LAWS:
Prime Minister why has the Government decided to sell off only part of its stake in Telstra, why not sell the whole lot of it?
PRIME MINISTER:
The professional advice we had from the people we've appointed, that's Goldman Sachs and UBS Warburg, was that we could, by doing it in this manner, namely selling part but not all of our remaining shareholding at the moment, we could get the better outcome. Now that's that the advice and in these things having set the policy, and the policy is to sell the lot, you've got to take advice from the experts as to how you sell the lot and in what stages.
LAWS:
Okay. You've said that the sale will end an absurd conflict of interest in which the Government is both the regulator and the major shareholder, will this mean that the Government is no longer the regulator?
PRIME MINISTER:
No, the Government will remain the regulator, but once we sell another $8 billion of our holding, although we'll still be the largest shareholder, we won't be the majority shareholder and that's quite a crucial difference. It is a fundamental conflict of interest to be a major shareholder and at the moment the majority shareholder in a company, and at the same time to be responsible, because we are the Government, for the regulation of the whole telecommunications industry. The other weakness of majority Government ownership is that it limits the capacity of the company to raise money. It can't issue more shares because we're not going to buy our, you know, we're not going to buy more shares and if it wants to raise money it's got to go into debt.
LAWS:
Can you guarantee that the partial sale won't cause a further slump in the Telstra share price?
PRIME MINISTER:
Look, I can't guarantee what the market will do. I have never tried to do that in the past and I'm not going to do it now. We have made a decision, the Parliament has ratified the full sale of Telstra by giving us the legislative authority to do so and it's now up to us as the Government taking advice from professional people, to decide when and how we do that. And this is the first big step in that direction and it will bring about a fundamental change because $8 billion will be sold in this public offer and the rest will be placed in the Future Fund and that rest, that remainder will be sold down by the Future Fund over time.
LAWS:
What price do you hope to achieve?
PRIME MINISTER:
Well that really is a matter for later comment. The way these things work, it wouldn't be either possible or therefore desirable for me to speculate about the price.
LAWS:
Who'll buy T3? I mean many people bought T1 and T2 but they lost a lot of money there.
PRIME MINISTER:
Well T2, the current face value has gone down, that's true, but shares are often a long term investment and we haven't heard the full story and there's no reason to suggest, like all shares, there won't be changes and turnarounds in the time ahead. But I think you'll get a variety of people, I think you'll get a strong interest from retail buyers, from the public, the institutions will clearly also have a interest. Senator Minchin has said that the Government is looking at some kind of preference for existing shareholders, more will be said about that closer to the sale.
LAWS:
What sort of incentives will there be for existing shareholders to increase their stake?
PRIME MINISTER:
I can't canvass that at the moment because that hasn't been settled.
LAWS:
But will there be incentives?
PRIME MINISTER:
Yes. Well Senator Minchin indicated that yesterday that the Government is considering the possibility of doing that. But we'll have more to say on the subject closer to the event.
LAWS:
How much opposition is there within the Coalition to this partial sale?
PRIME MINISTER:
Virtually none. The decision was taken when the legislation went through Parliament almost a year ago. That debate was had within the Coalition and Parliament passed a law giving the Government the authority, permission, to sell its remaining shareholding in Telstra. And it is therefore a matter for Cabinet, an executive decision, as to when that sale takes place and in what form and in what quantities and in how many stages. Now, you've had a few people express concerns but, I say this respectfully to them, the issue has been resolved both by the Government parties putting forward the legislation and the legislation passing through the Parliament. One of the things that I would remind all members of is, of course, that the Government is sticking very much to the regulatory regime and it was the, you know, the installation of that regulatory regime that was critical in securing the support of all members of the Coalition to the sale legislation. So we won't be going back on that part of the bargain. We'll be sticking to it and sticking to it very strongly.
LAWS:
Has the Government tried to gag Phil Burgess?
PRIME MINISTER:
What the Government wants to do, and I'm not going to get into personalities, what the Government wants to do is to have everybody working hard for this sale to be a total success. And clearly the company has disclosure obligations but also the company fully accepts, and the chairman has made this clear to me and he's made it clear publicly, the Government fully accepts that like any, the company rather, Telstra, fully accepts that like any company it has to work within the regulatory regime that's been established by Parliament. That doesn't deny it the right in a sensible measured fashion if it has a view to the contrary to articulate that view. But it's also undertaken not to use the sale process as a vehicle for agitating for change in the regulatory regime and that's been clearly settled between the company and the Government.
LAWS:
How would you characterise the relationship between the Government and Telstra?
PRIME MINISTER:
Business-like.
LAWS:
That's all?
PRIME MINISTER:
Well, that's what it should be. The directors have obligations, even though the Government's the majority shareholder, Telstra Corporation and all the directors of the corporation are governed like other directors are, by the laws relating to directors relating to disclosure and we obviously will seek to work with the company in a professional and purposeful manner. But the illogicality, the conflict, the frustration if you like, of being a majority shareholder and also a regulator is something that; it's in everybody's interests to end. And that's been one of the reasons, not the only reason, but one of the reasons why we have always supported the privatisation of Telstra. We have never disguised our position on this. It's been our policy on the past three occasions we've gone to the people to sell all of our interest in Telstra. In 1996 it was just one third and then we lifted it to the full amount at the next election. We're keeping our promise. I'm surprised that people want us to break the promise of going ahead with it.
LAWS:
Okay Prime Minister, I know you must be nearly at the airport by now and I appreciate your time as usual, and thank you, I hope we talk again soon.
PRIME MINISTER:
Thanks John.
[ends]