Telecommunications In Australia: A Labor View Lindsay Tanner - Shadow Minister for Communications

Media Statement

Transcript - 8th Annual Rural and Remote Telecommunications Conference - 18 November 2003

Thank you for the opportunity to address the rural and remote communications conference today.

The key issue facing regional telecommunications users today is the privatisation of Telstra.

Most of you here today will be aware that the Howard Government's recent attempt to privatise Telstra was defeated in the Senate by a combination of Labor and the cross benches on October 30. The Government has made it perfectly clear it intends to reintroduce this Bill to privatise Telstra after three months has elapsed from October 30. This will set the Bill up as a double dissolution bill next year.

Labor is opposed to the privatisation of Telstra because we believe telecommunications services are essential services. We believe a fully privatised Telstra would be a huge private monopoly too powerful for any Government to effectively regulate. We believe a fully privatised Telstra would neglect its regional customers in favour of its more lucrative markets in the big cities. A fully privatised Telstra would leave town faster than the banks. Labor believes Telstra remains primarily a public utility with pervasive monopoly characteristics delivering essential services, particularly to those living in regional Australia. This is another reason why Labor remains absolutely committed to retaining Telstra in full public ownership.

Given that the Government intends to reintroduce the Telstra (Transition to Full Private Ownership) Bill 2003 next year, I want to take you through some of the key issues regarding the Bill.

This Bill allows Telstra to be privatised without any guarantees whatsoever for future service levels in regional Australia. Under this Bill, Telstra will also be privatised without little likelihood that any significant chunk of the sale proceeds will be spent on regional Australia. The Bill also contains no caveat that Telstra not be sold until regional services are up to scratch. Given these realities, it is hard to fathom why the Nationals have voted for this Bill in both the House and Senate.

The Senate recently conducted an inquiry into this Bill. The inquiry received 144 submissions. Not surprisingly only six of the 144 submissions were in favour of the Bill. Of those six submissions two were from investment banks who stand to gain hundreds of millions of dollars from any further sale of Telstra, one was from Telstra whose executives would gain large salary increases in a fully privatised environment and one was from the Government. Only two of those submissions were from truly disinterested parties.

The Inquiry heard much telling evidence. Dick Estens effectively admitted in Dubbo that regional services were not up to scratch on October 1. But 29 days later the Government, including of course the Nationals, voted in the Senate voted for a Bill to sell Telstra, despite saying they would not sell Telstra until regional services are up to scratch.

On October 7 it was revealed that some of the statistics that the Australian Communications Authority has been using to paint a very rosy picture of regional telecommunications service levels have been highly misleading. The ACA has been passing off Telstra's monthly average fault free performance as a yearly average fault free performance in its network reliability framework reporting. This has grossly inflated Telstra's fault free performance levels. These revelations showed that the statistics the Government has been using to claim Telstra's regional service levels are in good shape have been grossly misleading.

The Senate Inquiry into the sale of Telstra reported on the 27^th of October. The minority report by Senators Sue Mackay and Kate Lundy was a significant contribution to the case against selling Telstra. The report highlighted some of the real weaknesses in the Government's arguments for selling Telstra and concluded that a fully privatised Telstra would in fact be a huge private monopoly too powerful for any Government to effectively regulate.

Leaving aside Labor's steadfast opposition to the further privatisation of Telstra let me outline Labor's view as to why this Bill is so deficient. The proposed Telstra sale Bill has two mechanisms in regards to future regional services. The Senate Inquiry into this Bill exposed both of these mechanisms as absolute shams.

The first provision is for an optional regional licence condition the terms of which are entirely at the discretion of the Minister. This provision cannot be described as "future proofing" as there is no guarantee of any particular level of regional services in this section. When a Communications Department official was asked whether this condition could theoretically consist of one Telstra shop in Gundagai and one technician in Kalgoorlie the answer was ‘yes'. Put simply there are no prescribed Telstra regional service standards in this Bill whatsoever. The Government is saying "trust us on this".

