms—which began in the eighties, which continued in the nineties and which will be resolved under this government—that will contribute to more Australian jobs, greater prosperity and continued economic growth.

The SPEAKER —Order! While it is not quite 2.00 p.m., it would seem to be inopportune to call the next speaker. If the member for Shortland wishes to contribute now then I will recognise her, but I think it would be fairer to the member for Shortland to allow her to participate uninterrupted later this afternoon. There being no objection, I recognise the Deputy Prime Minister, who will outline ministerial arrangements.