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Friday, 18 October 1996
Page: 4517

Senator CRANE(12.19 p.m.) —All I can say, after listening to that contribution, is that it is in stark contrast to what I hear from the Tasmanian representatives in this federal parliament. All I can say to Senator Mackay is: if it's so bad in Tasmania, come west. It is a great state and there is a lot going on there. We are very proud of our state.

I want to deal with the Telstra (Dilution of Public Ownership) Bill 1996. The reason we are hearing so much knocking from the other side about this bill and the creation of the natural heritage fund—which was our policy position leading into the election and still is—is that we put this policy together before they did. That is their single biggest problem with this proposed legislation.

They are not big enough to turn around and admit that this concept not only would improve Telstra significantly—many people in Australia do not have the services they should have; I could link our operation to that, and I will in a moment or two—but also is the first serious attempt to deal in a practical way with some of the environmental concerns that most of us in this chamber have expressed from time to time. Their problem is that we beat them to it. That is why they are bleating so much.

I come from the south-east part of Western Australia, and our property would probably have been the last of anybody's in this room to be connected to the telephone. It was not that long ago. We have an appreciation of the value of the telephone and the development of—

Senator Neal —It takes longer for some of us.

Senator CRANE —You would not have an appreciation of it. You have lived in the lap of luxury, subsidised by the ability of states like Western Australia to earn real income. That is where you have lived all this time.

I would like to talk about some of the national economic benefits of the measure before us. Communications has emerged in recent years as one of the main contributors to economic growth. The growth within the communications industry has been an astounding 18 per cent, or up to five times the growth rate of GDP. Trying to measure the precise economic value of improving an input such as communications services is difficult because it permeates all aspects of our society and because, year by year, it is becoming more important to the way in which we conduct our daily lives.

However, with or without detailed numerical analysis, we need to have a clear view of the importance of improvements in communications services. I intend today to move from the macro to the micro level, to demonstrate the real value of truly efficient delivery of services to the broader economy, to the communications industry and to each of us as individuals.

Next, I will deal with the broad economic benefits. Australia has been the lucky country in many respects. However, our geographic position in the world and our demographic spread have been major obstacles to accessing markets in commerce and trade. Our relative geographic isolation from major markets has constrained our economic potential. Distance from growth markets, even the north-east Asian markets, has limited our ability to trade and to establish a sustained presence in a number of key trade areas.

The problem has been compounded by an economies of scale problem whereby Australian firms have made one-off deals in particular regions, but are not seen as serious contenders next to large American or European corporations because we cannot finance a sustained presence in these countries. With efficient communications services, our businesses have the opportunity to overcome this barrier of distance to markets and be in a position to compete on an equal basis with other countries.

Large and small firms will be able to keep in touch with potential buyers electronically without the requirement for expensive representation on the ground. There is a considerable potential for Australian firms to become active in areas where we have considerable expertise, such as the remote sensing, agriculture, fishing, forestry and mining industries. There are also opportunities in service sectors such as telemedicine and education.

To become an export focused economy—and we must really address our balance of payment problems—we need to get overseas markets and require efficient world-class telecommunications links both domestically and overseas. Efficiency in the provision of communications services in Australia will act as a catalyst in opening opportunities for a range of Australian businesses overseas. We must take the steps that are necessary to gain this efficiency; otherwise the traditional problems of access to overseas markets will continue.

The barrier of distance also applies to large and small firms operating within Australia. Through efficient, affordable communications services, we have perhaps more to gain than any other country in the world by allowing producers and consumers to interact across continents. This is no small point and we should reflect on this for a moment.

The cost and availability of communications services may be the difference between securing a new contract or placing a new order. In short, it could be the difference between viability and bankruptcy.

In debating this bill, we need to think about these sorts of issues. The only way we are going to get sustainable jobs and improved standards is through profitable businesses. Profitable businesses need efficient communications services.

