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Wednesday, 17 November 2004
Page: 77

Senator LUNDY (2:12 PM) —My question is to Senator Coonan, the Minister for Communications, Information Technology and the Arts. Is the minister aware of reports that the National Party have instructed the Page Research Centre, the National Party's think tank, to consider a proposal for the government to retain ownership of Telstra's rural network infrastructure? Can the minister confirm that the government has already ruled out this proposal? If it is the case that the government has unequivocally ruled out this idea, why has the National Party's think tank been tasked with taking up the proposal?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —The government has taken a consistent position in relation to this issue over a number of years—unlike the Labor Party, which seems unable to make up its mind and has totally flip-flopped on whether there should be any form of structural separation to Telstra. The government does not favour forced structural separation of Telstra for sound reasons. Firstly, of course, there is no evidence that the claimed benefits of structural separation will outweigh the very real costs and risks of implementing such a policy. The process of structurally separating a company as large and complex as Telstra would obviously not only take some considerable time but also there are so many uncertainties attached to what it would look like after you have done it that you would have to also totally overrule the new and emerging kinds of technologies which may be solving any perceived issues with the sale of Telstra anyway, such as voice-over Internet protocols, which of course might—and they certainly appear likely to—disrupt Telstra's reliance on its traditional voice telephony revenues.

There are very real risks that the process would lead to higher prices and poorer services for consumers due to the high implementation costs, the loss of efficiencies and the disruption while you attempted it. If a government is going to embark on forced intervention it is going to do no good for the investors, who require certainty when looking at how they are going to invest in Australia's telecommunications industry. There would be some real issues with how you would compensate the 1.8 million minority Telstra shareholders, as that would significantly increase the cost of separation. The other issue is that, even if you did structurally separate Telstra, you would not eliminate the need for robust regulation in any event because any new infrastructure company created by a separation would probably retain the bottleneck control over the Customer Access Network, or the CAN, and this would necessitate regulation.

While it is easy to propose structural separation as a way of doing away with a perceived problem, it does not take account of the kinds of risks that might arise in some new market structure and the ultimate impact on consumers. That does not mean that people cannot ever discuss it in a democracy, though, does it? We do not run some sort of Nazi party, where there cannot be any discussion at all about different approaches. However, there are very sound reasons why the government have consistently said that forced intervention in the structure of Telstra is not a sound way to go. The government remain true to our policy that Telstra should be sold, and we ask the other side to get on with passing the legislation when we bring it back.

Senator LUNDY —Mr President, I ask a supplementary question. I trust that National Party members were listening closely to that answer. I refer the minister to the comments of the member for Hinkler, Mr Paul Neville, the chair of the coalition's backbench communications committee. He told the Australian Financial Review last week:

I can't see any mechanism that will require Telstra to act in a non-monopolistic manner in private ownership ...

Minister, your coalition colleagues do not believe your claim that a fully privatised Telstra can be properly regulated, so why should the Australian people believe a word of it either?

Senator COONAN (Minister for Communications, Information Technology and the Arts) —What the Australian people believe, if I could just remind Senator Lundy, is that the Labor Party does not oppose it either. Mr Tanner said:

... the existence of the minority private shareholding in Telstra and the cost and complexity ... associated with such separation, make that an inappropriate strategy for reforming Telstra.

I do not know whether Mr Tanner is writing Senator Lundy's questions for her. What the Labor Party should be concerned about is revisiting their policy of opposing the sale of Telstra instead of worrying about minor issues to do with how you look after rural and regional services, and they should get on with passing the legislation when it is brought back. The Labor Party's policy on telecommunications is a failed policy. Once again, it is a blank sheet of paper—although Mr Latham keeps saying that the Labor Party is opposed to the sale of Telstra. There is no possible rational reason why you would oppose it, and the Labor Party should get on with passing the legislation when it comes back.

Senator Conroy —What about the National Party?

The PRESIDENT —Order! Senator Conroy, I remind you, as we have not been here since August and you may have forgotten, that interjections are disorderly and continuous interjections are most disorderly.