The Guardian 24 August, 2005
Editorial
Telstra sale is theft
One of the reasons given by advocates for the full privatisation of Telstra is that the present split between public (state) ownership and private (shareholding) ownership creates a conflict which is an obstacle to the development of modern telecommunications in Australia. It is likened to being "half-pregnant" — an impossible situation. In fact, the raging battle in government ranks and the mass media is not about whether it should be public or private but how to go about that privatisation of the government’s remaining 51.8 percent shareholding.
The Howard government looked set to sell off the remaining 51.8 percent (a process commenced by the previous Labor government) of Telstra still in public hands with the new Senate. They believed they simply had to make a few trade-offs with the National Party Senators (for example National Party Senator Barnaby Joyce is an anti-abortion crusader). The government did not expect any major obstacles. Well, it proved a little more difficult than expected. Joyce has thus far stuck to his guns, and even after negotiating a $3.1 billion funding package with the government, still insists on going back to his Party and constituency.
The government’s promised package will not solve the neglect of the rural sector: it will not ensure access to high speed broadband, let alone provide for future generations of technological change. A total of $1.1 billion will be allocated from general revenue for improving rural services over a period of four years — at this stage a promise and nothing more. The other $2 billion (initially in the form of Telstra shares) will be held in a rural telecommunications fund earmarked as funding for future services and upgrades. You don’t need to be an accountant to work out that the sums involved are peanuts, and will not do the job. It is a smoke and mirrors act by the government.
The government is also under the hammer from the highflying, corporate-driven Telstra CEO they imported from the USA. Sol Trujillo makes no pretences when it comes to being a capitalist. He knows what his job is — to ensure that Telstra, as a fully privatised corporation, returns ever growing dividends and rising share prices to its shareholders. He has not wasted any time getting on with the job. One hundred million dollars is being set aside to sack 1000 Telstra workers. Trujillo has so far ignored union requests to discuss his plans with them.
Trujillo is not happy with the government’s deal spinning. There is another, what might be described as "half pregnant" situation which arose out of the removal of Telstra’s monopoly and introduction of competitors onto a single fixed-line network. Telstra sells access and use of its lines to a host of internet providers, long-distance and other telcos. Its mobile network is also used by other providers.
At present the prices it charges its rivals for these (wholesale) services is regulated externally. When Trujillo examined the books of what looked to be a healthy corporation (Telstra just announced a record $4.4 billion profit) he found massive bleeding of retail customers (domestic and business) to its rivals who were offering far cheaper services. These "competitors" are in fact parasites that have attached themselves to Telstra’s infrastructure and cutting edge technology, and are paying far less than that technology is worth.
Like the privateer that he is, Trujillo called on the government to end, not add to Telstra’s regulatory environment and warned publicly that Telstra’s future was not so rosy. As a result share prices turned downwards. Now the government is getting cold feet about a direct sale and looking for another means of disposing of its Telstra shareholding, via the Future Fund which could do the job quietly at a later date with less political backlash.
Telstra, like other publicly owned assets and services, is not the property of any particular government. These assets and services are a legacy given us by previous generations who toiled, paid taxes and made sacrifices to ensure a better life for those who came after them. It is a legacy this government wants to grind into the dirt. To sell Telstra to profit hungry corporations is nothing less than theft.