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Thursday, 21 August 2003
Page: 19155


Mrs IRWIN (9:34 AM) —In 1946, when Australia was setting out on the period of postwar reconstruction, the government of the state of South Australia was planning to expand its manufacturing and automotive industry base. The Premier, Sir Thomas Playford, who went on to become the longest serving premier in Australia's history, personally took responsibility for state development. One of the problems facing him was the lack of electricity generating capacity in South Australia. The privately owned electricity supplier refused to increase supply to match the requirements of new industries so the conservative premier of South Australia took the radical step of nationalising the electricity supply in South Australia. And that has been the history of almost every public utility and railway development in Australia: the private sector failing to invest in the development of this country because it looks to the short-term profitability of its investment and not to the long-term benefit of the nation.

Private sector investment in public utilities will always fall short of providing the infrastructure necessary for Australia's development. Where the private sector has provided the investment, it has in every case required the taxpayer to sweeten the deal to minimise risk and subsidise any losses. As we have seen with the massive losses incurred by private operators involved in international and interstate cables, the market has proven to be a very poor mechanism for allocating investment dollars. I am sure that Telstra—or its predecessors: Telecom and the old Postmaster General's Department—did not always get it right when it came to setting priorities for its investments. But we can at least be sure that its management was guided by governments with the development of the nation and the provision of service to the great majority of citizens as their principal objectives. What will be lost in the full privatisation of Telstra will be the last opportunity for governments in this country to direct the most important infrastructure development required in the next 50 years. My concerns here are not unrealistic.

From the very beginning of our telecommunications system in Australia there has been a lag in the provision of services. I can remember in my lifetime an era when only a few people had telephones; it seemed that the only people in our suburb with a phone were the postmaster, the doctor and the SP bookmaker. Getting the phone connected was a day we remembered, like the day we got our first TV set. The home telephone that we take for granted today was the result of a huge `public' investment—investment in lines and exchanges, investment in the technology of the day.

Unfortunately we still rely on some of that obsolete technology, and there is a need for new investment to bring the world of information technology to our schools, our places of work and our homes. But, like the era when home telephone services were being developed, there is a huge backlog of service upgrading required. The copper wires that have served us for more than a century still carry the information from the world to our door. The roll-out of high-speed data lines has not kept up with the demand, and we now have vast areas not only of our regions but also of our capital cities which do not have access to modern broadband information links—and there is no sign of when we can expect to see these services provided.

In the good old days people waited and waited for a phone connection; the roll-out seemed to take forever—but we were not so reliant on telephone communication. Now we are dependent on data links that we expect as part of a modern economy. But Australia is lagging behind the world in information links. We are being held back in the development of electronic commerce and increasingly our young people are being denied access to educational links. Where will this investment come from—this investment in infrastructure that will help Australia to keep its place in a rapidly developing world? The government, with its poorly planned exercise to sell Telstra, has long since stopped injecting its funds. Falling investment returns make capital raising less attractive and, as the government tells us, the half-public, half-private ownership of Telstra restricts Telstra's capacity to raise equity capital. So we are left with this half-bird, half-beast creature which the government says we need to sell completely because as half and half it cannot operate effectively.

Well, who got Telstra into this predicament in the first place? When the government—this government—sold off the first third of Telstra, it kept secret its intention to sell off the remainder as soon as it got the chance. The private investors did not seem too worried at the time that they were buying into a company that was government controlled; they were happy to see the value of their shares rise. Then it went to half ownership, and again there was no announcement that it would be fully privatised at a future date. The investors came back for more, but this time they were badly burned; the partly privatised Telstra was not the cash cow they thought it would be.

Should we sell the rest of Telstra, as the government seeks to do with this bill? What are the alternatives? Having sold off half of Telstra, the government says that there is no alternative but to sell the remaining half. Before it sells the remainder, the government says it will make sure that it has in place the investment and service guarantees that will keep its rural and regional supporters happy. But those supporters have obviously been sold a pup before today, and there is no sign that rural voters are prepared to let the government get away with the further sale of Telstra—and that opposition is echoed in the metropolitan areas as well.

There is real concern that a privatised Telstra will let services be degraded and will not provide the upgrades essential for users to be part of the information superhighway. The experience of many urban customers to date gives them little confidence that a fully privatised Telstra will provide the level of service they demand at a price they can afford. Also there is a real suspicion that call rates and charges will increase, as Telstra seeks to maximise its profits and cross-subsidise its overseas loss-making ventures. The government has no credibility on this issue at all. The public simply do not believe that they will be better off if Telstra is fully privatised. And, while the government has added sweeteners for rural customers, there is nothing for city customers. Of course, there are grand plans for spending the motza that the government will get for the remaining share of Telstra; but for those who see the proceeds of the sale as a windfall to be spent on fixing the environment or providing some other infrastructure project, it is a bit like burning the furniture to keep warm in winter. We should look at each project on its own merits and not as a way to use up Telstra funds.

Telstra is more than just a share portfolio held by the government; Telstra is a central part of Australia's communications infrastructure. In a world where there is great uncertainty in investment, Telstra can give direction and support to business and households in Australia to enable this country's development over the coming decades. We can take too much for granted when we look at Australia's potential for growth in the years ahead; we can make the mistake of simply projecting the growth forecasts up and off the page. But economic growth depends on more than good luck, and the next decade will be vital in setting the platform for Australia's position in the years ahead.