But what happens when we trust the Government on regional service standards? A classic recent example is the Estens Inquiry recommendation that a minimum 19.2kbps internet speed be prescribed for all Australians, particularly those in regional Australia suffering from ridiculously slow Internet speeds under Telstra's dilapidated copper network. The Government said they would respond to this recommendation in full. But when Labor examined the fine print of this licence condition we discovered that Telstra would only have to provide this speed on request and even then it would not be required to provide this speed if prevented from doing so by circumstances beyond its control. Telstra was let off the hook again. Only those aware enough to know a mandatory minimum speed exists will bother asking Telstra for the upgrade. Telstra's network will be allowed to continue to provide substandard dial up Internet speeds in many regional areas of Australia.

The second provision for regional services in the Bill is for a review of regional communications every five years by a committee appointed solely by the Minister. There is no requirement for the Minister to do anything with the review other than table it in Parliament and respond to the review as the Minister sees fit. This provision also cannot be described as "future-proofing" as again there is no guarantee of any particular level of regional services contained therein. We all remember the Estens Inquiry last year that painted a very rosy picture of rural telecommunications despite the overwhelming majority of submissions to that inquiry being from ordinary regional consumers complaining about poor regional services.

The other critical issue in regards to the proposed sale of Telstra is the question of Telstra sale proceeds. There has been much confusion about this issue for some time. In fact the Nationals have been running serious debates about how to spend the Telstra sale proceeds on regional infrastructure. The Nationals have had soul searching arguments about how many billions of T3 money they can spend in the regions. Some senators have also been staking claims regarding T3 money. Respected political journalists have also been running articles on this very topic.

What no one, except the Treasurer and Finance Minister seems to understand is that it is Howard Government's long stated and often repeated policy to spend the Telstra sale proceeds on debt reduction. This is basically because this is all they can do with it without sending the budget into deficit. The reason for this is that under the Commonwealth's accounting rules any spending of the Telstra sale proceeds hits the bottom line as expenditure but the proceeds are not counted as revenue. So if the Government spends $10 billion of the sale proceeds on regional infrastructure that's $10 billion off the budget bottom line.

The Government is allowing a phoney debate to take place regarding the Telstra sale proceeds, aided and abetted by some journalists who should know better. One journalist recently made the completely incorrect claim that spending Telstra sale proceeds would free up the surplus for bigger tax cuts. In fact spending the Telstra sale proceeds will do the exact opposite, it will erode any available surplus for tax cuts.

The Howard Government is deliberately allowing the myth to flourish that a huge bucket of money will materialise when Telstra is sold. It is allowing John Anderson to run around at Nationals conferences conducting phoney debates about what the Nationals are going to do with the sale proceeds.

But the demands from the National Party and some Senators for Telstra sale proceeds to be spent on vast infrastructure and environment programs are destined to be disappointed. The scope for more special dividends is minimal. Any spending that does not deliver a return like an ordinary loan or investment would come straight off the surplus.

Whichever way you look at it, a Telstra sale deal involving massive expenditure on infrastructure and environment programs is extremely unlikely. This is just another reason why the bush will be disappointed with any further sale of Telstra. Not only will they get a fully privatised monopoly focusing on lucrative markets in the city, they won't get a pot of gold to spend on regional infrastructure.

Concluding on the Telstra sale Bill, it allows the Commonwealth to sell Telstra without ensuring regional services are up to scratch and without any "future-proofing" or guarantee of regional service levels whatsoever. The Bill will not deliver any serious money to regional Australia to fix up its dilapidated telecommunications network. This Bill to sell Telstra is not in the interests of Australians, especially those living in regional areas.

Labor wants Telstra to remain in public ownership so it can provide a guarantee of universal telecommunications access for all Australians. Labor will ensure that Telstra gets back to basics and intensifies its focus on fulfilling its telecommunications responsibilities to the Australian community. Labor wants Telstra to get its telecommunications responsibilities right. Anyone watching the video stream of Telstra's annual general meeting last Friday will see that even many of Telstra's shareholders do not believe Telstra's telecommunications service levels are up to scratch.

In Tasmania last month, Senator Sue Mackay and I exposed serious problems in Telstra's regional telecommunications network. Photos were presented of cable joints sticking out of the ground covered in plastic, of cables running along grass around paddocks, of open trenches, more plastic bags and open holes. Years of staff and capital investment cutbacks have lead to deterioration in Telstra's regional network.

Labor wants Telstra to ensure that its telecommunications services take precedence over its foreign ventures and media investments. We want to see Telstra provide a decent network with decent capital expenditure and staffing levels. This will benefit shareholders and consumers. We want Telstra to be a builder not a broadcaster, a builder not a speculator.

