On August 16, federal cabinet endorsed the full privatisation of Telstra, despite 70% public opposition according to a recent Newspoll. At the time, Queensland National Party senator Barnaby Joyce was threatening to cross the Senate floor to block the sale.
Telstra CEO Sol Trujillo had told the government on August 11 that a $5 billion investment was required to bring Telstra's regional services up to scratch for the sale, $3 billion of which should come from taxpayers. Trujillo also threatened to stop spending money on infrastructure services if regulations on Telstra were not relaxed in the lead-up to privatisation.
Joyce held out for a week after the cabinet decision, to give the appearance of seeking further concessions from the government on behalf of Queensland's rural lobby. But $3 billion was the magic figure it seems: the government offered exactly that amount, and won the praise of Joyce and Queensland National Party president Bruce Scott.
On August 25, Joyce announced that he would now support the Telstra sale. He told ABC Radio, "I'm down for yes" on the provision that the final legislation toughens Telstra's "universal service obligation" (USO).
The government's deal consists of a $1 billion up-front cash injection and a $2 billion trust fund to "future proof" telecommunication services. All the parties involved are claiming that private investors will match the government's funding.
But there is no built-in guarantee that the "future fund" will be used to develop rural infrastructure. Nor is there any guarantee that the USO will not eventually be weakened, leaving both rural and metropolitan users at the mercy of the market.
The federal president of the Isolated Children's Parents Association, Jack Beach, told ABC News on August 16 that rural people are not convinced that the legislation will protect them. "We have a USO, there's nothing wrong with the legislation, it's just not being properly enforced. "
Meanwhile, despite Trujillo's claim that "everything is centred on the customer", another 1000 Telstra jobs are on the line. Telstra's chief financial officer, John Stanhope, announced on August 11 that $100 million has been set aside for redundancies. Coupled with the freeze on staff recruitment, this will drastically reduce Telstra staff's ability to provide adequate customer service.
After receiving no reply to an August 4 letter to Trujillo seeking clarification of management's position on job cuts and the impact of privatisation on staff, the Community and Public Sector Union lodged a dispute notification with management on August 12. CPSU organiser Paul Girdler told Green Left Weekly that soon afterwards Telstra managers agreed to meet with the union, but said they could not provide the information the union is seeking. Girdler added: "The CPSU is opposed to the sale of Telstra, full stop."