Subjects: Telstra
E&OE................................................................................................
KNIGHT:
Prime Minister, John Howard, good morning.
PRIME MINISTER:
How are you Ben?
KNIGHT:
Thank you very much. I thought we'd talk this morning
about Telstra and it just seems to me that it's looking less likely
that the remaining part will be sold. Apart from anything else how would
you get it through the Senate?
PRIME MINISTER:
Well you can only get it through the Senate if one way
or another the majority of Senators vote for it and I don't believe
in the end when, if we get a positive inquiry and as a greater realisation
of the benefits of Telstra spreads in the community I think in the end
the Senate will vote to get it through. I mean people said we wouldn't
get one third of it sold before the 1996 election. You can't go on
indefinitely with the camel like arrangement we have at the moment.
KNIGHT:
Why not?
PRIME MINISTER:
Because it constrains Telstra.
KNIGHT:
But we have seen them just sign a fairly hefty contract
in Hong Kong.
PRIME MINISTER:
Yes that's true but you realise that they can't
issue any... they can't raise any equity in order to finance deals
like that because if they do so they dilute government ownership and that's
not permitted by law and the government's not going to use tax payers
money to buy shares in Telstra, that would be absurd and a waste of tax
payers money. So there is a major constraint on the company.
And there's also a mistaken belief that the more
government ownership you have the more efficient it is. When it was 100%
government owned it was called Telecom, it was not more efficient, it
was less efficient. It has in fact improved a lot and what people in country
Australia are saying to me is, we don't believe that government ownership
makes it more efficient but we don't think it's good enough
yet and we would like to see it improve even further. Now that's
fair enough. Only a few days ago Telstra announced an investment of $340
million in upgrading the network in rural Australia.
KNIGHT:
Which has been pretty well received.
PRIME MINISTER:
Yes and it's a very important decision that because
what that will do is really address the basic infrastructure which goes
directly to how well it provides the basic phone service and there are
other benefits for rural Australia coming out of the proceeds of the second
sale of shares in Telstra.
KNIGHT:
I understand there was $150 million, which was earmarked
from the sale of T2 as its known that was specifically for rural and regional
areas. It took quite some time for that to get out. Do you think that
was a mistake?
PRIME MINISTER:
No, no, hang on it didn't, I mean we didn't
get the money until October of last year and we then had to do a scoping
study of what would be the best way and we are now dealing with that and
that money will begin to flow. But you've got to remember that we
didn't, you know the money didn't come in until October of last
year so I don't think people can say... I mean we would have had
it a lot earlier if we hadn't been mucked around in the Senate by
the Labor Party. I mean you can't sort of have it both ways. People
can't say, well we're against any sale but hang on why didn't
we have the money earlier.
KNIGHT:
Yes. Let's, let's just...
PRIME MINISTER:
I mean I... if they let it... you know... if
they let the legislation for the sale of the rest of it go through there
would be a lot more acceleration of infrastructure spending. I mean we
will provide infrastructure money irrespective of whether the rest of
Telstra is sold or not. The point I make is that you'll be able to
do more and do it more quickly if we could sell the rest.
KNIGHT:
Well one of the arguments that of course is for the sale
of the remainder of Telstra is that you're able to take that money,
you're able to go into regional areas and give basically world's
best technology, bring those areas up to speed but you know that the way
technology moves in twenty years it will be obsolete so what happens then
when you don't have a Telstra to sell?
PRIME MINISTER:
Well that's, I mean, you know I don't just
say that the reason...that's not the only reason for selling Telstra.
I mean of course technology changes but of course so do market players
and one of the things that has made the cost of telecommunications cheaper
for many Australians, indeed for most Australians is that there is more
competition now. Years ago when you had just one player, the old Telecom,
you had no competition at all. They not only had a monopoly but they charged
like wounded bulls. I mean the cost of telecommunications in this country
has fallen very significantly and that's fallen because there has
been more exposure to market conditions and there's been more competition
and that in a sense is what the full privatisation of Telstra is all about
now. Mr Beazley is arguing against it, argued the opposite way when he
was in government. I have no doubt that if he were to win the next election
he'd find a reason to change what he's now saying and hope that
we would do the right thing in opposition and pass the bill through the
Senate.
