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Thursday, 21 August 2003
Page: 19186

Ms HOARE (11:47 AM) —The Telstra (Transition to Full Private Ownership) Bill 2003 repeals the provisions of the Telstra Corporation Act 1991 that require the Commonwealth to retain 50.1 per cent of equity in Telstra. The bill allows the timing of the sale to remain open and for flexibility in the sale process, purportedly to maximise the government's financial interests. The Minister for Finance and Administration will be able to make a determination, setting out the rules governing a Telstra sale scheme. What we are seeing here is the Howard government asking this parliament to approve the $30 billion sale of Telstra when it is obvious from the debate that has occurred so far in this place that the majority of Australians do not want that. The majority of Australians want Telstra to stay in public ownership.

The ministerial power of direction over Telstra will be removed once the Commonwealth's equity falls below 50 per cent. This removes the key power for the federal government to ensure that Telstra acts in the national interest. While this power has never been used, the threat of its use, along with the board appointment power provided by majority public ownership, provides a strong degree of government control over Telstra. It is also an important reserve power if Telstra acts in a manifestly inappropriate manner and refuses to address such actions.

In a debate over some industrial relations legislation earlier this year, which we were also opposing at that time, I foreshadowed the introduction of this legislation into this parliament. The sell-off of Telstra is part of the Prime Minister's ideological push. We can see this legislation looming as another trigger for a double dissolution election. At that time I outlined the legislative pieces which had failed to pass the Senate twice, or that had been amended by the Senate in ways that were unacceptable to the government, and which are now sitting there as triggers for a double dissolution election. This is just part of the whole Howard ideological agenda that started off with the `never, ever' GST. That agenda is continuing with the industrial relations legislation, border protection legislation and legislation that will throw people off disability support pensions. We will probably see Medicare legislation join them and, as I foreshadowed earlier this year, we now have the legislation to sell off the rest of Telstra.

I have indicated these triggers because the process of a double dissolution election—if the Independents and minority parties in the Senate stay firm in opposing this legislation with Labor—will give the Australian electorate a clear opportunity to say to the government: `No, we don't want you to flog off Telstra. No, we don't want you to dismantle Medicare. No, we don't want you to continue attacking workers' rights. No, we don't want to continue to be shrouded in a campaign of fear and insecurity in relation to border protection legislation.' I am sure that, if a double dissolution election happens, the Australian public will give a clear and concise message to this government.

On average, two-thirds of Australians do not want Telstra to be sold off. We have heard in this place the results of surveys conducted by the member for Hume, the member for Dawson and the member for Kennedy. I am sure there are many other members of the coalition government's backbench who have conducted their own surveys but have been gagged by the leadership to prevent them revealing the results of their surveys in their electorates. We have also heard the figures indicated on this side of the House. So while I say an average of two-thirds, I believe—and I think it has been indicated in this debate—the number of Australians who are opposed to putting Telstra, our national telecommunications system, into private ownership is probably a lot higher than that.

As the Leader of the Opposition, Simon Crean, said in this debate:

... 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.

Prior to 1996, Telstra was 100 per cent owned by all Australians. Telstra was one of the great public success stories. It was one of the leading telecommunications giants in the world and the main contributor towards Australia's exports of nearly $1 billion worth of communications products and technology every year, which had grown from about $50 million in the early 1980s. In 1996-97, prior to privatisation, Telstra recorded a profit after tax of $2.6 billion. This was an increase of over 18 per cent on the previous year. In 1996-97 Telstra paid a total dividend to the Commonwealth—in effect, to its owners, who were the people of Australia—of $4.1 billion. In its final year of being fully publicly owned, Telstra paid a total of $6 billion to the government.

Australians are already getting a taste of how Telstra would behave as a fully privatised company under the Howard government. Telstra is betraying its majority shareholders—the Australian people—and is being allowed to act as if it were already privatised. Telstra is abandoning its broader responsibilities to the Australian community but is still exploiting the competitive advantages it derives from its background of monopoly public ownership. Because of the Howard government's obsession with pri-vat-isation, Telstra is failing to fulfil its broader obligations of national development and social inclusion. In this debate we have heard about Telstra's overall report card under the privatisation drive, and it is rather bleak. It indicates a deteriorating network crippled by major investment reductions and staff cutbacks, enormous losses on investments in Asia, rapidly escalating line rental fees that are not adequately comp-en-sated for by reductions in call prices, in-adequate competition because of Telstra's market dominance and control of the fixed line network, poor roll-out and take-up of broadband compared with equivalent count-ries, and an emerging Telstra focus on moving into other sectors such as media and information technology management at the expense of its traditional responsibilities.

