-----Original Message-----
From: Fisher, William Alford - FISWA001
Sent: Monday, 15 September 2003 5:30 PM
To: Fisher, William Alford - FISWA001
Subject: Submission: Telstra Piratisation

 

Submission to:   Senate Environment, Communications, Information Technology and the Arts Legislation Committee

 

On the:  Inquiry into the provisions of the Telstra (Transition to Full Private Ownership) Bill 2003

 

 

From:  W.A. Fisher

            11 Mackay Ave.

            North Plympton

            S.A.      5037

            Ph.:  (08) 83510157

 

 

 

            I am strongly opposed to the sale of the remainder of Telstra for reasons outlined below:-

 

             As a grandson of a former PM, I'm more inclined to take a long view than the radical fundamentalists now running Australia's economy.  The Auditor-General's report into Commonwealth estate property sales shows that it will be realising a net loss by 2008.  Selling public properties & then renting them back provides enormous benefit - to the new owners receiving the rent!  Treasurer Costello (like previous Treasurers, only much faster) has sold off most of the assets gathered by the nation over 100 years, giving his government windfall revenues.  After 2008, the next generation will be in the red, either having to spend much more to hire the assets or having to borrow billions to buy them again. 

 

            Why do I call the present government radical fundamentalists?  That's what they are.  The decision to sell public assets wasn't made for any sound financial reason.  The Department of Finance was instructed to sell every property which returned less than a "hurdle rate" of 15%.  Private enterprise would set the hurdle at 10%-11%.  A responsible government acting in the public interest would set it at 6%-7%.  Setting an absurdly high hurdle wasn't enough for these radical ideologues.  6 properties which did meet the hurdle rate were sold.  More fundamentalist economic sleight-of-hand!  The result:  what a surprise!  Most of the financial risk of holding the properties was retained by the Commonwealth.  Beneficiaries such as the Motor Traders Super Fund quickly jacked up rents based on revaluations of their new properties.  Many government departments had no choice but to rent back the newly sold properties because they had been purpose-built for them and nothing else suitable was available.  The Audit Office's report concluded that after 11 years :  "the cumulative rental outlays would outstrip the value to the Commonwealth of the sale proceeds and any earnings from their reinvestment".  In other words, they've sold the family silver & they're renting it back at a cost which will handicap future generations.  So much for Treasurer Costello's claims of intergenerational equity!

 

           {[I guess it's not so bad if the massive windfalls are being spent wisely?  Do me a favour!  Massive subsidies to private health insurance corporations while the public health system sinks into crisis (which, to these radical fundamentalists, justifies further dismantling a starved system which is, after all, not functioning well).  Then there's the mind-numbingly expensive Pacific Delusion, whereby we bribe various bankrupt and/or corrupt small island states to imprison refugees (most are later found to be refugees, as with the Tampa refugees), denying them their rights & any media access or public spotlight (ie, our rights to know what's being done in our name & at our expense).  Or the wars we're committed to, opposed by a majority of Australians (public opinion polls), justified by a pack of lies, with no coherent exit strategy or any real hope of an exit that isn't a catastrophe.  The less said the better about what these fundamentalists are doing to our higher education system, our national broadcaster, our alliance with state terrorism in West Papua & Aceh, & the erosion of our own freedoms from arbitrary arrest & detention.  No, the money isn't being well-spent.  On the contrary ....]}

 

            My grandfather would be appalled by this jumble of incompetence, cynicism & duplicity.  And yes, the sale of Commonwealth estate property is relevant to the sale of Telstra.  It shows the fundamentalist mindset of those who would sell Telsta no-matter-what.  It shows the probable financial result of the sell-off.  I remember well the glib lies told to justify the partial sell-off:  no, of course, part-privatisation is sustainable - no, it isn't a slippery-slide to full-privatisation.  Now we're told by the same people that part-privatisation is unsustainable.  We suspected they were lying.  Now we know they were & are.

 

            Privatisation will not deliver economic benefits (to anyone except the current government's business buddies) or service improvements without strong regulation & open disclosure of performance data.  What we're seeing instead with other privatisations is huge deals with no analysis, politicised public servants (on contracts to make them more compliant) who are protecting political interests above the public interest, and consistent attempts to marginalise auditors, regulators & the ACCC.  It's a fundamentalist mindset, with a determination to privatize no-matter-what.  That almost guarantees bad results.

 

            $1.2Bn. from the sale of Telstra established a National Heritage Trust.  The Auditor-General's report showed it to be a National Party slush fund propping up Coalition support in National Party seats with most of the money going to farmers.  Financial institutions also did well, scoring $430m. from commissions on the sale of the first 49%.  A similar amount is allocated to finish the privatisation.  Losses on the sale of the 2nd tranche were so big that shares in T3 will have to be discounted - a cost to taxpayers - to encourage buyers.  It amounts to a transfer of wealth from all Australians to a few Australians.

 

            Optus has spent $14Bn. duplicating Telstra's network - it still hasn't made a real profit.  In 1990, Australia rated 14th out of 22 OECD countries in the cost of business calls.  Now we've sunk to 24th out of 29.  We now have $10Bn. invested in redundant capacity, which could have gone into a tax cut or better health and education.  In a continent the size of Australia, telephone networks should be a natural monopoly, publicly owned & regulated to ensure service through a sparsely-populated interior.  That need is increased by the next technological development (and all future ones):  extending optic fibre cable with broadband capacity for interactive services.  Such a task won't be undertaken by any privatised telecom.  It will be done by public investment or not done at all.  It will cost over $20Bn. & the payback period is too far into the future for private investors.

 

            I predict that if fibre optic roll-out is limited to the profitable parts of the network, the National Party will go belly-up & cease to exist.  For many Australians, that would be no great loss.  However, any pretence of government for all Australians would be over; the long-term consequences for Australian democracy would be dire.  If the proceeds from the full sale of Telstra are used to finance the roll-out under government-imposed conditions, all of Australia will be covered, but Telstra will be foreign-owned & profit-motivated.  Australia's looming telecommunications crunch will be postponed until some later tech. advance.  Or the government could use its controlling interest in Telstra to plan the roll-out & finance it with government-guaranteed bonds.  It's obvious to me that this is the best option.

 

 

            This completes my submission to this Inquiry.

 

 

 

                                        Bill Fisher