Communications Minister Richard Alston let the cat out of the bag and set it among the carrier pigeons with his remarks that it was both inevitable and desirable that the whole of Telstra be privatised. The Australian public was led to believe before the election that the reason for selling just a third of Telstra was to finance major environmental projects, notably in the Murray-Darling basin. And all along the real reason for selling a third of Telstra is to drive in the thin end of the wedge so that the remaining two thirds can be sold later … a move driven by ideology which may or may not be of benefit to the Australian people.
The leader of the Democrats, Cheryl Kernot, has quite pertinently taken some joy at Senator Altson’s comments. She says that the debate about the privatisation of Telstra should be wider and longer. There are many details yet to be spelt out. The key question is how is it better for Australia to sell one of the nations most profitable public enterprises? Is it better for Australia that the lion’s share of Telstra be sold to foreign hands, as it inevitably will be? Leaving the question of foreign ownership aside, would it be better for Telstra to be in private Australian shareholders’ hands than in public ownership. The Government has yet to demonstrate this. It may be that the taxpayers and telecommunications consumers will be better off, but it is yet to be demonstrated. Surely, private investors will only invest if they can make a buck out of it. And if the private investors can make a buck out of it, why is it not possible for public ownership to do the same thing?
Other key questions arise. Telecommunications is not only about making a buck. In an nation like Australia which suffers the tyranny of distance, there is a public interest in ensuring that people in remote areas get good telecommunications at a reasonable price. It may well be that that can be achieved with Telstra in partly or fully private hands. Equally, it may well be that the interests of regional Australia will be pushed aside in the interests of making money for private shareholders.
Senator Alston’s honest, if politically inept, prognostications now demand answers to basic questions: will the efficiencies of a privatised Telstra be enough to generate enough taxation revenue to outstrip the profits that a publicly owned enterprise returns in profit? Will the Government be able to insist that the privatised Telstra fulfil community service obligations in the regions, and how is it that a privatised Telstra can do that better than a publicly owned one?
The real sting is that the corporatised publicly owned Telstra has demonstrated in recent years that it can generate very large profits in the face of competition from Optus and others; that it can deliver on community service obligations; and that it is such an efficient organisation in its present structure that there may be little dividend left in moving from so-called moribund public ownership to private ownership.
However cold the water used in John Howard’s hosing down of Senator Alston, it is not cold enough to remove the onus now on the Government to show that the Australian public (from the taxpayer in inner Sydney to the phone user in Outer Woop Woop) will be better off. In this respect Senator Kernot is right: the partial or total privatisation of Telstra requires considerably more detailed cost analysis and more widespread debate.