Dana Wortley (SA, Australian Labor Party) Share this | Hansard source

I rise to speak on this matter of public importance: the Howard government’s continued mismanagement of the sale of Telstra. It is not the first time I have spoken on this issue and I am sure it will not be the last. We already know that the Howard government disregarded the views of more than 70 per cent of Australians when it voted to go ahead with the privatisation of Telstra and that the government is out of touch with the majority of the Australian population that do not want Telstra sold, let alone sold at any cost. It has been a debacle from day one. And, just when you thought it could not get any worse, new heights of arrogance have been reached. The public offer prospectus for the T3 float is the latest confirmation of the economic incompetence of the Howard government. The Howard government’s mismanagement of the sale of Telstra has turned T3 into a shambles. This shambles is hurting the prospects of Telstra and the interests of Telstra’s shareholders.

There are three areas where the Telstra prospectus identifies the government’s actions as hurting Telstra. First of all, there is the government’s childish obsession with forcing the nomination of government nominee Mr Geoff Cousins as a director of Telstra despite the opposition of the Telstra board. The second is the government’s economically incompetent decision to dump billions of dollars worth of Telstra shares into the Future Fund for sale at a later date, depressing the Telstra share price for years into the future. The third is the regulatory uncertainty that undermines Telstra’s investment plans.

The presence in the T3 prospectus of these three risks to Telstra’s future is extraordinary. Their presence is extraordinary because each is a risk to Telstra’s profitability, undermining investor confidence in the float that has been created by the Howard government. These risks are not the usual risks associated with business; they are additional investment risks that are purely the creation of the Howard government. The fact that, on the one hand, the government could be talking up the Telstra float while, on the other, creating risks that undermine the prospects of the float is an extraordinary demonstration of the government’s incompetence. Even worse, these risks are purely the result of personal animosity and ideological obsession—not a compromise for policy reasons but pure personal vindictiveness and ideological obsession.

The government have done what they have become accustomed to doing when they want to stamp their ideological position. They have turned to their internal line-up of Howard foot soldiers in an attempt to absorb heat over their ongoing mess, this time rolling out Mr Cousins and nominating him, confident that he will be elected as a director at the annual general meeting, even though concerns have been raised about the consequences should he be successful in winning the position.

The appointment of Mr Geoff Cousins is the basest of personal square ups. The Telstra board has outraged the Howard government simply by disagreeing with its view of the world. So, as payback, the government is now forcing a close personal friend and adviser of the Prime Minister onto the Telstra board to act as a government spy. The Prime Minister said yesterday:

... the government will be voting for Mr Cousins at the annual meeting and I feel reasonably confident that he will be elected ...

This, and the Prime Minister knows that Donald McGauchie has already written to shareholders asking them not to vote for Mr Cousins. The handling of Telstra by the Howard government is reaching the point where they are completely on the run and have few places left to turn, so much so that the government’s embarrassing performance during question time yesterday confirmed that they are out of answers and completely exposed.

Under the heading ‘Investment and other risks’ in the T3 prospectus, printed and launched yesterday as the ink was still drying, the first paragraph attempts to shed some light on the nomination of Prime Minister Howard’s nine-year part-time adviser and—as media reports say—‘friend’ as a director to Telstra. It says:

There are significant differences between the Commonwealth and the Telstra Board with respect to the nomination for election as a director of Mr Geoffrey Cousins.

‘Significant differences’, read another way, could mean a genuine risk in the view of Telstra. Telstra used the prospectus to warn investors that the election of Mr Cousins could upset the board. The prospectus says:

Telstra believes that there is a risk if Mr Cousins cannot be considered an independent director that this could prove disruptive to the smooth and effective functioning of the Board. Were this to occur, this could also affect Telstra’s ability to attract and retain qualified directors.

It goes on to say:

The Telstra Board did not seek Mr Cousins’ nomination and did not have the opportunity to adequately assess Mr Cousins’ candidacy in accordance with its governance processes, which include assessing a proposed director having regard to the independence requirements of the Board’s Charter and the ASX Principles of Good Corporate Governance.

But it does not end there. It goes on to say:

... the Board is concerned that there is a risk that Mr Cousins’ previous consulting role with the Government could interfere with his capacity to be considered an independent director. In the Notice of Meeting for the AGM, the Board did not recommend that shareholders vote in favour of Mr Cousins.

Now I will consider the government’s opposing view. The government says that it has sought the nomination of Mr Cousins and lists his experience, highlighting a number of positions he has held. The government also states that Mr Cousins will act independently. It should be noted that Mr Cousins only resigned as a part-time consultant to the Prime Minister upon his nomination. So, after years of his being a consultant to the Liberal Party, we are now expected to believe that the government will be held at a distance, that he will act independently and that his appointment is justified by his experience. In the T3 prospectus, the Commonwealth has written:

Mr Cousins has more than 26 years experience as a company director ...

My understanding is that Mr Cousins does have experience in Australian telecommunications—that he was the chief executive officer of Optus Vision, a company that lost $4 billion and was wound up. The T3 prospectus tells us:

Mr Cousins was previously the Chairman of George Patterson Australia ...

Further down, it says that he has held a number of positions at George Patterson, including Chief Executive of George Patterson Australia.

A recently released government contracts document shows that Mr Cousins’s former advertising agency, now called George Patterson Y&R, has been contracted by the government for $1.87 million for advertising agency services for the Telstra T3 sale, and today in our newspapers we read this about the government’s $20 million Telstra share offer advertising campaign:

Media buyers said the government would pay higher than normal prices because of the need to book prime time television advertising spots.

So here we have the government appointing a mate to the board, contracting the company in which he held significant senior positions and then spending a further $20 million—paying higher than normal prices—on the advertising of their sugar-coated sale of Telstra. Whichever way you look at it, the government’s actions regarding T3 have undermined its medium- to long-term prospects.

The government is attempting to get the public’s confidence by embarking on an expensive advertising campaign—$20 million worth of advertising—while continuing to attack Telstra’s direction and its leadership and not giving genuine consideration to concerns Telstra has raised about the government’s nomination for a position on the board. But Australians should not be surprised about this latest extravagant advertising campaign—it is straight off the back of the government’s $55 million Work Choices advertising campaign.

Telstra’s prospectus, released yesterday, is a damning indictment of the government’s role in the Telstra sale process. The government’s handling of Telstra has been a shambles. It is time John Howard stopped putting his own political interests ahead of those of the Australian public and Telstra shareholders. They deserve better than this. (Time expired)