Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answers given by ministers to questions without notice asked today.

It was only 12 months ago that the government secured legislative support for its plans to sell Telstra. That was a sad day for Australian consumers. Twelve months of bungling, incompetence and mismanagement later, we now have an utter fiasco on our hands. It is now clear that the sale of Telstra will not be a sad day just for consumers; it will also be a disaster for existing Telstra shareholders.

As a result of the relevant ministers’ incompetence, the government now has only two realistic options left for selling Telstra: a fire sale or dumping its shares into the Future Fund—two bad options for Telstra shareholders. At this stage, the government’s only option for a retail offering of Telstra is, as I said, a fire sale, in which existing shareholders are forced to watch the government sell down its shareholdings by half. That is right: half of what they paid in T2. That is the legacy of this mob on the other side. It sold shareholders, small investors and mums and dads a pup with T2. Under Senator Minchin’s and Senator Coonan’s watch, $7.40 rose to $9 and today it is trading at $3.60 because of this incompetence.

Just last week we had the Prime Minister saying that a fire sale would be unfair to the body of Australian taxpayers and it would certainly be unfair to existing Telstra shareholders. That is right; those were the Prime Minister’s words. In my book it seems pretty unfair to Telstra shareholders for the government to sell its Telstra shares at the current market price, about $3.60, which is less than half the $7.40 investors paid to buy shares in T2. That is what you have to offer Telstra shareholders—a fire sale.

On the other hand, of course, the other option the government likes to toss around, as Senator Minchin kept intimating today, is to proceed with the sale of Telstra by dumping its shareholdings into the Future Fund for David Murray to deal with the mess. This plan has attracted almost universal condemnation in the financial press. Let’s go through them. They include columnists as diverse as Terry McCrann and Stephen Bartholomeusz, as well as Sol Trujillo—even Sol Trujillo, the hand-picked CEO ticked off by Senator Minchin who supported it every time he was asked about it—and Stuart Wilson from the Australian Shareholders Association. They all agree: dumping the government’s Telstra shares in the Future Fund will be a disaster for existing shareholders. It will be a disaster for the President of the Senate, who on his declarations has listed Telstra shares. He bought them not that long ago. He is not laughing, Senator Minchin. You might be, but let me tell you the President of the Senate is not laughing. That is four different commentators, including two journalists from different publications, a shareholder activist and the Telstra CEO, all singing from the same songsheet. It is a disaster.

It is quite an amazing situation. It is one of the few areas of common ground amongst the warring voices in the Australian telecommunications debate that dumping the government’s Telstra shares into the Future Fund will be bad for shareholders. By dumping its Telstra shares into the Future Fund, the government will be creating an overhang of shares that David Murray will use to sell into any strengthening of the Telstra share price. And I noted Senator Minchin kept trying to say it is the Labor Party’s fault—

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

Our fault?

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The Labor Party’s fault. Let’s be clear about this. Let’s be clear about who created the overhang. In the 1996 election, who was it who said, ‘We’ll sell a third’? It was the then opposition, the current government. They decided to sell a third. They created the position of the overhang. Then in 1998 they announced they were selling the rest. It was at that moment, when the government stated they were going to sell the rest, that the overhang was generated. It was not generated by the Labor Party, who had been in opposition at that stage for about three or four years. It was not the Labor Party. This mob created the overhang. This mob are responsible. By dumping their shares into the Future Fund, the government will effectively institutionalise a weak Telstra share price for the immediate future. Dumping their Telstra shares into the Future Fund will be a failure of policy— (Time expired)

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

This is a rather strange debate. I well recall moving around Australia 20 or 30 years ago; the constant refrain wherever you were in the suburbs or the towns in the days of the PMG and Telecom, and even in the days of Telstra, was: ‘If only private enterprise’—that was how they put it in those days—‘owned the phone company. It would be so much better. Government does not run things well; the private sector does.’

