December 4th 2004

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Articles from this issue:

COVER STORY: The rise of Condoleezza Rice

EDITORIAL: Corporate power ... and the public interest

CANBERRA OBSERVED: Talent gap widens between major parties

CENSORSHIP: Nicole Kidman in controversial movie

ECONOMICS: Productivity report driven by ideology

FINANCE: Day of reckoning for Australia's debt binge?

RURAL AFFAIRS: The National Party's Telstra sale dilemma

NUCLEAR PROLIFERATION PART 1: Iran backs down on uranium enrichment

NUCLEAR PROLIFERATION PART 2: US doubtful about Tehran's intentions

VIET TAN: New reform party launched for Vietnam

STRAWS IN THE WIND: Uncharted territory / The Zamindars / Labor's performance / The Light on the Hill

SEX EDUCATION: Telling teens the truth - 'cool' virginity, abstinence and faithful marriage

US ELECTIONS: Christians eat lions in 2004 election

China's stand-off with Taiwan (letter)

Labor needs heart transplant (letter)

Saddam's secret weapons (letter)

BOOKS: MONASH: The outsider who won a war, by Roland Perry

THE CRISIS OF ISLAM: Holy War and Unholy Terror, by Bernard Lewis

BOOKS: Non-Alignment and Peace versus Military Alignment and War

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The National Party's Telstra sale dilemma

by Victor Sirl

News Weekly, December 4, 2004
For National Party members, no issue is more painful than their commitment to supporting the full sale of Telstra. They proclaim that this will only happen when telecommunications in regional areas are deemed to be up to scratch. Even so, the idea is unpopular with their constituencies.

Nevertheless, Prime Minister John Howard and Treasurer Peter Costello are pushing ahead for the full sale of Telstra.

The Nationals, in trying to work out how to escape from between this proverbial rock and a hard place, have turned to their own think-tank and, oddly, to their two new and most inexperienced senators due to take office in July next year.

Working party

According to Shane Lewis of The Australian (November 15, 2004), over the next five months Senator Fiona Nash will chair a working party of the National Party think-tank, the Page Research Centre, to examine the state of telecommunications in the bush, with Senator Barnaby Joyce as her deputy.

Both senators-elect have expressed reservations about the full sale of Telstra and one wonders if, once down in Canberra, the Sir Humphreys will slowly turn them away from making "courageous" decisions.

Kay Hull from New South Wales is one National Party MP who has put forward the possibility of splitting Telstra into a publicly-owned telecommunications utility controlling basic infrastructure such as cables, while other lucrative assets, particularly related to retailing, are put into the market place.

The Nationals should note that none of our Asian trading partners has a fully privatised telecommunications sector - and few would call Taiwan, Singapore or Japan backward in this field.

Shane Lewis writes of Telstra boss Ziggy Switkowki's desire to protect the structural "integrity" of Telstra.

No such guarantee, of course, exists after privatisation, so why should one exist before? A fully privatised company listed on the stock exchange can always be restructured, so why can't the Government recommend that?

The Australian (Tuesday, November 16) recently reported how, in a rebuff to the junior coalition partner, the Communications Minister, Senator Coonan, at an industry lunch attacked the idea.

But more astonishingly, John Howard's protegée, Jackie Kelly MP, was reportedly running the line that "the Government was restricted in its ability to force structural change on Telstra because it was a shareholder in the company." Any decision regarding structural change was a matter for the board.

However, the Government has the right to tell the board that it will not sell its majority share unless certain conditions are met. The Nationals could say to the Liberals and the Telstra board: "Split it or no sale."

Indeed, they have abundant evidence from the September 2000 Telecommunications Service Inquiry that services would not be up to scratch in regional areas for some years, if ever.

It is obvious that some financial journalists and the Liberals are launching a pre-emptive strike to discourage the Nationals going down the path of recommending a splitting of Telstra.

Those who favour a splitting of Telstra need to outline clearly how it would work in practice and how shareholders (fat cat executives excluded) will not be harmed. The Page Research Institute would do well to heed those economists promoting the idea.

In 2002, Melbourne University economist Stephen King argued that a fully privatised Telstra would be taking a natural monopoly out of public hands and placing it in private ones.

Keeping infrastructure in public hands, however, would ensure transparency and a level playing-field for all telecommunication players in the market.

From the Nationals' point of view, public ownership also allows the Government to cross-subsidise regional areas and guarantee that future services and technological innovations are shared with rural Australia. The move would meet with the approval of rural-dwellers, the Nationals' traditional constituency.


But for this to happen, the Nationals would have to exploit their numbers in the Senate, refusing to sell off the rest of Telstra but offering the face-saving position for the Liberals that some privatisation is better than none and would still result in a windfall for government coffers.

However, Peter Costello has reminded Queensland Senators Ron Boswell and Barnaby Joyce that they are obliged to follow "Coalition policy".

The Nationals would be entirely justified in standing firm and refusing the full sale of Telstra. The media may not like it, the Liberals will not like it, the Telstra board will not like it, but most Australians will.

Who would the Nationals rather be loved by? And who has the most votes?

  • Victor Sirl

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