Having taken control of the Senate on July 1 and then bullied and bribed recalcitrant Coalition MPs, particularly Queensland National Party senators, PM John Howard was all set to steamroll through parliament the legislation needed to sell off the government’s remaining 51% of shares in Telstra. But on September 7 — just as the first bill of the Telstra sale legislation was introduced into parliament — the Telstra bosses, headed by newly appointed CEO Sol Trujillo, released a briefing document they had presented to the government last month.
The document exposed as lies the claims that have been made by Howard and his ministers that Telstra is in great shape and rapidly moving to fix up its phone and internet services in “the bush”. It revealed that there are faults on 14% of Australian phone lines and that Telstra had received millions of complaints from customers.
The document also revealed that under its previous CEO, Ziggy Switkowski, Telstra had taken billions of dollars from its reserves to prop up its share price for full privatisation, a practice that Trujillo believes is unsustainable. Furthermore, the document revealed that under Switkowski’s management, Telstra had neglected investment in essential telecommunications infrastructure, services and staff training to the tune of $3 billion.
When they met with government ministers last month, the Telstra bosses wanted to get the government to provide the company with these funds. Instead, the government decided on a different course — to buy the votes of National Party senators reluctant to agree to the full privatisation of Telstra with a promise to spend $1.1 billion on the “immediate” upgrading of telecommunications services in rural and regional areas, and a further promise of $2 billion for a “communications trust” that will supposedly fund future technical improvements in country areas.
While Trujillo wants Telstra to be fully privatised, he does not want the corporation to be saddled with the “competition” regulations (under which Telstra will have to provide other telcos with cheap access to its monopoly infrastructure) and service requirements to “the bush” that Howard has had to promise to win support for full privatisation from Coalition backbenchers. These will undermine Telstra’s monopoly position and require it to provide unprofitable services, thus undermining its ability to continue to make monopoly superprofits for its big private owners.
Howard has accused Trujillo of betraying the interests of Telstra’s 1.6 million private shareholders. In reality, Trujillo is defending the long-term interests of Telstra’s curren and future corporate shareholders, including Trujillo’s own personal interests (since his future executive salary and a “retirement” package will include a big block of Telstra shares).
In an interview with Kerry O’Brien on ABC TV’s 7.30 Report on September 7, Howard argued that the current conflict between his government and the Telstra bosses illustrated that there was a conflict of interest between the government being the majority shareholder in Telstra and its role as Telstra’s regulator. However, as O’Brien pointed out, this is “a situation entirely of your own making” — a product of the Howard government's decision to sell off 49% of Telstra — “and now you’re using that as your main justification for selling the rest of Telstra”.
Later in the interview, O’Brien observed that Howard “said today that you’ve never been in favour of government-run enterprises yet you own and run the Australian Post Office, which you also regulate, an institution which does seem to be competitive on a number of fronts and very efficient”. O'Brien asked him: “Why is there no conflict with the government on the post office?” Howard’s only answer was that “both the size and the scale of the business and the nature of the competition in the market is entirely different in relation to postal services, entirely different”.
Yes, it’s “entirely different” — that is, until Howard and his anointed successor, Peter Costello, find an excuse (“circumstances have changed” is now a familiar one, first used to renege on their promise to “never, ever” introduce a GST) to declare that it’s not.
Howard’s big-business masters are already looking at what can be privatised after Telstra. Reflecting their views, the August 26 Australian Financial Review ran an editorial headlined “After Telstra, sell the rest”. Observing that “federal and state governments still have $174 billion invested in trading business”, the AFR called on the Coalition and Labor to sell off not only Australia Post but government-owned transport facilities, and energy and water supply.
From Green Left Weekly, September 14, 2005.
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