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Thursday, 11 March 1999
Page: 2714


Senator SCHACHT (10:52 AM) —I rise to speak to this statement tabled today from the working party of the Senate Environment Communications, Information Technology and the Arts Legislation Committee—a committee I served on in the last parliament—that dealt with the bulk of this issue of the CoT cases. In my time in this parliament, I have never seen a more sorry episode involving a public instrumentality and the way it treated citizens in Australia. I agree with all the strong points made by my colleagues on both sides who have spoken before me on this debate. What was interesting about the Senate committee investigating this matter over the last couple of years was that it was absolutely tripartisan—whether you were Labor, Liberal or National Party, we all agreed that something was rotten inside Telstra in the way it handled the so-called CoT cases for so long.

The outcome here today is sad. There is no victory for citizens who have been harshly dealt with by Telstra. I accept the recommendation of the committee—of which I am no longer a member—that there is now no further point in the working party continuing, but when you read their statement you can only say that it is not a victory for Telstra that the working party has wound up its work, that the committee has recommended it not continue. When you read the statement and the letter from Mr Wynack himself you would say that there were still grave problems within Telstra in its handling of this issue.

This particular episode is absolutely a reason why this parliament should never give in to the requests from Telstra management that they no longer appear and justify their actions before the estimates committees of this parliament. On two occasions, I think, in 1998 we had approaches from Telstra that they be exempt from having to appear before the Senate estimates committee four times a year. The committee rejected it unanimously and told the minister to tell Telstra that we would expect them to turn up and answer questions. We also expressed our disappointment that Mr Blount, the chief executive at the time, refused to appear before any Senate committee dealing with Telstra. On a number of occasions we wrote to him saying that it would be in his interests and Telstra's interests if he turned up. He refused. Fortunately, in that sense, he has now finished his term with Telstra and is no longer the chief executive.

The new chief executive is Mr Ziggy Switkowski—an outstanding Australian with a very good track record. I was delighted that the board appointed Mr Switkowski to the position of chief executive. I think he has an excellent track record in Australia as an Australian CEO. But I would say to Mr Switkowski that he would do his own reputa tion and Telstra's reputation immeasurable good if he would occasionally appear—at least on an annual basis—before the Senate estimates committee dealing with Telstra, and not take the arrogant attitude of Mr Blount, who I think did not undersand the Australian parliamentary system at all. That is one of the disadvantages of being from another country. I also believe that Mr Blount did not play a useful role in resolving the CoT cases. I think some of the pressure put on management not to fix these issues came from the very top of the company under Mr Blount's managership.

We had the most extraordinary episode two years ago when Mrs Garms won a settlement in the court and was awarded, I think, several hundred thousand dollars. It was agreed by the arbitrator, by the court, that she should be paid this money but, because she quite rightly reserved on another aspect to continue another court action, Telstra refused to pay her the money. Even the minister wrote a letter to Telstra saying, `I think you should pay the money.' Telstra said, `No, minister, we ain't paying it.' It took a public hearing to embarrass Telstra into ultimately paying Mrs Garms some money.

I thought the minister on this particular occasion—as I said after the hearing—was gutless. Here he was being told by the management of Telstra, `Go jump; we ain't taking any notice of your letter or of the court or of the arbitrator saying that Mrs Garms should get her money.' This was Telstra's tactic of trying to starve her and all the other CoT cases out. This is one example—as I said on the record at the time—where the minister should have used his power of direction to tell Telstra to pay the money forthwith to Mrs Garms as agreed in the court case.

This parliament has to be absolutely rock solid on insisting: one, that the power of ministerial direction is maintained even if the present minister is gutless and will not use it; and, two, that we should always maintain the Senate estimates committees. If we had not had the Senate estimates committee using the device of inquiring into the CoT cases under the annual report we would not have brought to light all of the injustices that have occurred in these cases.

What came out that is astonishing is that Telstra have spent $24 million, most of it on hiring various lawyers in this country. I think at one stage they told us that they have something like 40 law firms in Australia on retainer. That means that if you try to find anybody in the legal profession who has any knowledge about handling telecommunications issues, you cannot hire them because Telstra have them on a retainer. If anybody shows an interest, Telstra take them on a retainer, and no-one is available to help defend you against—as Senator Alston in a previous incarnation described it—`the 600-pound gorilla'. But he never did anything to try to tame the gorilla in this particular case; he ran away from it.

So Telstra spent $24 million—at the time we asked the question it was $18 million—on legal fees, overseeing the payout of $1.8 million to various CoT cases. The lawyers made an absolute killing, and Telstra were willing to do it. Telstra then responded that the total claim of all the CoT and associated claims was $44 million. They have spent $24 million so far on defending $44 million. Five or six years ago they could have settled this case for half the legal costs they then paid. I am sure the CoT cases would have accepted a payment in total between them of $5 million, $10 million or $12 million—half of what Telstra spent on legal fees. But this arrogant organisation, under the leadership of Mr Blount and other senior managers, refused to negotiate and used every device to starve the CoT cases out.

Mr Wynack, in his final report, still says there was a problem with getting information. He says on the last page of his letter to the committee:

In many cases, it is impossible—

that is, to get the documents—

because of Telstra's poor record-keeping practices during the periods of the claims and since.

Telstra's main defence now is that the records are not good enough, and that is costing the CoT case people. What are Mr Switkowski and senior management going to do about improving the record keeping of the biggest company in Australia? This is an indictment on Telstra's senior management. They cannot keep records for their customers. Their own defence now is that they have been lost and, `Therefore, we can't give you any information that may help you in your dispute.'


Senator Carr —It's a bit too convenient.


Senator SCHACHT —It is a very convenient excuse. I want to take this opportunity to congratulate Mr Wynack for his work—under considerable frustration with the way Telstra acted on a number of occasions. The work he did on behalf of the committee is excellent, and it should go down on the record that as a member of the committee I appreciate his work. He could have easily decided a long time ago that this was all too difficult and frustrating. He stuck at it because he thought there was a case for justice for the CoT cases and for other people taking on Telstra on this issue.

As I said at the beginning, this is one of the sorriest examples of corporate mismanagement in Australia's history—not because the loss of money compares with some other scoundrels' activities, such as Mr Bond and Mr Bell, but because of the way they have dealt with individuals. Like other members on my side, I support public ownership of Telstra. As Senator Carr said, if Telstra had been fully privately owned, the CoT cases would not be before the Senate. We will use our opportunity to examine Telstra and force an outcome.

That is one reason why I oppose privatisation—a company that is a near monopoly for most Australians must stand before the Australian parliament and answer questions about what they are doing. If not, they will run roughshod over ordinary citizens forever and a day and use their enormous financial power to starve the citizens of Australia out. (Time expired)