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It doesn’t take much to stay out of touch.



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Senator Len Harris Tel: 07 4092 3194 Fax: 07 4092 2755 PO Box 2206 Mareeba Qld 4880 Email: senator.harris@aph.gov.au

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Senator LEN HARRIS Pauline Hanson's One Nation Senator for Queensland

M E D I A R E L E A S E

It doesn’t take much to stay out of touch 29 October 2003 One Nation Senator Len Harris says the Federal Government is critically out of touch with voters over the sale of Telstra. The Senator this morning delivered a stinging speech admonishing the government’s privatisation agenda. “The number of people who are opposed to full privatisation has grown in the last 12 months,” Senator Harris said. “ The resounding ‘NO!’ has increased from 75 per cent to 92 per cent in some areas.” “The majority of voters believe that Australia’s national security is best served by keeping Telstra in public hands. Constituents do not want private companies totally controlling our telecommunications,” Senator Harris said. “Once the 85% sale day is determined and the Commonwealth’s holdings fall below 15% then the government can no longer impose reporting and other special regulatory measures on Telstra,” he said. Senator Harris also raised concerns over the so called Casualties of Telstra. “Rather than selling off a profitable public asset, the Liberal-National coalition should be pushing Telstra to resolve the hardships that some businesses have suffered as a result of past equipment failures.” Senator Harris said nearly 40,000 jobs had been lost from Telstra since partial privatisation in 1996. “This is what happens when you start the privatisation process. Workers - both contractors and full time employees - are literally waiting for the axe to fall.” Senator Harris said the government was pushing ahead with privatisation because of Australia’s international agreements at the WTO. “The General Agreement on Trade in Services and the Basic Agreement on Telecommunications were the main instruments of the telecommunication liberalisation agenda,” Senator Harris said. “If all of Telstra is sold off, that money will go into the pockets of private investors. The dividends will be transferred from the many to the few. The wealth will shift from all Australians to some Australians. And a lot of that wealth won't even be reinvested or spent in Australia because it will go overseas to foreign shareholders and offshore tax havens,” Senator Harris said. “None of the reasons provided to us to date by the government justify the sale of Telstra; they do not justify selling the people’s property against their will.” ENDS Further Details: Senator Harris 02 6277 3410

Senator Len Harris Tel: 07 4092 3194 Fax: 07 4092 2755 PO Box 2206 Mareeba Qld 4880 Email: senator.harris@aph.gov.au

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Second Reading Speech Telstra (Transition to Full Private Ownership) Bill 2003

Senator HARRIS (Queensland) (10.49 a.m.)—I rise to speak on the Telstra (Transition to Full Private Ownership) Bill 2003. The Liberal and National parties are critically out of touch with voters over the sale of Telstra. As the government, they are the custodians of the people’s asset, yet all we get from them is plundering of the public purse. I have just returned from a comprehensive tour of rural Queensland, and voters are saying that they do not want Telstra completely privatised. The number of people who are opposing the full privatisation has grown in the last 12 months. The resounding ‘No’ has increased from 75 per cent to 92 per cent in some areas. The majority of voters cite national security as one of the main reasons for opposing the full privatisation of Telstra. I would like the Prime Minister to listen to what people are saying.

These comments come from the meeting we held in Charters Towers last Thursday, where people were asked, as part of a survey: ‘Would you support the government selling its remaining stake in Telstra if the sale was accompanied by strictly enforceable laws to prevent overseas ownership, legal arrangements to ensure that Telstra Country Wide’s role in regional Australia was maintained, strict regulations to ensure service levels in Australia were either maintained or improved and regulations to ensure equity was maintained between regional and metropolitan areas?’ These are the answers. ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘Yes.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘Yes.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ ‘No.’ How much clearer to the government can the message be? That is the people from Charters Towers clearly conveying their views to the government.

Constituents believe that it is not in Australia’s best interests to have private companies totally controlling our telecommunications network. My decision to oppose this bill is based 100 per cent on the response of the Queensland people. One Nation’s position on all legislation is to represent the will of the people. The voters do not want Telstra privatised, so I will vote against the bill. Once the Commonwealth’s holding falls below 15 per cent, then the government can no longer impose reporting and other special regulatory measures on Telstra.

