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Monday, 28 October 1996
Page: 4607


Senator PANIZZA(6.20 p.m.) —I rise with pleasure to support the Telstra (Dilution of Public Ownership) Bill 1996, although my turn came much sooner than I expected today. We have obviously had a sudden loss of interest from those on the opposition benches to speak on this bill. Perhaps after the Lindsay by-election—


Senator Carr —There is a lot of interest.


Senator PANIZZA —Don't start. Perhaps they got the message from the by-election that was held the weekend before last. I am not going to harp on that one for too long. I think the message was there hot and strong that this government was given a mandate and it went out there before the election and told Australia exactly what it was going to do, which was quite contrary to what happened with the Commonwealth Bank, but I will come to that later. Anyway, the time has come for me to do my part. As I said, it is a pleasure to speak to this bill.

Let us get a few things straight. To my knowledge, those people responsible are not in the chamber now, but time and time again as I sat here the Friday before last doing the whip's duty most of the day, I heard senators from the opposition benches, the Democrats and the Greens—one of the Greens spoke today—talking about the sale of Telstra. They repeated it that often that I started to believe it too. But we are back to a new week now. By now they should realise that we are only selling one-third of Telstra. That is what the bill is all about.

As Senator Calvert pointed out early in his delivery, the two-thirds that remains with the government and the shares that are going to be sold amount to a figure of about 88 per cent—I may be wrong, so please correct me if I am—but very little will be owned by interests outside this country. Please everyone, get it through your heads that we are selling only one-third of Telstra. I heard Senator Conroy say it for a start.

Let us compare this with that broken promise of the previous Labor government on the Commonwealth Bank. They claim that it was not a broken promise because they did not mention it leading up to the previous election. I suppose they could go down that line and say, `No, we never promised not to sell it; we just did not say anything about it.' I come back to the point that, leading up to the election, we were out there saying that we were going to sell a third. We said that $1 billion would go into a foundation for the environment and the rest would be used for retiring debt and not recurring expenditure.

Let us compare the sale of Telstra with the sale of the Commonwealth Bank. As I said, the Labor government of the time, contrary to former promises—even though they did not mention it leading up to the election—sold off 30 per cent of the Commonwealth Bank. They sold 249 million shares at $5.40 each, which brought in $1.344 billion. At that time, this gave the Commonwealth Bank a total value of $4.4 billion.

In September 1991, just six weeks later, the share value of each of those shares that were sold off reached $6.46. As I remember, six weeks later, that 30 per cent grew to $1.608 billion. So the $1.344 billion grew to $1.608 billion—that was the privatised part—in a maximum of two months or something like that. That already gave a total value of $5.361 billion.

However, in September 1993, when the government of the day decided to sell another 20 per cent, at that time those shares were valued at $7.79 per share. That original 30 per cent was now worth $1.939 billion, which also gave the Commonwealth Bank a total value of $6.463 billion. The point I am getting at is that whatever the government got at the time in that first share issue was far outstripped by the increase in the total value of the Commonwealth Bank.

In other words, the 80 per cent that was left at the time in the hands of the Commonwealth government grew back in no time, in a matter of about two years, and it went beyond the total value in 1991. In other words, it went past the 100 per cent value. Of course, there was a certain amount of inflation in that. But, unless the government at the time want to say that they let inflation run rampant, the inflation did not make up for that. So you can see that by part-privatising a government entity, it does not take very long to make up for what has been sold.

In two years, the Commonwealth Bank grew to $2 billion, which was far in excess of that original sale of $1.344 billion. You ask: why does that happen? It happens because, when you go into part-privatisation, you also get private enterprise management. You get private enterprise thinking in management.


Senator Kernot —You get a loss of accountability.


Senator PANIZZA —Senator Kernot, you do get that; it does happen. That is why I can see the same thing happening with the balance of Telstra which is 66.66 per cent recurring. In no time down the track, this will be worth as much to the government as it is today, having already picked up in the meantime whatever the value is in cutting down the debt and certainly not using it on recurring expenditure. This includes that $1 billion that is going into the foundation, the income from which—this is something that those on the other side did not fully address—will go to the environment along with other allocations from the budget.

Why will it make Telstra a little meaner and leaner with private enterprise management? Even though Telstra operations around the country have improved a lot over the years, there is still a lot to be done as far as work practice and attitude to work are con cerned. I can remember a person who worked for Telstra somewhere in Australia, not necessarily Western Australia, who had a private enterprise mentality about him. His job as a technician was to do certain installations. He was given a list of jobs to do for that week on a Monday morning; he came back at lunchtime and said that he had done such and such. They said, `You have done what? You have done three times the allocation that you were supposed to have done this morning.' He had to appear in front of a superior who told him to slow down a bit. I just throw that in to show you that those things are still going on. That is the comparison I have made with the Commonwealth Bank. I cannot see why the same cannot be repeated in Telstra with the two-thirds that remain.