You would not have found a single Australian 25 years ago—other than those opposite—arguing that Australia’s phone company should be in the hands of the government. It strikes me as passing odd that that thinking has now been turned on its head, and that government ownership is now seen as the only way to guarantee good phone services in Australia. If the principle that the government runs things better and is better at providing services holds true then the government should step in and buy a whole range of private businesses and activities. The government should probably step in and buy internet service providers. If governments really do things better, why do they not step in and buy web design companies? Why not nationalise all the schools? If government does things better, why not nationalise all health provision? If the principle holds true that only government can guarantee good services then that is what should be done. The government should buy the banks, the airlines and the insurance companies. That is what government should do if government ownership really is the key to good service provision.

Given that is the view of the Labor Party, I do not understand why the Labor Party does not state as its policy that it will renationalise Telstra—sure, keep the ownership that the government currently has. If Labor really believes that government ownership leads to better services then why doesn’t the Labor Party have a policy to buy back the rest of Telstra? That would at least be a consistent, honourable and understandable position. I must say, I have to pay credit at this point to Senator Kerry Nettle, who, when I shouted this very point as an interjection the other day, shouted back, ‘We do.’ At least she has the strength of her convictions, unlike the Labor Party. She believes that if it is good enough for North Korea and Cuba it is good enough for Australia. If it is good enough for them to have totally government owned phone companies it is good enough for Australia.

I am surprised that that is not the view of the Labor Party as well. The Labor Party position in relation to the ownership of Telstra is a little bit like the saying in Animal Farm, George Orwell’s book: four legs good; two legs bad—that is, half ownership good; no government ownership bad. It is about as logical as that. Labor’s half-ownership policy is half baked. Labor do not, deep down in their souls, have an objection. They are opportunistic. They lack conviction. I, for one, do not believe for a second that Senator Conroy is against the full privatisation of Telstra. He is very much alone on the other side of this chamber. He supports the US alliance. He supports free trade. And I know that deep down he supports the full sale of Telstra. He lacks conviction in what he says.

Labor clearly lack conviction in this area. Remember the Commonwealth Bank? Ralph Willis put a letter in a prospectus for the part sale of the Commonwealth Bank saying that Labor would never sell the remainder. Well, guess what happened? Ralph Willis, as Treasurer, misled the Australian people on behalf of the Australian Labor Party. It was the same story with Qantas. Qantas was sold by Labor. It was never meant to happen, yet it did.

Mr Acting Deputy President, I must say, if you will bear with me, that I quite like the following quotes. Let’s play the game of guessing who they are from. The first one says:

Privatisation fits in with the Government’s broader economic imperative to create jobs ...

That was Kim Beazley, finance minister, on 24 August 1994. But the next quote is the humdinger. I think it really sums up the modern Labor Party. It is a quote from Mr PJ Keating. He said:

There are four dinosaurs in Australia: Qantas, Australia Post, the ABC and Kim Beazley—and the fourth dinosaur is in charge of the other three.

Never was a truer word spoken. And, to finish up, Senator Conroy, on 16 August— (Time expired)

Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Link to this | Hansard source

The issue before the Senate is not whether Telstra ought to be sold or not. The government made the decision to privatise; it has passed legislation. The issue before the Senate is the government’s massive incompetence in mishandling the regulatory regime around Telstra, which has been led—although I should not use that word—by Senator Coonan, the Minister for Communications, Information Technology and the Arts, and in the mishandling of the privatisation process by the Minister for Finance and Administration, Senator Minchin. That is the central issue.

That is the issue that people are worried about in this country today, and I will tell you why they are worried about it: it is because, under the direction and oversight of Senator Coonan, the minister for communications, we have seen an absolute shambles and mess of regulatory mismanagement, which has largely resulted in the share price diving from $7.40 at the release of T2 shares to the low of $3.60 today. That is the reason the share price has been going south—the incompetence of Senator Coonan in her approach to the regulatory issues and regulatory parameters. She introduced legislation into this parliament that is set around Telstra, and that is the basic dilemma that the government have.