Senator HARRIS In Continuation

Chief Executive Officer, Ziggy Switkowski, has predicted that Telstra will be fully privatised within five years. The full privatisation of Telstra carries many risks for Australia, including the scaling back of services in rural and regional areas, the removal of price caps for rural services, timed local calls, ordinary customers subsidising Telstra’s corporate clients, inadequate funding of public telephone facilities, profits and assets sent offshore to tax havens such as Bermuda, further job shedding, prices rising affecting us all and, most specifically, people on low incomes who might have to pay more for what is essentially a public service. The department of communications, DCITA, its general council, its law team, its legal consultants and the Australian Government Solicitor would be no longer able to compete and enforce regulations because Telstra is reported to have 250 in-house lawyers and it has also retained 45 of the top 50 law firms in Australia on retainers. Telstra’s ability and its legal advice to get around any regulations that the government puts forward are profound.

Furthermore, Telstra’s performance and any corporate misconduct would be automatically precluded from scrutiny by the parliament, including scrutiny by the Senate committee process. The proceeds from the sale will go into consolidated revenue in the year that they are received. The government’s intention is to sell Telstra in three equal tranches, beginning in 2005-06. This would bring around $11 billion in each fiscal year. The government has stated that it is committed to using the proceeds of the Telstra sale to retire debt. There will be no social bonuses and there will be no huge funding bags for the environment. The next time that the government needs to retire debt or needs to call on an emergency reserve for funds, there will be fewer assets available to sell, certainly none worth as much as Telstra.

The tools for managing public debt have therefore diminished. The one tool that remains—running a balanced budget—will have to be constantly monitored. The sale of Telstra will not create wealth. The beneficiaries of the sale will not be the public but the big end of town—the likes of ABN AMRO, Rothschild, Credit Suisse First Boston and J. B. Were and Son. The various brokers who received hundreds of millions of dollars in commissions and fees over the sale of T1 and T2 are the ones who will benefit from full privatisation of Telstra.

I raise another important issue about the sale of Telstra and its possible relationship with superannuation. The government needs to answer some questions about superannuation. Will any of the money from the sale of Telstra be used to offset the $89 billion liability that exists with respect to superannuation for government employees? At present, the liabilities are paid each year out of consolidated revenue, but how that will impact upon the budgets over the coming decades is of great concern. What expenses will have to be reduced or eliminated, or what taxes will have to be increased or introduced to ensure that those superannuation liabilities are met? There certainly will not be any assets left to draw upon.

Senator Len Harris Tel: 07 4092 3194 Fax: 07 4092 2755 PO Box 2206 Mareeba Qld 4880 Email: senator.harris@aph.gov.au

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During my recent tour of rural Queensland, voters indicated that their satisfaction with Telstra customer services had increased from 52 per cent to 82 per cent. But despite that rise in satisfaction of service, voters still do not want the carrier sold. I would point out that partial privatisation has not necessarily resulted in better services for customers. According to the Australian Communications Authority’s quarterly Telecommunication performance monitoring bulletin released in June this year, Telstra’s fault repair performance declined significantly in the March 2003 quarter, particularly in urban areas: In urban areas, fault repair performance by Telstra fell by seven percentage points to 82 per cent compared to December 2002 and two percentage points compared to the same time last year. Performance in all states and territories declined with the biggest falls recorded in Queensland and Tasmania.

There is also concern over the fact that there are issues outstanding to be resolved regarding the casualties of Telstra. There is a cloud over Telstra’s sale, because it would be exempt from the Freedom of Information Act once privatised. Telstra has provided certain information under the Freedom of Information Act which clearly shows that businesses have suffered financial losses as a result of technical failures of Telstra’s equipment. Rather than selling off a profitable public asset, the Liberal-National coalition should be pushing Telstra to resolve the hardships that some businesses have suffered as a result of past equipment failures. Without access to documentation, how will the average Australian be able to support future claims against Telstra if it is privatised?

Senator HARRIS In Continuation

I turn to the international push to privatise telecommunication networks. Let me be very clear about the origin of the government’s telecommunication privatisation policies. They are coming directly from the WTO agreement on basic telecommunications services. Australia became party to this agreement, which promotes liberalisation, in February 1997. Furthermore, the WTO’s GATS treaty contains sectoral annexes that set out rules for particular sectors such as telecommunications and financial services. If these liberalisation proposals are achieved, we could reach a point where there are only four or five telco giants left in the world.

As well, we have problems regarding cheap labour being imported to work in our telco sector. We recently witnessed reports that Telstra imported Indian IT contractors to work in Australia. This process is facilitated by the natural persons clauses of the GATS agreement. Let me quote from Emma Connors’s article in yesterday’s Financial Review: About 1500 jobs will move to India under a radical Telstra plan to scale down key technology operations in Australia in favour of sending more work to overseas outsourcers.

