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Friday, 18 October 1996
Page: 4513

Senator MACKAY(Midday) —In rising to oppose the Telstra (Dilution of Public Ownership) Bill, I would like to say that I welcome and support the majority report of the committee that inquired into the bill. I believe, as do my colleagues, that the reasons expounded by the government for the privatisation of Telstra are fundamentally flawed in terms of both protecting the interests of Australians and what those on the other side are supposed to be about—that is, good business.

It was with great interest that I read the evidence from the Department of Communications and the Arts. This evidence drew heavily on a report from the World Bank. I am sure senators are aware of the content of this report. It states that the majority of companies used as examples for privatisation were companies that were simply not profitable—or, to put it in a way that those opposite can understand, they did not make a buck—unlike certain share portfolios.

Senator Calvert —That is a nice outfit you are wearing.

Senator MACKAY —Senator Calvert, you are interjecting, are you?

Senator Calvert —I was just saying that that is a nice outfit you are wearing.

Senator MACKAY —I have not heard you talking about Telstra or anything of interest to Tasmania recently. How are these companies comparable to Telstra? They are not. Telstra makes a lot of bucks; Telstra is a very profitable company with consistent record profits. For the department of communications to use this comparison when there is clearly no comparison just goes to show how desperate this government is to justify the partial sale of Telstra.

Under public ownership, Telstra has performed superbly. Let me tell you how. Telstra is performing up to world's best practice on pre-tax return on investment; it is performing up to world's best practice on interest cover; it is performing up to world's best practice on debt ratio levels; and it is performing up to world's best practice on average equity. Obviously, Telstra is a company that anyone would kill to own—anyone except the government. However, given Telstra's profitability, I am sure that if this initiative succeeds government members will be lining up to buy shares in Telstra.

Telstra has also performed well in my home state of Tasmania. Tasmania's isolation obviously has an effect on our capacity to communicate. Having the phone on should be a right and not a privilege. If it were not for Telstra's public ownership and cross-subsidisation regime, Tasmanians would be paying thousands simply to have the phone on. If it is privatised, who will be the losers? Regional and rural Australians, the sick, the poor and the elderly.

Under this government, we have seen a string of body blows to Tasmania—cuts to job creation programs, cuts to Commonwealth funds, cuts to legal aid, cuts to our university and on and on. Tasmania's economy, under a Liberal state government and under a Liberal federal government, is in an absolute shambles. This sale will compound the litany of betrayal of the people of Tasmania.

It is no accident that Tasmanians stuck with Labor in March this year. They knew what to expect because of the actions of a state Liberal government. They do not trust the government; they do not like the government; and they did not vote for the government.

Let me describe the appalling state of Tasmania's economy. The state Liberal government is slashing services right across the board. Nearly 1,000 state public sector workers are out of a job—and that is before you add on the federal government cuts. Let us turn to the federal government. Over the next three years your government will impose cuts to Tasmania in the vicinity of $160 million.

Senator Crane —Why don't you come to Western Australia—we are going well.

Senator MACKAY —Let me tell you, Senator Crane, that what happened in March this year was that Tasmania actually got the best result for Labor in Australia and we almost got three senators. There was very little change in the Senate vote. Do you know why that is? Because we ran a campaign in Tasmania on what would happen to Tasmanians in relation to the sale of Telstra. That is why we actually kept our vote—Tasmanians did not vote for this government and they are not going to vote for this government next time.

Medicare offices are closing. We are losing the Launceston taxation office and federal public sector jobs are being slashed. All of these things mean absolute disaster for my home state. The recent Access Economics report has predicted that the Tasmanian economy will grow by only 0.7 of half a per cent over the next year. Our unemployment rate remains the nation's highest—it is currently at 10.7 per cent, seasonally adjusted—and youth unemployment is a staggering 24.9 per cent.

This government is now proposing that Telstra be partially privatised. Let me enlighten the Senate as to how a partial sale will further depress the Tasmanian economy. Telstra currently employs a total of 1,460 people in Tasmania. On 13 September this year, Telstra confirmed that it plans to shed 22,000 jobs nationally. If this cut is implemented across the board, it will mean the loss of some 500 jobs in Tasmania. In addition, many of the remaining positions will be transferred to Melbourne, stripping Tasmania of employment in high value added areas of Telstra. The real number of job losses in Tasmania could end up being closer to 700.

These jobs have been on the line only since the change of government. As Telstra prepares itself for a partial privatisation, Telstra chiefs have said that the jobs need to be cut to make Telstra more competitive. Surely a company recording a profit of $2.3 billion is already competitive. Telstra's wage bill in Tasmania is currently in the order of $51 million. If half the jobs go, half the wages go—even those on the other side can understand that. The removal of this amount of cash from the Tasmanian economy is something we simply cannot afford.

Tony Rundle, the most pathetic Premier our state has ever seen, cannot even see through the blackmail inherent in the promise that Tasmania will receive a lion's share of the Natural Heritage Trust. His eyes are dazzled by the idea of a few lousy dollars.

Given what has happened to Tasmania over the last six to eight months, I guess Mr Rundle will clutch at any kind of straw in relation to job creation. He sold his state down the drain, pure and simple. And it is not just economics: there are community service obligations that need to be looked at.

The universal service obligations set out in this bill are not good enough. They are not good enough for Australia, nor for Tasmania. There is no provision for the standard telephone service to include technological advancements such as broadband services and so on. This is despite spurious assurances from Senator Alston that:

The extent to which people in rural and remote areas have access to services is obviously critical if they are not to be left behind in keeping up with the latest technologies.

The likelihood of the universal service obligation being broadened to include these technologies is remote as it would reduce the profitability of Telstra. If you are about making a buck—and the company is about making a buck, and that is the sole motivation—then that is logical. It makes sense. This would lower the price of stock that this government would get from the fire sale of Telstra. Senator Alston said in this place:

Optus has indicated an interest that will extend to Tasmania.

