Here is my speech in Parliament opposing the Howard Governments legislation to sell the rest of Telstra.

There was also a Senate Inquiry into this Bill: Report on the Provisions of the Telstra (Transition to Full Private Ownership) Bill 2003 - (PDF format) - Tabled 27 October 2003 - Submissions

Senator LUNDY  (Australian Capital Territory) (7.12 p.m.) —Once again we find ourselves debating this Telstra privatisation bill, the Telstra (Transition to Full Private Ownership) Bill 2003 [No. 2]. It is like Senator Cherry said: it feels like Groundhog Day in many respects because the government have been so persistent in bringing this back again and again, knowing full well that they are not likely to get support in this place.

Senator Cherry —It's a waste of our time.

Senator LUNDY —It is a waste of time, but I guess it is time when we get the opportunity to articulate once again all of the powerful and compelling reasons why further privatisation of Telstra is such folly. I am privileged, in my portfolio responsibility of information technology, that I am able to focus on the communications infrastructure of this country, particularly on the role of data users or Internet users. That creates a quite unique perspective. I have to say that some years ago it was more unique than it is now, but with the growing number of Internet users the object of achieving greater quality of data communications services has become a central issue in what constitutes future-proofing the Australian telecommunications network, and Telstra, largely because of their still dominant position in the market after years of competition, are quite central in determining what sorts of data services and quality of Internet access is available through the network. I will go more to the specifics a little later, but firstly I will turn to the broad national challenge that stands before Australia at this point in time.

Every day that passes sees new challenges and opportunities arising on the Internet and how people use that particular technology. It is a truly global medium and, as such, it services a global society of which Australia is part. But different nations have been able to respond in different ways to the challenge of the need for better, faster, higher-quality communications infrastructure and the potential that the Internet offers. What I have been able to observe, as I think many have, is that a given country's ability to exploit their communications potential has not necessarily been linked to the stage of their economic development.

Some developing countries have managed to leapfrog whole generations of copper technology and are now investing in and deploying communications networks that are broadband and that do take those countries to the next level of how they communicate. By using fibre-optic, wireless and broadband services generally, they are able to bypass whole generations—it is longer than generations, it is decades of a copper based network that has fundamentally shaped our future here in Australia. Many of these developing countries through wisdom, foresight and an understanding of the power and potential of high-bandwidth communications infrastructure have developed the public policy necessary both to stimulate Internet usage and to invest in the hardware in those networks themselves.

On the other hand, some developed countries have understood that their existing economic and social strength derived from advanced communications infrastructure can be further strengthened, again by focused and timely investment to upgrade their existing infrastructure to broadband networks. In some cases this has obviously occurred because the investment environment has been right. But most often it is because the government of the day has articulated a vision that goes to the very core of what economic and social development is all about—that is, this almost ancient cliche of the Internet being a new highway and a utility in the way that roads and electricity have been in the past is a fundamental prerequisite to that progression and growth.

Other developed countries have, unfortunately, developed a `wait and see' approach, content to become followers and to see what happens elsewhere. Invariably, these countries have failed to grasp altogether the need for universal broadband constituting an essential utility for the 21st century. Unfortunately and unforgivably, under the Howard government Australia has become a victim in this category. It is under a negligent Howard government that very little real attention has been paid to this critically important task of ensuring that Australia's communications networks are adequate for effective participation in 21st century society and economy. We have to ask this question: is being merely adequate enough?

We have watched Australia slide down the international scales of broadband penetration. We have watched the performance of other nations who have embarked upon a visionary public policy of upgrading their own networks outstrip Australia 10 to one in sheer speed of making that investment. As a result Australia is losing its edge, and in a global economy that is the worst outcome. Surely a more appropriate vision for Australia is to be up there with the dynamic and visionary nation states that foresee an age where digital delivery completely and utterly dominates communication, learning and public and private services, including health, commerce, financial services, security and so forth.

However uniquely Australia may have been positioned in the past, it is the Howard government's blinkered, backward, stunted and conflicted handling of telecommunications policy—characterised by an unwillingness to see beyond the ideological privatisation agenda and the derivative attempts to bribe the electorate with the takings of those sales—that has led to an inability to articulate a vision for how advanced broadband communication infrastructure will underpin social cohesion and economic expansion across all regions in Australia. It is this ideological agenda that has consumed the Howard government. Achieving privatisation is the only consideration, it seems—hence this debate again in the Senate today. The neglect in ignorance of critical communications policies has been at the expense of Australia keeping pace with the rest of the world in quality, affordable broadband services, and hence Australia's capacity to compete in the knowledge based, high value added, future orientated industries.