This is what happens when you start the privatisation process. Workers—both contractors and full-time employees—are literally waiting for the axe to fall. This is the horrible future of a completely privatised Telstra: more jobs offshore and foreign workers brought in to undercut Australian wages. Furthermore, there is evidence that outsourcing is not working. In yesterday’s Australian, there is a report by Selina Mitchell which reveals security breaches in key federal government departments, including Prime Minister and Cabinet. In one incident, email back-up tapes for departments, stored in a wheelie bin by Telstra, were accidentally thrown in the rubbish. The tapes contained information with a protected classification and they have not been recovered.

Let me be very specific about job losses and privatisation. Telstra’s privatisation has occurred in two stages to date, in November 1997 and in September 1999. Just before privatisation, Telstra had 76,522 domestic full-time staff. Today, Telstra’s annual report indicates that domestic full-time staff number just 37,169. This is a net job loss of nearly 40,000 since Telstra was first put on the market. Telstra now uses a greater proportion of outside contractors to do its work. The job shedding gets staff numbers off its books and that pleases the financial markets. As a result, more and more of the work is being done on a casual or contract basis. That adds up to increased insecurity for those employed in the industry. Increasingly, job security is not a simple entitlement but a condition wholly dependent on company performance and productivity.

While the cost cutting is being undertaken in the name of greater efficiency, there is little sign that any gains from these measures are being passed on to consumers in the form of lower service charges; rather they are being used to underpin returns to shareholders. Under the economic value added (EVA) approach to decision making, now adopted by Telstra, all investments are to be weighed in terms of their ability to produce gains in shareholder value. Consider this quote by Telstra spokesperson Maria Simpson: Our obligation under law is to provide the best service we can so we deliver the best value to our shareholders.

Such criteria may not produce socially optimal outcomes. A telecommunications company operating in a mature market typically derives some 80 per cent of profits from the top 20 per cent of its customers. Where shareholder value dictates investment choice, this top 20 per cent is likely to be the chief beneficiary of infrastructure modernisation and service innovation.

I want to take note of Labor’s policy on Telstra and remind the Australian public that the ALP’s opposition to the Telstra sale is nothing more than a vote-buying ploy. Labor governments opened the door for its sale by ending Telstra’s telecommunications monopoly and restructuring the corporation. Let us not forget Labor had a secret plan to privatise Telstra. The Macquarie Bank publication Telco Weekly of 8 September 2002 reported that Labor were actively considering moves to break up and sell off the company. The Macquarie report states:

Senator Len Harris Tel: 07 4092 3194 Fax: 07 4092 2755 PO Box 2206 Mareeba Qld 4880 Email: senator.harris@aph.gov.au

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The ALP is considering such a break-up for Telstra. Our discussions with senior members of the Opposition has indicated that a split between Telstra’s network and its retail businesses is an option being considered by the ALP. It has been mooted that the Government could 100% own the network business. The retail business could then be either fully or partially privatised.

The report also notes: ... such an idea was discussed by the previous ALP Government when Paul Keating was Prime Minister.

I have no doubt that Labor want the Telstra money for their own purposes and will vote no to the sale until they win government, then direct the funds in support of their party’s policies. The people are not fools. The attraction to sell Telstra might be a reduction in public sector debt, but ultimately the public pays higher prices for privatised services and the country loses huge amounts of long-term revenue. If Telstra is fully privatised, we will witness more jobs being squeezed out so that profits can be increased. The bottom line of this government is economic efficiency. Yes, some publicly owned entities may operate below optimum efficiency. Telstra is not one of them. A government stake in Telstra offers job security on a wide scale, particularly in times of crisis. If thousands of people have to fear for their jobs and their future, then privatisation has become a mad political race.

Senator HARRIS In Continuation

The government is the custodian of the people’s assets. Before any of Telstra was sold, all of Australia’s 20 million people had shares in the company. Every year Telstra paid a dividend to the Australian government, and that money could be spent on hospitals, schools and the environment. If all of Telstra is sold off, that money will go into the pockets of private investors, the dividends will be transferred from the many to the few and the wealth will be shifted from all Australians to some Australians. A lot of that wealth will never be reinvested or spent in Australia, because it will go overseas to foreign shareholders and offshore tax havens.

I said at the outset that people do not want Telstra to be sold. I have outlined a number of significant reasons why One Nation opposes this bill. None of the reasons provided to us to date by the government justify the sale of Telstra; they do not justify selling the people’s property against their will.

ENDS