The government have set in place a regulatory framework in which Telstra is, frankly, struggling to survive at the present time. As a consequence, we have seen the share price of T2—which was $7.40 if you are one of the just over 1½ million individuals to buy into T2—almost halved to the low of $3.60. The over 1½ million Australians who, on the urging of this government, participated in T2 have taken an absolute bath when it comes to the capital purchase price of the shares they bought. The government are primarily responsible for that situation. Here they are, 11 years in government, and they blame us! We did not vote to privatise Telstra. It was the government that voted to privatise it. It was the government that set up the regulatory regime. Largely driven by those bananas and drongos in the National Party, they have tried to impose some sort of Stalinist centralist regulatory shackle on the telecommunications system. Today, we are in an unholy mess as a consequence of what Telstra has got to struggle with.

It is not just the shareholders who have taken a bath; it is the Australian taxpayers who are taking a bath. In the budget last year T3 shares were valued at $5.25, and the tranche was worth about $31 billion if it was sold. In the mid-year financial review its value dropped to $4 a share or $26 billion, and now on the current approach the value has dropped to below $3.60 and it is now worth $24 billion. So on this government’s watch, because of their incompetence in terms of the regulatory framework around Telstra, the taxpayer has lost some $7 billion in Telstra’s value because of Senator Coonan’s incompetence.

I feel a little sorry for Senator Minchin. Senator Minchin is one of the smarter operators on the government side and he must be tearing his hair out at Senator Coonan’s approach to the regulatory parameters and her performance and comments about Telstra. Everything Senator Coonan touches and everything she says about Telstra has the share price dropping. So we are faced with the worst of all worlds: inappropriate regulation and a diving share price.

And all of this mess is going to end up in the Future Fund. Can you find anyone in the market who believes that it is a good idea to dump 30 or 40 per cent of Telstra into the Future Fund? It creates an overhang on price for the next three to four years. That is the mess. We have got the worst combination of outcomes here. Senator Minchin blames the Labor Party for the mess, but in recent days we have seen an outbreak of virulent anti-Americanism from the government ranks. They do not blame Senator Coonan or Senator Minchin or have a hard look at what they have done. They blame the American imports, the executives. (Time expired)

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

We are talking about having a bath here. I think that Senator Sherry should take a cold shower or, at the very least, wash his mouth out with soap. To stand up and discuss the relevance of this government’s decision and commitment to sell Telstra as being in the best interests of the Australian people and also in the best interests of the company and then to harangue us because they have stopped us from doing it is appalling, quite frankly. They have made a $50 billion decision. It has cost the Australian taxpayers, the men and women of Australia, over $50 billion because they would not allow us sell Telstra completely in the second tranche. It is a part of the socialist unrepresentative mantra that the Labor Party have been spewing for 10 years now and it is quite offensive.

We hear Senator Sherry talking about majority ownership by government. This is the same bloke who formulated a plan with George Campbell in January 2004 to ensure that no faction had majority control of the Australian Labor Party. He is absolutely opposed to anyone having majority control—except the government and particularly if it is a Labor government. Then they are happy to have control. But as a party and as a government we are committed to releasing these shares and putting Telstra into private ownership so that the Australian government can proceed and fund its superannuation liabilities on an ongoing basis.

We have been shown again today the idiotic policy of the Labor Party. They have put forward the absurd proposition that the problem lies in the regulation. We have been on the record time and time again saying that it is inappropriate for any government to be a major shareholder in an organisation like Telstra as well as being on the regulatory board determining the regulations. It is a preposterous proposition that we should be expected to handle both obligations in a sufficiently adequate manner. It is like putting the unions in charge of the Labor Party. You see the result—

Jeannie Ferris (SA, Liberal Party) Share this | Link to this | Hansard source

They are!

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

They are in charge of the Labor Party. That is right, Senator Ferris. Isn’t that absurd? Isn’t it preposterous? It is absolutely dumb. But let us go back through a bit of history, because I think that history is a very important thing for us to consider in this capacity. The Labor Party, who now oppose privatisation by any means, in July 1991 were happy to release 30 per cent of the Commonwealth Bank to the public. In 1992 ‘Corporate Kim’ Beazley corporatised Telstra, obviously in preparation for sale. But Corporate Kim did not quite get his way at the time. In 1993 they decided to hive off a bit of the national airline and sell 25 per cent of Qantas, and that is exactly what they did. They sold it to the public.

