BY SUE BOLAND
If you want an example of classic government whitewash, you need look no further than the report of the Telecommunications Service Inquiry which was released by the was released by the government on October 12.
The outcome of the inquiry was predictable, especially as it was chaired by privatisation evangelist and businessperson Tim Besley. The government hadn't wanted an inquiry into telecommunications at all, but it was the price for placating nervous Coalition MPs with rural and regional constituencies.
And, for the government, the Besley inquiry has done its job well. It has provided enough of a fig leaf for the Coalition to pretend concern about poor service in rural and regional areas, while pressing on with its campaign for the full privatisation of Telstra.
When releasing the Besley report, communications minister Richard Alston said that "the government will not introduce legislation to sell the commonwealth's remaining shareholding in Telstra until such a time as its plan of action has been fully considered and made public".
And the delay isn't entirely negative for the government's privatisation program. Telstra's low share price means that if it was sold off now and a whole lot of new Telstra shares flooded onto the stock market, the share price would be driven down further.
Farce
While the Besley inquiry might have done its job well for the government, it's a farce from the point of view of telephone users in rural and regional areas.
The report is premised on the idea that competition makes the phone system work better. It just asserts that problems with poor service in rural and remote areas will be fixed by having more competition.
It never once explains how competition will fix these problems, especially when the experience of people living in these areas is that intense competition between privately owned banks has resulted in the total withdrawal of banking services from some regions.
Despite acknowledging poor service in regional areas, the report sets no benchmarks about the level of service that Telstra should meet.
The report dutifully reflects the government's line that the "community can no longer expect a single provider to meet all the communications needs of all Australians".
With this view, it's not surprising that the report supports the government's decision to sell off the $150 million Universal Service Obligation (USO) contract to deliver untimed local calls in remote areas, describing it as "an opportunity to leverage a better communications outcome for rural and remote Australia". Previously, Telstra, and its forerunner Telecom, automatically received the subsidy for providing unprofitable telephone services in remote areas.
However, this "opportunity to leverage a better outcome" is contradicted by the report's recommendation that competition could be encouraged by relaxing the Customer Service Guarantee for new companies entering the market to compete with the official universal service provider. Currently, the guarantee requires all telecommunications companies which provide telephone services to commit to installing telephones and repairing telephone faults within a particular period of time.
The report also rejected calls for the USO to be upgraded from the standard telephone access to include guaranteed access to mobile phones and the internet.
In justifying this stance, the report pointed to the decision of the European Union that a service had to have reached 75% community penetration before it could be included in the USO. As the internet has not reached that point in Australia and the cost of upgrading Telstra's network to that point would be $4 billion, the report rejected upgrading the USO.
This recommendation ignores the fact that as banking and other services are withdrawn from rural and regional areas, the only method of conducting business is over the internet or via STD telephone calls. And the 75% threshold for take-up of the internet is impeded by people in large parts of Australia not having access to a telephone line which is capable of running the internet.
Desired effect
The Besley inquiry appears to have achieved the desired effect on National Party critics of privatisation. Once the inquiry had been initiated, the National Party's Queensland branch withdrew a motion opposing the sale of Telstra from its state conference.
Since the report was released, Bob Katter has been the only National Party MP to describe it as a cover for privatisation. The rest of the National Party is just relieved that the debate has been postponed, perhaps until after the federal election.
Meanwhile, the government has to develop a strategy to convince the public that even if they don't like the idea of privatising Telstra, there is no alternative.
This involves applying pressure to the ALP and the Democrats.
The ALP was acutely embarrassed when it was revealed that shadow finance minister Lindsay Tanner had told the Macquarie Bank's telecommunications analyst Andrew Butterell that he believed Telstra should be restructured with its core infrastructure functions being completely publicly owned and the rest sold off. The government accused the Labor Party of having a secret plan to privatise Telstra.
Labor leader Kim Beazley responded promptly in parliament by saying that the Labor Party had "rejected structural separation back in 1991" and that "no Labor government presided over by me will continue the privatisation of Telstra". He added that the ALP national conference this year had rejected any further privatisation of Telstra.
However, the federal Labor governments of Bob Hawke and Paul Keating never felt bound by ALP policy when they wanted to privatise the Commonwealth Bank and Qantas. Beazley was a senior minister in these governments.
It is quite likely that a future ALP government would privatise parts of Telstra while retaining the infrastructure in public ownership. The proposal has been pushed by several senior ALP figures in addition to Tanner.
While the Democrats remain opposed to any further privatisation of Telstra for now, they support splitting Telstra's retail and network businesses, and they supported the tendering out of the USO contract.
The Democrats must know that in the torturous debate about Telstra privatisation it hasn't only been Lindsay Tanner who has advocated the splitting of these functions. In May, Telstra CEO Ziggy Switkowski and the government were both advocating such a restructure as a stepping stone to getting public acceptance for privatisation.
Cuts continue
Meanwhile, Telstra is continuing with its brutal staff reduction plans, which will inevitably result in service reduction, unimpeded by any of the recommendations from the Besley report.
A leaked Telstra briefing paper published in the November 7 Sydney Morning Herald revealed that Telstra is planning to cut 40,000 job, with about 400 being cut from its construction business Network Design and Construction (NDC).
The Communications Electrical Plumbing Union (CEPU) Communications Division president Colin Cooper explained that the latest NDC job cuts were part of a pattern that had seen work to both directly employed and contract workers cut back severely since April this year. He said that "this was affecting both basic service provision and the network modernisation program in country areas".
The problems began, he said, when "the government ... put the Universal Service Obligation in remote Australia out for tender. Telstra is playing a 'wait and see' game in these areas, especially in relation to the modernisation of its radio network. Why afterall would it pour money into costly upgrades when it might not even be operating in the Extended Zones in 12 months time?"
A statement from the CEPU (Queensland branch) said "We have examples where work on upgrading service to rural and remote areas has been stopped mid-stream; the equipment recovered and shipped back to Brisbane and technicians brought home to sit on their tool boxes."
Now that the Besley report is public, we can expect to see much media hype as media magnates use their mouthpieces, such as Financial Review editor Michelle Grattan to promote the view that "Both history and commonsense suggest that eventually, one way or another, Telstra will be fully sold" (SMH October 13).
It is to be expected that the wealthy elite and their highly paid politicians, lead journalists and economists will promote this view. They're not the ones who will suffer from the results of privatisation. But we don't have to accept their views. As the banking industry demonstrates, it is irrational to rely on a private corporation to provide an essential service.