The obsession with Telstra's privatisation has meant a preoccupation with increasing or maintaining Telstra's share price. Why? Because a higher share price means that the potential share buyers in any further sell-down will be willing to part with their money. This is a fundamental conflict of interest. It is the privatisation agenda itself that creates this conflict of interest, as the Howard government can only privatise if there is enough market interest in the shares—in other words, if someone wants to buy. This is why I found it extraordinary to hear the Minister for Communications, Information Technology and the Arts, Mr Williams, attempting to assert in a Financial Review article on Wednesday last week that indeed it was the remaining majority public ownership that somehow presented a conflict of interest. He said:

Labor failed to explain how it would deal with the conflict of interest the government has as both a majority shareholder of the telecommunications carrier and regulator of the industry as a whole.

It is absolute rubbish to assert that. In fact, it seems to conflict with one of the pieces of correspondence associated with the free trade agreement. I will quote from what I presume to be a draft letter subject to legal review for accuracy, clarity and consistency—like most of the correspondence associated with the FTA. I will read a paragraph from that letter which directly contradicts what Minister Williams was trying to assert in that article in the Financial Review last week:

Notwithstanding the Australian Government's current majority holding of equity in Telstra, Australia's telecommunications regulatory environment is open and competitive and all telecommunications carriers are subject to the same regulatory scrutiny by independent regulatory agencies. The Government will continue to ensure that its interest in Telstra does not affect this regulatory independence. Telstra is also subject to Australia's policy of competitive neutrality as set out in the 1995 Competition Principles Agreement between the Australian Government and the state and territory governments. Competitive neutrality requires that significant government business activities do not enjoy a net competitive advantage simply by virtue of the public ownership.

It seems to me that obviously Mr Vaile and Mr Williams have not been talking on this issue. Any attempt to try to paint that the ongoing retention of the majority of Telstra in public hands as somehow a conflict of interest for Labor is both spurious and misleading. Labor has no conflict. Labor has clearly and consistently argued that it not only will not privatise any more of Telstra but it values any dividend returned to the public purse as a result of their remaining 50.1 per cent share in Telstra. At no point has Labor given any indication that the regulatory policy will be somehow used in the way that the article from Mr Williams implies. Telstra has consistently maintained that the ongoing dividend is of far greater fiscal benefit to taxpayers of Australia than any one-off sum reaped from the sale of Telstra. We have consistently argued that. Indeed, my colleague Mr McMullan has demonstrated on many an occasion the crossover point. Clearly the dividend from maintaining that public share in Telstra is the best way for Australian taxpayers to get that fiscal benefit.

Labor has stated specifically that the primary public policy goal is quality, affordable, future-proofed telecommunications services in Australia. For Labor there is no conflict of interest because there is no privatisation agenda. That is the real difference. It is worth reflecting on how the preoccupation with maximising the share price has led to quite an irrational underinvestment in Telstra's infrastructure. The truth is that the sensible, long-term strategy for Telstra to maintain value in their share price would be to build and maintain infrastructure that is genuinely future proof and has an eye to the networks Australia is going to need in the future. Instead, we have Telstra admitting in a Senate inquiry that they are extracting the last sweat from their copper network—an ageing, decrepit, local loop copper network, as we have been able to demonstrate through various Senate inquiries and Senate estimates investigations. This is a disgrace and signals that at some point money will have to be spent on upgrading this network if Australia is going to remain competitive and indeed do justice to the potential that underlies these networks.

Senator Ian Macdonald —Who is going to provide the money?

Senator LUNDY —Senator Macdonald asked: `Who is going to provide the money?' Invariably, under the coalition's policy, it will come back to the taxpayers to provide that money. It is an interesting point because the government is very keen to say: `Who is going to provide the money?' I would like to come back to the issue of how the Commonwealth government has played its role in helping Telstra to fill the gaps over the years. In the process, it has managed to further entrench them in the market and has done very little to alter some of the underlying inefficiencies in the network. Indeed, it has not encouraged Telstra in any way to make the investment necessary to upgrade the network as a whole or, at the very minimum, maintain the existing network so at least it functions.

