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Tuesday, 8 October 1985
Page: 777

Senator BLACK —My question is addressed to the Minister for Industry, Technology and Commerce. Given Telecom's policy of fostering Australian industry through the purchase of 90 per cent of its telecommunications equipment from local suppliers, can the Minister advise the Senate of the effects which privatisation, the accompanying removal of purchasing preference policy and possible foreign ownership would have on the Australian telecommunications manufacturing industry?

Senator BUTTON —I thought this question of privatisation had gone into limbo over the last fortnight. It was the flavour of the week before that as far as the Opposition was concerned, but I thought it had disappeared until Senator Messner, of course, resurrected it again in an interview yesterday when he announced that the Liberals would finance their mini-tax package by cutting government expenditure and by privatisation. I thought that Mr Valder and Mr Howard between them had more or less laid that issue to rest when Mr Valder described it as fiddling at the edges and Mr Howard backed away from it very fast after being elected Leader of the Liberal Party. Apparently it is still on the political agenda. In that context, Senator Black's question becomes important-more important, perhaps, than it might have been, with respect, a week or so ago.

Of course, Telecom's practice of purchasing 90 per cent of its equipment from Australian manufacturers is very beneficial to those manufacturers and the telecommunications industry in Australia. It is a very strong protective device for the telecommunications sector in this country. I guess it has been important to the development of that industry that Telecom has done that over a number of years. It has been beneficial in terms of employment and for the companies concerned. However, there are disbenefits in that, as one could well understand. Operating in a fairly small domestic market, telecommunications manufacturers not only have had the benefits of protection but also have idled along in the knowledge that, while those protective arms are there, they do not have to do much about exports or research and development and so on. That issue is currently being discussed with the telecommunications industry in this country.

The effects of what has happened in Britain since the Thatcher Government made its decision to sell British Telecom are somewhat diffuse and varied. For example, it has no doubt been damaging to companies such as Plessey, STC, GEC and others in the British telecommunications industry. However, some good things can be said about it. The attachments market, which has been served by small companies in the United Kingdom, has become more vigorous, with greater opportunities being opened up.

The things that are detrimental as a result of that policy in Britain on the sale of British Telecom are that the standard of service is said to have deteriorated and that a major problem has developed with the emergence of a new web of regulations enforced by an organisation called Offtell, leading to a process in Britain which is now identified in the terminology of British industry as reregulation. This has followed directly from the decision to dismantle British Telecom.

I point out also that it was said that one of the great virtues that would result from selling British Telecom would be diffuse shareholdings spread across a number of people and institutions. In fact, a month after the sale of British Telecom, there were four million identifiable separate shareholders in what had been British Telecom. In 18 months, that figure had reduced from four million to 500,000. There had been an aggregation in shareholdings in what was British Telecom.

All those experiences in a country such as Britain are relevant, but, in my view, they are only marginally relevant because of the very different circumstances which pertain in a country like Australia, where we have a public instrumentality like Telecom serving a small population in a vast continent. For that reason, the differences are very real and apparent.

To summarise my answer to Senator Black's question, the purchasing policies of Telecom Australia have been beneficial to the Australian telecommunications industry. It is my view that those policies have to be supplemented by some other stimulus to the telecommunications manufacturing industry in Australia if it is to grow as that industry is growing in the rest of the world.