KNIGHT:
I ask you about using the proceeds, the earnings of Telstra
rather than the money from the sale because this point has been raised
by the Opposition. They have said that it would have been more profitable
to use the income from Telstra than to use the money from the sale to
achieve interest savings.
PRIME MINISTER:
Well we don't agree with that. I mean they don't
seem to have made proper allowance for the fact that we've paid off
a lot of debt and if you pay off a lot of government debt you're
paying less interest on it.
KNIGHT:
But it is a good earner.
PRIME MINISTER:
Well nobody's saying it doesn't provide a dividend
and equally I'm not saying that the public debt interest savings
are the only reason why you are selling it, I mean there are other reasons.
But the principle reason why you sell it is that we believe in the long
run operating in market conditions it will be more efficient and it will
provide a better service to its customers and the best illustration of
the strength of that argument is to remember back to when you had no competition
in telecommunications in the old Telecom.
KNIGHT:
But the same thing could be said to apply to banks and
they certainly haven't distinguished themselves in terms of rural
service I would have thought.
PRIME MINISTER:
No but you've got to ask yourself would things have
been any better if the old Commonwealth Bank had remained in government
ownership. I mean the old Commonwealth Bank was of course sold by Mr Beazley
when, with our support, because we supported privatisation but you've
got to remember that we have lower interest rates now partly because there's
more competition in the financial system.
In all of these things you've got to ask the question
what would things have been like if the government had continued to owned
something. And when governments own businesses they are normally undistinguished
performers and that has been the long experience and I don't think
it's any different in relation to Telstra.
The thing that should be remembered Ben is that you don't
need government ownership to guarantee standards of service delivery we
have...
KNIGHT:
Why?
PRIME MINISTER:
Well because you can legislate for them which we have
done and the strongest argument for those who say look if the government
lets go our services will decline is for me to say to them those service
guarantees, those levels of service are guaranteed by legislation and
that legislation will continue to operate to support the delivery of those
services long after the government has sold its shares in Telstra.
KNIGHT:
When the inquiry comes back to you on Telstra I'm
expecting that it will mention some of the stories that we've covered
on this program relating to Telstra; call centres in the country are likely
to be closed; the CDMA roll out does not match the analogue system as
promised; pagers are being phased out in Victoria which means the CFA
is being stranded on its communications and it still takes longer than
it does in the city to get technical service. How then do you argue that
through the Senate?
PRIME MINISTER:
Well I think I should have a look at the inquiry results
before I pass judgement on that but what we have said is that it's
a condition of us proceeding further to get a satisfactory tick off from
that inquiry and that inquiry is completely independent and if that inquiry
comes back and says look we're satisfied here and here but we're
not satisfied over here then we will have to satisfy over there before
we go ahead. That was always the Government's policy. We're
not just going through the motions of having an inquiry.
And I have no doubt that you can always improve things
and I have no doubt that there is still a lot of room for improvement
in the bush as far as Telstra is concerned, I've never argued otherwise.
I would simply say though that some years ago when Telecom was fully government
owned things were even worse, much worse. The service delivery by Telstra
has improved in many areas even though it is still short of what it is
in city areas and I can understand why country people don't like
that. We are putting extra resources both out of the budget and Telstra
is separately, such as the customer access network investment of $340
million. Those things are going to improve services further but we're
going to look very seriously at this inquiry and if it says look it's
not up to the mark in these particular areas well we'll want some
action before we would ask the parliament to authorise the sale of the
rest of Telstra, that has always been our position.
KNIGHT:
And that's where we'll have to leave it. Thanks
for coming in.
PRIME MINISTER:
You're very welcome.
[ENDS]