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Telstra 2 shareholders have Howard Government to blame.

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Telstra 2 Shareholders Have Howard Government To Blame Stephen Smith - Shadow Minister for Communications

Media Statement - 2 November 2000

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Shadow Minister for Communications, Stephen Smith, today condemned the Howard Government for the plight of many Telstra 2 shareholders.

At the close of the market yesterday, Telstra 2 instalment receipt holders were sitting on a paper loss of $1.02 per share - a staggering $2.4 billion in total.

"This represents a paper loss of $153 for those mum and dad investors who bought the minimum 150 T2 receipts and a $816 dollar loss for investors with an average holding of 800 receipts," Mr Smith said.

"The value of T2 receipts must be particularly worrying for those 400,000 Australians for whom T2 was their first foray into the stock market.

"Receipt holders will no doubt understand from reading the newspapers in recent weeks that, according to analysts, the predominant factors affecting the Telstra share price are a global reassessment of the value of telecommunications stocks generally and the market's evaluation of Telstra's renegotiated Pan-Asian Alliance with Pacific Century Cyberworks.

"But receipt holders will know and understand that when the Howard Government sold them the T2 receipts in October 1999, rather than leaving them to form the balanced view of the value of Telstra receipts as set out in the Public Offer Document, the Prime Minister and Ministers Fahey and Alston, more concerned about politics than the proposed receipt holder, talked up the stock.

"For example, the Minister for Finance and Administration, John Fahey, and the Minister for Communications, Senator Richard Alston, said in a Joint Media Release dated 21 June 1999:

Investors will now have another opportunity to invest in a strong and innovative company operating in a high growth sector located in one of the world's most stable and proven investment environments.


"Prime Minister John Howard said on 18 October 1999 in relation to T2 that:

JOURNALIST: Prime Minister, Telstra shares didn't exactly deliver a windfall today. Any words for worried investors out there? PRIME MINISTER: It's a great deal.


"The Minister for Finance and Administration John Fahey, told the House of Representatives on 20 October 1999 that:

They [shares in telecommunications companies] are a growth stock around the world, and Telstra is at the very top of the tree when it comes to that because it is a very ●

dynamic Australian company.

"On 1 September 2000, in the middle of a panic about Telstra's share price, the Prime Minister said:

...I would simply make the observation that people should take the long view. ●

"On 16 October 2000, Minister Alston sought to talk up the value of T2 receipts with the following financial advice to T2 receipt holders:

I think there is a lot happening that will ensure that Telstra remains a very important company for Australia and therefore a good investment opportunity. ●

"Typical of the reaction to these statements are the comments made by Mr Kelvin Thorogood, a T2 receipt holder, who told the ABC's 7.30 Report on Monday, 9 October 2000 that:

I'm concerned that John Fahey, the Minister for Finance, last year was basically standing up and waving a flag and blowing his trumpet and saying how fantastic this offer's been and yet, in the running paying the final instalment of T2, he's nowhere to be seen.


"Rather than provide financial advice to potential investors the Prime Minister and Ministers Fahey and Alston should have followed the accepted standard as set out by Treasurer Peter Costello on 19 October this year. Mr Costello said:

I'm not sure that we're entitled to give out advice. Somebody's liable to say to me if I do I should have a dealer's licence, so I'd better be very careful. ●

"If T2 receipt holders are feeling concerned and disillusioned today then there is only one institution that they should blame - the Howard Government," Mr Smith concluded.

Authorised by Geoff Walsh, 19 National Circuit, Barton ACT 2600.