I mentioned earlier the difficulty in measuring the economic value of improving communications services. Despite this there has been some analysis and, as commonsense would dictate, gains at the micro level are quickly translated into massive gains at the macro-economic level.

Telstra's submission to the recent Senate inquiry provided a detailed exposition of benefits in terms of GDP growth, consumer surplus, more efficient use of the community's resources, improved international competitiveness and reducing the relative cost disadvantages experienced by business and residents in rural and remote regions of Australia. The submission stated:

According to Industry Commission analysis, adoption of Hilmer-type competition reforms in the telecommunications sector was estimated to achieve significant improvements in GDP of the order of $2.7 billion. Follow-up analysis by the Centre for Regional Economic Analysis showed that all industries and every state of Australia would benefit from these reforms. This is because virtually every business in Australia is connected to a telephone network and therefore uses a component of communications as an input in the production process.

It is also important from an international competitiveness viewpoint that Australia has an efficient and minimum cost telecommunications infrastructure. Improving productivity within Telstra and the industry assists exporters (and potential exporters) to compete in international markets and domestic-focused firms to compete with imports. Higher exports and import substitution both operate to increase measured domestic GDP. Furthermore, this could lessen (although difficult to quantify) the current account deficit. Historically a major cyclical constraint to economic growth in Australia.

The inquiry also heard that the Department of Communications and the Arts had commissioned some modelling of the potential economic gains arising from improving Telstra's labour and capital efficiency.

This built on work done previously by EPAC and the Industry Commission and suggests that there are some significant potential gains to the wider Australian economy simply through improving Telstra's technical efficiency—that is, without taking account of likely changes to service offerings. This work was summarised as follows: for labour, efficiency gains of 15 per cent, 30 per cent and 45 per cent were modelled for the communications sector as a whole. These correspond to improving Telstra's ratio of access lines per employee to about 160, 190 and 220 respectively, adjusted for Telstra's market share.

For capital, efficiency gains of zero, 10 per cent and 20 per cent were modelled. Notably, the middle case scenario—a 30 per cent gain in labour efficiency and a 10 per cent gain in capital efficiency spread over four years—indicated the following. Private consumption, which is an indicator of living standards, would increase by $1.7 billion or a permanent 0.6 per cent gain. There would be an 11 per cent fall in the long run price of communications services. An associated gain in the economy wide GDP peaking at 0.5 per cent—that is, $2.4 billion—by the year 2002-3 would moderate to 0.35 per cent—or $1.7 billion—in the long run and on a continuing basis.

A decline in employment in the communications sector of 17.5 per cent would be offset by increases in other sectors in the long run. The economy wide gain would be $3 per employee per week in 1995-96 prices. Allowing for the limits of modelling of this type, there are clearly significant benefits to the economy, businesses and consumers from increased efficiency in Telstra and the communications sectors generally.

Clearly, there are very real benefits for the economy as a whole from improving Telstra's efficiency because of Telstra's importance in the telecommunications sector and the significance of telecommunications to other sectors. The benefits of efficiency gains in Telstra will permeate virtually every area of economic and community activity.

The telecommunications industry is the star performer in the Australian economy. As I have mentioned, the industry is currently growing at around 18.1 per cent or five times the growth of GDP. But this performance needs to be put in context; otherwise we may be tempted to agree with the opposition's approach of sitting back and not making any preparation for the future.

Telecommunications is a growth industry world wide. This technology plus—and I emphasise the `plus'—efficiency gain is driving this rapid growth. In Australia we are receiving some of the benefits of technology improvement, but we are not getting the gain from efficiency. In short, while this result is good, it is not as good as it could be.

Telstra, as the major player in the industry, must pull its weight. By being less efficient than it could be, it is effectively constraining the potential of the rest of the sector. Achieving efficiency in Telstra is, therefore, vitally important to the entire telecommunications sector and the growth that has been achieved in recent years will be further assisted by an improved performance by Telstra.