Where are the analysts on this issue? It was very interesting to see how quickly they commented on some of the revenue implications of the recent broadband pricing competition notice issued by the ACCC. But the analysts conveniently ignore profound statements such as Telstra provided at one of their more recent Senate hearings when they talked about their network being on their last sweat and being five minutes to midnight. Where are the analysts in commenting on Telstra's performance when they observe statements like that indicating that Telstra are reaching a crisis point? They have been unwilling to maintain the network to provide the necessary services. Further investment is obviously imminent, not to mention that some sort of substantial investment in new infrastructure has to be the logical conclusion to the state that Telstra have allowed their existing network to fall into.

We all know that Telstra are guilty of underinvestment. Telstra continuing their market dominance has had the effect of suppressing technological advancement. Obviously it is part of maximising their returns with minimal expenditure. We have heard a lot in this place about the reduction to their capital expenditure, or capex. The Howard government is guilty of helping Telstra along the way. I believe that, in partnership with the current management of Telstra, the Howard government has worked very hard to fool the public into thinking that somehow it has been acting on complaints about Telstra. One example of this is the way in which 19.2 kilobits was established as a minimum standard for Internet connectivity. This may have been so when web sites were flat pages with no images. Even then I doubt it, as 19.2 kilobits is, as I am sure even Senator Macdonald would agree, absolutely useless when it comes to downloading web pages of the calibre that are now available just through general services. Try using 19.2 kilobits in downloading an email attachment. If you have a PowerPoint presentation, you have absolutely no hope.

Senator Macdonald, I am sure that you, as I do, receive continuous complaints about line dropouts and slow line speeds. When people lodge these complaints, invariably the advice they get from Telstra is that they had better go and talk to their ISP or reconfigure their modem or computer in some way. Let me tell you, if it were not for the exposure by the Senate committees, the campaign about the use of pair gains and the ACCC's insistence that Telstra advise their customers about the existence of pair gains, Telstra would still be blaming the poor performance of Internet connections with their network on the modem, the computer or the ISP. What a lot of rot! Two years down the track, we now know that Telstra were covering up the use of this poor and outdated equipment and the fact they are still installing it today. There are many different types of pair gains. It sounds like a technical issue but the bottom line is that these types of systems that Telstra use in their network have a number of effects of inhibiting the quality of service for Internet connections. In some cases, they also have the effect of blocking access to some of the broadband style services like ADSL.

This is the Telstra that the government says is ready, is somehow up to scratch. I cannot think of anything further from the truth and believe that it is only by virtue of public ownership that Telstra finds itself accountable in this place. It is only by virtue of public ownership that we in the Senate have the capacity to demand answers to these questions. What better check and balance on a still dominant player that cannot even tell the truth to its customers following the asking of a direct question without the intervention of the regulator and focused parliamentary scrutiny? In itself, that presents a compelling argument to never, ever privatise Telstra in any further way whatsoever.

The other example of how the government has helped Telstra along relates to the report that I know many senators have mentioned. The ACA has reported glowingly on Telstra's improvements in fault levels, only to find that the leaked internal Telstra document brought forward by Labor several weeks ago proved conclusively that Telstra's fault levels were soaring. This was due to underinvestment in the network and not to what the government and Telstra presented as an excuse—inclement weather incidences. These fault levels are at a six-year high, and this fact corresponds directly with the sort of feedback that all of my Labor colleagues and I have been receiving out and about in the real world.

Finally, I think it is fair to say that all the inquiries the government has organised and orchestrated have lent themselves to very soft recommendations that are compromised in themselves. I have already mentioned the 19.2 kilobits. We now know from recent evidence that this was a contrived speed designed to fit within what Telstra was capable of providing. In addition, we now also know that, despite Telstra having agreed and the government having supported a recommendation to remove the types of pair gains systems that I spoke about earlier, Telstra is only doing so when those systems become congested. It is not doing it off its own bat or in any proactive way, as was the commitment and understanding at the time.

There are so many issues in relation to Telstra, and I know that the Senate has spent a lot of time going through them. This debate does present an opportunity for the whole range of compelling arguments not only as to why Telstra is so far from being future proof but also as to why the government is so conflicted within its ideological privatisation debate as to actually persist with this argument. The government has caused this underinvestment by virtue of its privatisation agenda, and now we find ourselves in the situation of having to defend once again the stopping of privatisation. (Time expired)