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Thursday, 30 May 1996
Page: 1430

Senator WHEELWRIGHT —My question is directed to Senator Alston, Minister for Communications and the Arts. I refer you to the Telstra bonds which are listed on the Australian Stock Exchange with a total value of over $2.6 billion. Can you confirm that there is a requirement under listing rule 3A(1) to provide the exchange with any information which might materially affect the value of those bonds as traded or that might influence an investor to buy or sell them? Can you further explain why no information has been given to the exchange on the proposal discussed by both you and the Prime Minister to set up Telstra in another company?

Senator ALSTON —It is probably no great surprise to Senator Wheelwright that I am not particularly familiar with the licensing requirements of 3A(1), or whatever else it might be. I will certainly seek advice on that. I am not aware of anyone having brought any particular concerns to my attention. I am sure you understand that at this stage of the game the ultimate way in which Telstra is privatised is very much a matter within the hands of this parliament.

Those who subscribe to Telstra bonds would have well understood the various permutations and combinations that could flow down the track. Undoubtedly they would have understood—or they could be selling out right now—our policy which did not limit us to the legislative route, although that was always our preferred option. They would certainly have understood, and I would be very confident that they would take the view, that having a significant slice of private investment in Telstra would make a very significant positive difference to the value of the company. In no way would their investment in bonds be jeopardised.

As the senator well knows those bonds are underwritten by Telstra—if not the federal government—and on my understanding, although I will take further advice on this, unless the value of Telstra actually fell below the value of the bond, the value of their investment could not depreciate. They would always get the guaranteed interest payable and would be able to redeem their bonds when they fell due. The only time there would be a risk would be if the value of the company fell below the value of the bonds on issue.

I do not think Senator Wheelwright is suggesting that on any stretch of the imagination Telstra could be worth less than $2 billion. I would have thought that all investors out there would be looking forward very much to a privatised Telstra. They would very much like you to do the right thing and allow it to happen, instead of filibustering in 11 regional centres around Australia and supposedly taking advice or evidence about a matter on which you have all made up your minds. In other words, this is a huge, costly and elaborate charade all of which is designed to reduce the value of Telstra.

The investors out there know that whichever path we go down we will always do it in accordance with the law. At the time of issuing our policy we did not rule out going down the extraparliamentary route. The real answer is that it never occurred to you that we might, so you did not call on us to give any assurances prior to the election. We assumed in good faith that you would understand the overwhelming merits of the case and that you would be prepared—after a proper examination by a committee—to actually allow Australia to do what every other country in the western world has done—in other words, substantially increase the value of the dominant telecommunications carrier by allowing the injection of private capital, allowing ordinary Australians to take shares and allowing Telstra employees to get a return on their own labour input as well as having a direct stake in their own company.

For all of those reasons, you will find that potential investors in Telstra—and I presume that does not include Senator Wheelwright—would want to see us proceed down the privatisation path by whatever legal means as quickly as possible. Therefore, it would not seem to me that there would be any concerns on that score. I will take advice on the matter and if I have anything further to add I will bring it back to the Senate.

Senator WHEELWRIGHT —Mr President, I ask a supplementary question. I can understand why the minister may be tardy in informing the Senate about what you are up to with Telstra, but do you not think that you have an obligation to all of those mums and dads out there who own this $2.6 billion worth of bonds to tell them in a very timely fashion in full exactly what you are up to? Given the fact that the bonds are trading now, when exactly are you going to inform the exchange?

Senator ALSTON —You seem to proceed on the basis that the mums and dads ought to be made aware of some bad news. The only bad news that those mums and dads have had in recent weeks is that you lot are not prepared to do what anyone else around the world will tell you needs to be done in this case. This is simply designed to enhance the value of a major Australian asset. Senator Schacht thinks it is the biggest company in Australia. I hope he has learnt that it is not.

The fact is that they are very interested in having a direct stake. They would like an investment in the company. They want to be sure that their bonds are secure, and I have no doubt that they are. I did not hear Senator Wheelwright take issue with my assessment that, unless the value of the company was below the value of the bonds, their investment could not possibly be at risk.

To the extent that there is any legal obligation on us to notify whoever is notified in these circumstances—perhaps it is the Australian Stock Exchange—then we will obviously do that. If it is simply a matter of judgment about whether there is likely to be a depreciation in the value of Telstra as a result of our current proposals, then I can assure you we certainly do not take that view. You asked me whether I thought they should be advised and on that basis the answer would be no.(Time expired)