Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My question is to Senator Minchin, the Minister for Finance and Administration. I again refer the minister to the government’s briefing document directing coalition MPs to talk up the particularly attractive dividend stream flowing from T3. Is the minister aware of comments by columnist Terry McCrann that John Howard ‘plans to trick up T3 in exactly the same way as he did T2—suck you in with an artificially and unsustainably big dividend’? Isn’t it the case that the T3 share price will be artificially propped up by this unsustainably big dividend? Isn’t it the case that, in 18 months time, T3 investors will again have the Howard government to blame for sucking them into Telstra through a ‘tricked-up’ dividend just as they were in T2?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I begin by totally rejecting the premise of the question. Investors in T2 were fully informed of the risks associated with and the benefits associated with investing in T2. The prospectus and indeed a letter by John Fahey, the then minister for finance, pointed out all the risks associated with any investment in any company, including this one. That is always the case with prospectuses—there must be a full and comprehensive statement of any risks associated with the particular investment—and that was the case in T2. We again urge investors to make sure they speak to their own financial advisers before they invest in T3. That is clear and, indeed, as I said, that is made very clear in the briefing document for coalition members—they should ensure that any constituents who express an interest in this should be informed that their first port of call should be their own financial advisers to see if an investment in T3 suits their particular investment strategy.

In response to the specific question, I make the point again that the dividend policy of the company is entirely a matter for the board. It is not a matter for the government. It is not possible for the government to have, so-called, tricked up this matter. Dividend policy is entirely a matter for the board. The board has announced that, at least for the next 12 months, the dividend will remain at 28c per share. The company further expressed its acknowledgement that investors in Telstra are keen on the dividend policy of the company—it understands that. But it declined to give a specific guidance in relation to 2008, and obviously investors would need to take account of that.

In the remarks the Prime Minister made, he was referring to the fact that the government, as owner of its shares, is of course entitled to offer them on a basis which it determines. We did then, and we will again, offer our shares on the basis of an instalment receipt process whereby investors can pay a part payment first up, but then they will be entitled to full payment of the dividend. We did that in T2 and we have announced that we will again do that in T3. To the extent that we will be offering the shares to the investing public, as the owner of the shares we will indicate the basis on which we will be seeking to make our shares attractive, and it is perfectly proper for us to inform the market that that instalment policy will prevail. We have also said that there will be an entitlement for existing Telstra shareholders, the details of which will be made clear when we define the offer structure.

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I ask a supplementary question, Mr President. Is the minister aware of the recent comments by Mr Paul Neville, the chair of the coalition’s backbench communications committee, who warned the government against pulling another smoke-and-mirrors trick on T3 by saying, ‘I think sweeteners are fair enough provided you don’t suck people in.’ Isn’t Terry McCrann right when he says that this is exactly what the government is trying to do with its tricked-up T3 dividend trap? Why is the government intent on sucking in thousands more investors in T3, just as it did in T2?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I have great respect for Terry McCrann, but his position, which he advocated for many a long month, was to simply give these shares away. He just wanted to hand them over for free to everybody. We do not believe that would be a good policy. We do not believe that $23 billion worth of shares should simply be given away. With great respect to Mr McCrann, we are not following his advice. I also have great respect for Mr Paul Neville. He is a very good chair of our communications committee and provides very good, sound advice and views to the government and the party room.

I repeat: potential investors in T3 will of course be made well aware of the risks associated with any investment or further investment in Telstra. Any investor needs to consult their financial advisers before they embark on an investment in T3. We think Telstra is a great company. It is a company with a very strong future in this country. We support the transformation strategy being brought to bear in that company. As to whether potential investors wish to participate, that is a matter for them to decide. (Time expired)