Senator Conroy from the opposition said that Telstra was a high performer. I agree that it is a high performer, except for a few of the things I have just mentioned. I believe that it will be a higher performer still with a private enterprise mentality and management.

Senator Conroy went on to say that Telstra made $2.3 billion in profits. I believe that those profits will certainly increase. The way he said it, I thought the $2.3 billion was going to disappear. Two-thirds of that, if the profit is the same—I think it will be higher—will still be there. Does he not know and do others in the chamber not know that the dividends going out from that privatised section will be taxed? Has he forgotten that? Have others forgotten that? Another thing is that it will probably be taxed at a higher rate. Most of those shares will be, I hope, held by ordinary Australians like you and me.


Senator Kernot —We already own it.


Senator PANIZZA —Yes, we already own it, but in a different way. This way, it will be much more efficient. It will probably be taxed at a higher rate than it is at the moment—higher than the company rate. So there will be more taxes flowing into the coffers so that Australia can proceed at a faster rate. I ask Senator Conroy to think about that. That $2.3 billion is definitely not going to disappear. Two-thirds will be there and the other third will probably be taxed at a higher rate. Perhaps he did not think of that.

Senator Conroy also mentioned—I happened to be in the chamber at the time—that Telstra paid rates and taxes and all those sorts of things that a corporation pays. Is that not going to be the same under a part privatised Telstra? They will be paying exactly the same if the figures are the same. Those rates, taxes and whatever else they pay will still be being paid. Let us not say that those things are going to disappear altogether and that those government entities will not be getting what they are getting out of Telstra.

In my office a bit earlier on I heard Senator Stott Despoja from South Australia talking about the efficient suppliers of materials from Australia to Telstra, as if we were going to lose the opportunity to supply that high quality electronic equipment to Telstra. Where is Telstra all of a sudden going to get those supplies? Are they going to go overseas just as a matter of course? No, they will not be going overseas as a matter of course. They will be buying where they have the quality of equipment they are buying now and where it is competitive. Australian manufacturers of electronic gear are doing pretty good now, so I cannot see for one moment how Australian suppliers are going to lose the opportunity of supplying that equipment to Telstra, as they are now.

An operator the size of Telstra has to have reliability of supply, the ability to have those supplies brought in quickly in case of breakdown. These days, with international flights you can get parts from Singapore, New Zealand and other places fairly quickly, but there is nothing like having them here on our doorstep. I can assure you that there will be no change at all. They will still be buying Australian, and good Australian gear.

I turn to the matter of community service obligations. From what I have been hearing from the opposition and other benches, you would think that by the sale of a small portion of Telstra community service obligations are going to go out the door. On my reading of the bill, I think it is pretty well covered.

I believe there are not many people in this place or in the other place who come from more remote areas of Australia than I do. From what I have read of the bill and from what I see of Telstra, I cannot see that we will be any worse off. You never know, we might be better off.

I live in a place—there are not too many of these places—where we have no facilities for mobile phones yet. You can use mobile satellite phones, but of course it costs you about $8,000 to buy a set and it costs you about $1 a word to speak on it. That is not a real alternative. I believe that with part privatisation and the shake-up in management, we might do better. I am from a remote area and I cannot see anything wrong.

We heard a few other red herrings from the other side of the chamber. Senator Mackay from Tasmania was telling us how Tasmania has been neglected. I have not spent too much time in Tasmania, but any time I have wanted to communicate with someone in Tasmania I have always been able to do it just by picking up the phone and dialling. I was on an inquiry into communications towards the year 2000. That is the only time I went to King Island—


Senator Kernot —Should we cross-subsidise them to make them work properly?


Senator PANIZZA —We will leave that debate for another day. Yes, there were certain recommendations made, but I do not think Tasmania is any further behind the rest of Australia. I don't think Tasmania and Senator Mackay have anything to worry about.

I want to quickly address the subject of overhead cables. As Senator Knowles has already said, this has nothing to do with the partial sale of Telstra—nothing whatsoever. When I am driving along the road or walking down the footpath, I don't necessarily look upwards; I look forwards to see where I am going. If you put a new cable up, Senator O'Brien, you will notice it for a while. But when you already have power cables there, especially three phase power with four heavy cables, and if an extra one is added overnight, I defy anyone to notice the extra one.

I can tell you that the further overhead cables extend into the bush the better because it means that civilisation is coming closer to you. I might be peculiar in that I don't happen to see those cables overhead, but I defy anyone to say that they will see the extra ones if there are cables already there. In suburbs where the cabling is already underground then, by all means, I believe they should follow suit. In time, I also believe that all power cables and other communication cables will go underground. That will come in time. All these good things come if you wait long enough.

I believe that the government, having told the people of Australia—and it was reaffirmed last Saturday in the by-election—


Senator Kernot —Did you campaign on Telstra?


Senator PANIZZA —How did your vote go there? With all the noise you have made, how did your vote go? The by-election was a chance to judge the government on its performance. They didn't agree with you. We have been elected to govern. That is our policy and that is the policy we'll go down the track with.