Then they kept going. In July 1995 they said: ‘Hang on, we cannot be in charge of a commercial airline. Let us get rid of the remaining 75 per cent,’ and they did. Then, because they had not had enough of a good thing, they planned to privatise the remainder of the Commonwealth Bank. And all the time they had Corporate Kim corporatising Telstra ready for a sale. What happened? The people of Australia saw through their union-controlled mantra and they said no, enough is enough. It is time to put some decent people in charge of the Treasury. It is time to remove the Beazley black hole. It is time to ensure that unemployment falls. It is time to ensure that the people of Australia have access to decent interest rates. It is time that they had access to jobs and it is time that Australia prospered.

Accordingly, they elected a coalition government, and it has governed very well. Part of its consistent policy—and, Senator George Campbell, you would understand this—has been to bring about the full privatisation of Telstra. You have opposed this at every election and we continue to get elected on it. People are still happy to see us come back into government because they know it is in their best interests. We are trying to fully fund our superannuation liabilities, a legacy of the mismanagement of the Labor Party in the decade of mismanagement when people went broke and the government had a $96 billion black hole. Now you have still got the same people—Corporate Kim and all those other blokes—in charge of the Labor Party. They are still there and the socialist union movement is pulling all their strings. If Telstra is such a bad investment, explain to me why the industry super funds all have shareholdings in Telstra. Explain to me why the National Bank, Citibank, Westpac Custodian Bank and JP Morgan are all shareholders. (Time expired)

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I will not waste any time in responding to Senator Bernardi. He is obviously still very much a learner and very green behind the ears. When he learns a little bit about what he is talking about then we may pay a bit of attention to it. The response you get from the other side of the chamber is interesting when you raise any criticism of the way in which they are managing either the Australian economy or bits of it. Senator Minchin was asked a question about the sale of Telstra and the first words out of his mouth were: ‘It’s all your fault. It’s all the Labor Party’s fault.’ I do not recall the Labor Party ever taking a decision to sell Telstra.

From memory, the decision to sell Telstra was taken when you won government. I recall that it was your platform. You went to the people and said that you would sell Telstra and you went to the people with the plan to sell a part of it. You are the people who devised a plan to sell a part of Telstra, and that is where the whole problem that you are now faced with regarding Telstra emanated from. You could not wait to unload it. In the same way, at the last election, when you won the numbers in this chamber—when you had the 39 votes—you could not wait to get the bill in here and get the decision to sell Telstra. You were so anxious to get the decision that you even guillotined the committee stages of the debate in the chamber. And what have you done since? You have made an absolute mess of the organisation. You have cost the people who were gullible enough to buy the shares in the first place substantial funds—1.6 million shareholders have lost substantial funds as a result of your handling of Telstra.

You appointed Mr Trujillo as the CEO. We are used to the situation in which CEOs in this country are paid substantial salaries, exorbitant salaries—outrageous salaries, most people would say. But what has become consistent with the outrageous salaries is that we also pay them bonuses when their companies are going badly. The share price of Telstra is half of what it was and the CEO picks up a $2.6 million bonus. How much would he be worth if Telstra were actually going well? We would not be able to afford to pay him. Mr Trujillo did a very good job in suckering in the previous company he worked for in the United States, with the payout he received from that company, and he has certainly done a good job of suckering in you lot, in terms of the arrangements that he has made for his salary in this country.

We were accused by Senator Fifield of wanting to hang on to the old socialist mantra—wanting to hold on to Telstra in public ownership. Let us play a little bit of a guessing game. Who said, ‘There is too much instability in the telecommunications market to consider the sale’? None other than the government’s partner in crime: The Nationals. Senator McGauran, you are no longer with them, so you can leave. You are no longer a part of them; you got out. That is an organisation that has been wedded to socialising the losses and privatising the gains for the whole of their history—their whole history has been predicated upon agrarian socialism—and they have woken up to what is happening in terms of Telstra. Senator Minchin, the reality—and you cannot get away from it—is that this mess is of your own creation. This government has created the mess that Telstra now is, and you ought to be man enough to stand up and accept responsibility for the outcomes of the policies that you and your government have put in place. (Time expired)

Question agreed to.