Telstra shares have more than halved in value in the past five years, falling from a high of $8.90 in 1999 to $4.74 today. Telstra's capital expenditure has fallen from a peak of $4,705 million in 1999-2000 to an estimated $3,250 million in 2002-03. In September 2002 urban New South Wales reported the worst Telstra customer guaran-tee performance across all areas of Australia with just 83 per cent of faults fixed on time. It seems that Telstra always has something to blame, like bushfires or flooding. How about realising that, when you sack a large number of workers, they are not there physically to fixed people's phones! Telstra has never invested enough resources in the Hunter and appears to lack any appreciation of our growing needs and expectations of telecommunications. Telstra cut its work force by over 4,000 in the last financial year and cut its capital expenditure by $600 million. This may have something to do with Telstra's poor customer service performance in places like my electorate of Charlton.

In July there was a pertinent article in the Age newspaper in Melbourne, written by Kenneth Davidson, entitled `Why Telstra is running down our network'. Some of my arguments are highlighted quite well in this article. The author, in referring to globalisation, says:

... unless we are connected to the world through a broadband telephone network within the space of a decade, there is no way we will be able to benefit fully from globalisation.

He indicates that a ballpark figure of $20 billion would need to be invested to connect every Australian to the broadband network, and that is just a guess. Australians must have access to the world through broadband cable. Australians who do not have access to broadband and the information and services it opens up will become second-class citizens. Kenneth Davidson says:

If the Government manages to sell the rest of Telstra and if the Government succeeds in carrying out the Coalition's plans for Medicare and higher education, Australia could end up with the trifecta: two-tier health, education, and communications systems.

... ... ...

The OECD Telecommunications Outlook for 2003 paints the picture. Compared with other OECD countries, Australians are keen users of the internet. But Australia is lagging badly in investing in broadband networks that will allow internet users to maximise the benefits of being online.

According to the OECD, about 22 per cent of Australians were connected to the internet in 2001, compared with an OECD average of about 18 per cent. But only about one in 100 Australians had broadband access to the internet in 2002, compared with nearly four out of 100 OECD inhabitants.

Australia is lagging in creating broadband access and is failing to keep up the investment in maintaining the existing network. Telstra has halved its investment in relation to revenue and, as is indicated in the article in more detail, the investment that did take place was largely wasted.

In 1990 Australia was rated 14th out of 22 OECD countries on the cost of business calls. Today we rank 20th out of 30. According to the OECD, Telstra's R&D expenditure has fallen from 0.3 per cent of total revenue in 1997 to 0.1 per cent in 1999 and zero in 2001. The author indicates that the two reasons the government advances for Telstra's privatisation do not stand up. Debt reduction makes sense only if the government has better uses for the proceeds of the sale—and it does not. The other reason the government puts forward is that it should not both regulate the industry and retain an interest in Telstra. The author questions why not. According to the OECD, most OECD member countries retain a controlling interest in their major telecommunications.

Telstra constitutes about two-thirds of the entire communications sector and earns almost 95 per cent of the sector's profits. A private Telstra would be a giant private monopoly that would totally dominate the communications sector and use its monopoly power to extend that dominance into other sectors, like media and information. As pointed out by the shadow minister, the member for Melbourne, Labor sees telecommunications services as essential services, whereas the Howard government regards telecommunications services as a luxury whose availability should be governed only by market forces.

As part of Labor's unconditional opposition to any further sale of Telstra, we have also chosen to pursue a four-point reform strategy, designed to bring Telstra back to its primary role and maximise the benefit of telecommunications competition. Among the key features of our strategy are that Telstra will be required to intensify its focus on its core responsibilities to the Australian community and reduce its emphasis on foreign ventures and media investments. Telstra will be asked to intensify its focus on the provision of affordable and accessible broadband services for all Australians. The competition regime will be strengthened by requiring much stricter internal separation of Telstra's wholesale and retail activities, the minister for communications will be removed from the process of ACCC scrutiny and regulation of accounting separation within Telstra to ensure the process is genuinely independent and rigorous, consumers will be given stronger protection from the sharp practices by telecommunications companies, and the price control regime will be made fairer.

Labor believes in public ownership of Telstra because telecommunications are essential services. Under a Labor government, a majority publicly owned Telstra will deliver high-quality telecommunications services for all Australians and decent returns for its shareholders.