I turn now to the benefits for the home. This debate is not just about the effect on business and cold hard numbers; it is also about the quality of people's lives. Telecommunications services are an integral part of our home life in terms of both conducting our personal daily business and keeping in touch with friends and family. All those in the chamber tonight—

Senator West —That only indicates how confused you are.

Senator CRANE —I am not confused at all, I was initially to deliver this speech tomorrow night. I will correct myself. All of those in the chamber today would be aware of how they are increasingly making use of communications technology to make the duties of office more manageable and to maintain contact with family and friends. Can you imagine the difficulty you would face in not having a fax machine, an answering machine or even a mobile phone available? Very shortly we will be equally reliant on the Internet access to conduct business and communicate with family members.

Communication services reduce the direct cost and ease the burden that we all face in conducting our daily tasks. Already we do not have to go to a bank to do our banking for an increasing number of items. We do not have to go to a shop to do our shopping. They also provide added benefits that cannot be assessed in monetary terms by improving our ability to cope with days in which time is increasingly at a premium.

Telecommunications services clearly provide economic and other benefits to the household. This is evidenced by the fact that we all want access to new communications services at affordable prices and is reflected in the incredible interest there is in the entire debate.

The conclusion is not only simple and obvious but also vitally important to Australia's future. If Australia is to compete internationally and make full use of the current telecommunications services and the raft of new services to come, we must have access to these services at affordable prices. Government alone cannot provide these services, and protective barriers to operation will not guarantee them in the long term. The only way Australians will get the communications services they need is through an efficient, internationally competitive industry.

The government wants Telstra to continue to be a key player in the Australian telecommunications market in the future. The Telstra bill is about achieving an efficient Telstra to ensure that it has a major role in Australia's telecommunications future. To deny the need for an efficient Telstra, as the opposition parties have done in their rejection of this bill, is either to condemn the company to eventual strangulation by more efficient competitors or to assume that Australia must accept a second-rate telecommunications system.

This government will not accept the opposition's second-best solutions. Australia cannot be held captive by the antiquated ideology of the sanctity of public ownership if we are to join the vast majority of OECD countries that have embarked on privatisation and have realised the full potential of their telecommunications carriers.

This bill represents a driving force in improving Telstra's efficiency and making sure that the company flourishes. It also represents a significant step in ensuring that Australia reaps the full benefits of the communications age.

In conclusion, the principal reason for the noises we have heard coming from the other side, and for their consistent complaining about this particular legislation, is that we in government, and prior to the last election, were able to get both the heritage trust fund and the reform of Telstra up as a policy position. There is very wide endorsement out in the community in terms of the policy positions that we went to the last election with.

Furthermore, I would like to mention a few things from the point of view of my own state of Western Australia. If what is happening over there continues—the continued development of our mining industries, the continued development of the initial stages and longer of providing income for this country, export dollars for this country, the continued improvement in our agricultural efficiency and all the other various aspects that go with life over there—it is absolutely essential that we keep pace with what is happening in the rest of the world.

As I have acknowledged here before, Telstra has done a fantastic job to this point in time. Now is the time to move into the new age, a different era. It is a different situation; it is not the same as what it was 10 years or 15 years ago. We as a nation cannot continue to support a situation which would be like putting a leg rope round a cow and holding it back, nor can those of us who come from Western Australia—at least those of us on this side of the chamber.

Now is the time to open ourselves up to a different era, a modern era—an era where Australia wants to go. It is about improving our economic performance as far as our current account situation is concerned, which we have seen happening since we got into government. It is about improving the various stocks around the country as well as the boost of confidence that has occurred. I could mention a whole range of things that I will leave to another time.

In the last 10 to 12 years of my life I have come to rely on a good telecommunications system by having a telephone. There are still a few people who do not have a telephone in Australia, but not many. By having a telephone, I do appreciate the importance of having a good, modern telecommunications service. I look forward to the time when we will no longer have to go out into our paddocks and steer our tractor, but will be able to set the program up in our houses—which is happening in some parts of Europe now—and our farming will all be done through telecommunications systems.