He went on to say:

I have no doubt that if Tasmanians are interested in the service, Telstra will be looking at it as well.

`Looking at it' is about as far as it will get, let me assure you. There is no guarantee of access. Both Telstra and Optus have confirmed that they have no intention of rolling out broadband cable in Tasmania. That has been confirmed; they have no intention whatsoever. Telstra will not do it because Optus is not going to do it—pure and simple.

Tasmania cannot be guaranteed access to pay TV. We will end up with Internet access that is simply not up to scratch. Tasmania faces a future with a second-rate communications system, a system which will disadvantage consumers and disadvantage the business community. Businesses in Tasmania are trying to compete for a market share through the Internet, and they will be way behind the eight ball. If you want to run a business in Tasmania and have access to those kinds of services, you will have to run the business out of Melbourne in order to get access to state of the art technology. That is ridiculous and absurd.

This will mean a decrease in business investment and a further slowing of what could be kindly described as an already limping economy. Tasmania will become a technological backwater as a result of this initiative, and the people of Tasmania know it. If a partial sale goes through, there is no way that Tasmania will be assured of access to the latest technology. The only way that Tasmania can be guaranteed this access is if the minister has the power to direct Telstra to ensure that that access is there.

However, the loss of ministerial direction is just one of the many safeguards that will go under this bill. The cross-subsidisation rates, which currently are provided by Telstra, are absolutely critical for regional Tasmania. Under the existing universal service obligations, the annual access cost per line is highly subsidised in my state. Let me give an indication of the extent of these subsidies. In Burnie, for example, it costs $850 per year to have a phone connected, and Flinders Island is subsidised to the extent of a staggering $4,930 per year. Even Launceston—which is actually in Bass, one of the few seats held by the Liberal Party in Tasmania—is subsidised to the extent of $730 per phone line per year. The loss of cross-subsidisation will clearly be an absolute disaster.

Tasmania is the only state which has every one of its federal electorates receiving a cross-subsidy for the provision of telecommunications services. Tasmania is subsidised to the tune of approximately $9 million per year. These universal service obligations are not guaranteed under this bill and, despite what the government says, they will go. The offending clause in the new bill states that:

Universal service obligations . . . should be fulfilled as efficiently and economically as possible.

If private owners of Telstra decide that the universal service obligation is not efficient or economical, they will say they do not want to fund it—that is what will happen—and we will have lost the ability to make them.

This clause is the carrot for foreign investors. It has quite deliberately been put in there. This is the loophole that will enable the new owners to water down the universal service obligations. This clause changes the universality of our telecommunications system. This government wants a system that links telecommunications access to the ability to pay—as with everything else this government has done. If you have got the money, you will be all right; you can get the phone on.

Once privatised even partially, Telstra will have to comply with the Corporations Law. This law clearly states that majority share holders—that is, the government—cannot make decisions that financially disadvantage minority shareholders. That is another loophole for the removal of the universal service obligations. Tasmania is obviously in need of protection, and the status quo is the only way to guarantee that we receive it. A partial sale of Telstra could end up being the straw that breaks the camel's back for Tasmania's economy.

This government has admitted that a privatised Telstra, under market forces, may reduce the quality of services. How do we know that? Because why else would they talk about introducing a customer service guarantee if they are not concerned about a diminution in the standard of service? That guarantee would establish minimum levels of services in areas like the time taken for connections and time taken for rectifying faults and service difficulties—not good enough.

The Senate committee looking at the bill noted that some submissions, including those of the Telecommunications Ombudsman, argue that a guarantee is not sufficient; it does not go far enough. This guarantee has no accessible enforcement mechanism. Basically, if you cannot afford to pursue the matter, tough luck.

What protection is there for Tasmanians who live in rural areas? What if their phone connection took longer than the time specified under the service guarantee? They would have to go through a process that involves a whole lot of red tape. That will take time and cost money. Effectively, their protection will be lost. That is the reality. The so-called guarantee would be worthless.

I ask Liberal senators representing my home state to think carefully about their social and moral obligations. In doing so, I remind them of the words of the Prime Minister (Mr Howard) to the Tasmanian state Liberal conference:

We will look after and respond to the special needs and interests of Tasmania.


In the years ahead we will maintain that special understanding of the particular problems and challenges to Tasmania.

What a joke! Tasmanians did not believe him then and they do not believe him now.

I say to Tasmanian Liberal senators: why don't you stand up and represent and fight for the people who actually elected you to this place? Why don't you do what the Prime Minister suggests and look after the interests of Tasmania? You have no credibility and you are letting your state down.

How do they think they got here? Tasmanians voted for Tasmanian Liberal senators in good faith, and I challenge them to do the right thing by their state. The Tasmanian Liberal senators in this place should hang their heads in shame at what they have done to Tasmania and at what this government has done to Tasmania with their complicity, their compliance, in absolute silence.

We did not hear a thing out of them when these budget cuts were being brought down in relation to Tasmania—not a peep. Senator Abetz flirted with the idea of crossing the floor but was pulled into line by the Liberal Party machine—which is ironic given his background—and that is the last we heard. This is their chance to do something positive for Tasmania and vote against the partial sale of Telstra for the state that they represent and for the people who elected them.

The partial sale of Telstra is bad news for Tasmania. The partial sale of Telstra is bad news for Australia. The bottom line is that the partial sale of Telstra is bad news—bad news for the poor, bad news for the sick, bad news for the elderly and bad news for country people.

If this bill were to go through, I can tell you, it will be bad news for the government. People will not like it. Labor has three seats in Tasmania out of five. Come the next election, we will have five out of five.