Telstra has had no small part to play in Australia's development in the last century. One of the things we have taken for granted is the role played by Telstra as a customer for Australian designed and built equipment, but of more importance has been the role played by Telstra and its predecessors in ensuring that Australia has had a work force skilled in the electronics and related industries. These industries have been at the forefront of national development, and in Australia we have had the benefit of a work force of skilled technicians, engineers and scientists. As Telstra has become more commercial, much of its training effort has lapsed, and we have been fortunate that demand for many of those skills has decreased with changes in technology. But we should never forget that our entry into the computer age has been aided by a ready skilled work force that has been trained by organisations like Telstra, AWA and OTC, the former Overseas Telecommunications Commission.

A privatised Telstra would no doubt continue to run down the basic training role undertaken in the past. The technology and equipment will be almost totally imported, and even much of the servicing can be expected to be carried out overseas. The further loss of skilled and rewarding jobs will leave Australia dependent on other nations for this most important part of our industry, commerce and daily lives—but that is the reality of organisations whose central objective is to make a profit. The reductions in staff numbers at Telstra are an indication of what we can expect from a privatised organisation. The reduction in service standards is one result of the loss of staff, but we should not forget that as a nation we will be poorer for the loss of existing skills and the failure to build the skills base of our work force. It is worth noting that Telstra has been an employer with a skilled work force spread across regional Australia.

It would be interesting to consider what things would be like in 10 years time if, by some miracle, this legislation were to be passed. Back in the 1970s, I can remember when what was then Telecom came out with a plan for the future called Telecom 2000. That is ancient history now, but what is most obvious is the change in technology and how it has affected the way we live and work. I do not remember seeing anything in the plan about the Internet or electronic banking, but they have had a dramatic effect on the way we live and do business. What should be obvious to us is that few industries will change as much as the communication and information technology industries. Consider what might happen if we were back in the days of Tom Playford and our major telco said that it was not interested in improving its service. What if Telstra were to say that it wanted to maximise its profit at the expense of much needed investment in new technology? The consequences for Australia would be disastrous, but by then it would be too late for government to intervene to direct our largest telco.

So far I have been looking at the national effects of the sale of Telstra. But its greatest effect will no doubt be at the household level. As I said earlier, when I was young, telephones were considered a luxury. Today, communication and information technology is a necessity. One thing that surprises me is that what we once called utilities—the supply of water, gas and electricity, and we should include telephone services—were once considered to be best provided by state owned monopolies. The attraction of these businesses to the private sector came from the potential improvements in efficiencies if these utilities were better managed. For a state owned utility which improved its efficiency, in the same way as electricity generators did in the last half century, much of the saving was passed directly to consumers by way of lower prices.

It was once explained to me how privately operated utilities are able to generate super profits. Take a water supply company that takes over a publicly owned utility. The company would know that, because there was a large loss of water due to the pipes leaking, if it fixed the pipes then it would effectively be getting for free the water that was previously lost, and it would keep the profit from that rather than pass on the saving to the customer. This is my greatest fear for Telstra customers. Improvements in technology can make access to new products cheaper than older services, and inflation can provide a smokescreen for telcos to increase prices even though their costs have reduced. Capital equipment is allowed to run down and, as we saw recently in New York, a whole power system can collapse from lack of maintenance and new equipment. But a monopoly supplier can cream off most of the savings in extra profits.

There are enormous benefits to be gained both economically and socially from improved technology. It can be shared for the benefit of all or it can be used to turn a privatised Telstra into a cash cow. That cash cow will be feeding off the pensions of older Australians whose only regular contact with their families and friends is by telephone. It will be feeding off the small businesses, forced to pay high rates for unreliable services. And it will be feeding off the opportunities of Australian students, forced to pay high rates for second-rate Internet services. Access to communications technology should be seen as more than a commodity which can be sold at the highest price the market will bear. It should be seen as the right of all. That is what much of the debate about the sale of Telstra is about. It is about people in regional and remote Australia—and I will not leave out metropolitan Australia—having access to the best communication and information processing technology available.

The signs are already there that players in this industry are prepared to cherry pick the regions offering the highest returns and concentrate their services in those regions. When the profit motive is the only goal, that is the natural result of those business strategies. Those who feel they will be at the margins can see that complaining about service failures to a fully privatised Telstra would be a waste of time. While ever the Australian government has the controlling interest in Telstra, the communication users of Australia will have a say in the level of service they require and the price they have to pay. That is why the majority of Australians want to keep Telstra in government ownership—ownership by the people of Australia to serve the people of Australia, not the chosen few. That is why they know it is so important to speak out now and oppose the full privatisation of Telstra.

Some months ago I conducted a similar survey to those carried out by the member for New England and the member for Hume, and I have to confirm the results of their surveys. In the Fowler electorate that I represent, 88 per cent of those surveyed opposed the full privatisation of Telstra. This is an unpopular move by this government. It is totally opposed by the Labor opposition and should be rejected by all members of this House.