Telstra: From "half-pregnant" to "conflict of interest"
by Bob Briton As Federal Parliment resumes for the last two weeks of the year, the Government digests the defeat of its Bill to privatise the rest of Telstra. The Coalition pollies would have us believe they are struggling with a terrible moral dilemma: the propriety of the Government's position as regulator of the telecommunications industry and its 50.1 percent shareholding in Telstra. The "conflict of interest" slogan has now replaced the "half- pregnant" one to defend the Government's push for the privatisation of Telstra. Former Communications Minister Richard Alston aired the argument before similar sell-off moves in June. "It's like the chief steward in the Melbourne Cup owning the red-hot favourite", Mr Alston said. The new Communications Minister Daryl Williams reiterated the sentiment, using it to argue for the full privatisation of Telstra. "There is a very significant conflict of interest between the Government owning 50.1 per cent of the shareholding of Telstra and being the regulator of that and the other 88 carriers", he told the ABC's Premium News recently. Of course, the role of this Federal Government and its predecessors in introducing the 88 other carriers into the system is not mentioned. The truly glaring conflict of interest of corporations delivering an essential service and trying to gouge the maximum private profit from it is also left alone. Strong Profits Despite returning strong profits ($960 million this year) and containing its share value losses better than most telcos in the turbulent world market, it was argued that its dual private/public character somehow hinders Telstra. Senator Nick Minchin used to profess concern for taxpayers who were exposed to "unnecessary risk" by having their money tied up in Telstra — "a publicly listed company in one of the most competitive industries". Perhaps because Mr Minchin comes from South Australia, where similar concerns were expressed for the future of the once publicly owned electricity utility ETSA before being privatised, this old chestnut was seen to lack any credibility and was soon dropped. South Australian taxpayers have already had to bail out failing private operators showing, once more, that "free enterprise" privatises profits and socialises corporate risk. At the same time, the "free market" has pushed South Australians' power bills through the roof. In the best corporate tradition, Telstra directors (mostly from the corporate sector) have had their hands out for a $170,000 pay increase in spite of a number of embarrassing developments lately. Telstra's foray into the Hong Kong telecommunications market ended when its Reach venture failed requiring a write-down of $965 million. Despite its healthy profits, Telstra is keeping broadband retail prices and set-up costs high. Its reliance on usage metering means that download costs on this high-speed internet service are also high. As a result, Australians have been slow to take up the broadband option in a clear break with their customary willingness to embrace new technologies. Only three per cent of Australians have a broadband internet connection, a figure below the OECD average and a level that Tony Blair called a disgrace when it applied in the UK. Britain now has 22 per cent of internet users connected through broadband. Telstra's commitment to the bush is questionable with regard to broadband, as well. As shadow IT spokesperson Kate Lundy points out, Telstra continues to install outdated line-splitting equipment throughout regional Australia. She worries that regional and rural Australians will be "forever burdened with sluggish internet access and will never have any chance of affordable broadband". If Telstra is fully privatised the chances of rectifying this situation are even more remote. Private telcos will focus almost all their attention on the more profitable metropolitan and big business markets regardless of the government's "legislative safeguards" eyewash. The clearest evidence that Telstra is helping the privatisers is its establishment of a $1 billion fund to buy back shares from disillusioned "mum and dad" investors. It is hoped that this will cause the share price to rise closer to the $5.25 mark desired before the remaining third chunk of the telco can be offloaded. Opinion polls, like a recent one conducted by the Advertiser in SA, show that nearly three quarters of Australians oppose the sale of Telstra. Two thirds of coalition voters are against it. Apathy will be encouraged, though, by the slowness of its response to problems with its Big Pond e-mail service and its involvement in an incident where Telstra Enterprise Services put some of the government's most sensitive backed-up e-mails on Canberra rubbish tip. Telstra continues to alienate its workers with its undertakings before the Senate Estimates Committee to take the axe to jobs. Its "aspirational" figure is for 3000 jobs to be shed in the financial year 2003-04. While the Greens and One Nation's Len Harris appear solidly opposed to full privatisation, the Democrats and independents Meg Lees, Brian Harradine and Shayne Murphy have shown signs of a willingness to negotiate. Democrat Senator Andrew Murray reportedly wants part of the funds to be invested in the environment. Meg Lees (of GST infamy), also wants infrastructure projects and urgently needed action on the Murray Darling basin to take preference. "If you think, that as a South Australian Senator, I am going to sit idly by and watch my state die of thirst on the basis of an ideological position about a telecommunications company without exploring every aspect of the debate then you seriously underestimate me", she told the media in June. Lees and several other Senators may yet capitulate to the Government. The forces campaigning to keep the remainder of Telstra in public hands cannot afford to relax simply on the strength of the latest Senate victory.