I look forward to again working to ensure the defeat of the Telstra Sale Bill when the Government reintroduces it next year. If the Government wants to then go on and fight a double dissolution on Telstra we in the Labor Party say bring it on.

The choice for Australians in any Telstra double dissolution election will be clear. Vote Labor and Telstra remains in majority public ownership. Vote Liberal or Nationals and Telstra will be sold. There will be no Senate process to stop the sale of Telstra. There will be no clause in the Telstra sale bill saying Telstra will not be sold until regional services are up to scratch.

Vote Coalition and Telstra will be gone forever, end of story. Nothing could be further from the interests of regional Australians and I am sure the prospect of a double dissolution election fought on the sale of Telstra will make many Nationals and Liberal regional MPs quiver in their boots.

There are two other issues I want to comment on briefly before I conclude my speech. I want to comment on the recent Auditor General's report which went to the heart of the Government's telecommunications policies and received little media attention other than in the Courier Mail and the Australian.

The Howard Government has spent around $500 million of its Networking the Nation program by way of large numbers of telecommunications grants to individual projects. While some of these projects may have delivered some benefits to particular discrete parts of Australia, significant question marks remain over many others. There has certainly been no consistent upgrade in regional telecommunications service levels across the board as a result of these grants.

The Auditor-General's report on November 5 criticised the management of the Howard Government's $500 million telecommunication grants program. The Auditor-General found that it is difficult to report on the success or otherwise of the Networking the Nation program or the increase in telecommunications infrastructure stemming from the program. This is because the Howard Government failed to set targets for the future or establish benchmarks regarding existing services.

The Australian National Audit Office effectively found that there was not an appropriate performance management framework to monitor the efficiency and effectiveness of NTN program delivery. The Howard Government has spent nearly $500 million on regional telecommunications grants without setting proper targets.

The ANAO also state that the Department of Communications had, "experienced problems after making large upfront payments for some projects". One of these problems was Green Phone based in south-eastern South Australia and western Victoria. Green Phone appears to have lost around $1.5 million of taxpayers' money.

Labor has always been concerned about waste and mismanagement in the Networking the Nation program. The Auditor General's report has confirmed our worst fears. If significant amounts of public money are to be spent we must have targets, goals and performance measures. Labor would like to see a more nationally orientated strategy with Commonwealth telecommunications expenditure. We would like to have seen consistent national benchmark and performance goals for all Networking the Nation expenditure to ensure that all regional Australians were sharing in the benefits of this expenditure, not just those lucky enough to have a good project in their area.

The Howard Government is trying to privatise Telstra, yet much of its regional telecommunications spending cannot be shown to have achieved any positive outcomes. The Auditor General has shown Networking the Nation to be a regional pork barrelling exercise with no benchmarking or performance guidelines. Labor will continue to monitor this program and call the Government to account for its waste and mismanagement.

The final area I want to talk briefly about today is regional data speeds. Along with mobile phone coverage and reasonable fixed line services this remains the big telecommunications issue in regional Australia. I receive constant complaints from regional Australians, even outer-suburban Australians, complaining about either slow dial-up Internet speeds or inadequate broadband access. Telstra has finally admitted inadequate access to their ADSL network is a problem and has belatedly initiated a program to get their ADSL availability up to speed. But ADSL is not the solution for many in regional, rural and remote Australian and satellite Internet remains prohibitively expensive for some.

Dick Estens recently admitted that the 19.2kbps minimum data speed he recommended last year for regional Australians is no longer adequate. Yet the Government's response to this recommendation, as discussed earlier, is to get Telstra to provide this speed only on request by informed customers.

Getting reasonable and comparable data speeds to regional Australians is in many ways a key to ensuring the on-going viability and competitiveness of regional Australia. It must be a top priority for Government. Labor recognises this as a key challenge for policy makers as we grapple with how to ensure regional Australia does not fall behind by missing out on the data revolution. One thing is for sure: privatising Telstra will not solve regional Australia's data speed problems.

Labor remains absolutely committed to ensuring that regional Australia receives decent and adequate regional telecommunications services into the future. We oppose the sale of Telstra and we will work to ensure that appropriate service standards exist and that regional telecommunications money is spent properly. Thank you for your time today.