LAWS:
Prime Minister good morning.
PRIME MINISTER:
Good morning, can't sing as well as John.
LAWS:
Isn't he good?
PRIME MINISTER:
He's very, very good.
LAWS:
But Prime Minister not only does he sing, he writes those extraordinary lyrics.
PRIME MINISTER:
He does, he's a real talent. I remember he was good enough to join us at the commemoration in 2003 of the Bali attack and his presentation at a private gathering of relatives and friends who, of the people had been killed, his presentation in private at the function we had was very effective, very moving and something that everybody appreciated a lot.
LAWS:
Yes he'd have them all in tears I would imagine.
PRIME MINISTER:
Yes.
LAWS:
Well I'll tell you what, you're obviously concerned about Telstra, it seems that the people are now concerned about Telstra. You didn't miss these fellows yesterday. I mean you used very strong language, Telstra a disgrace. Do you have any regrets at saying that?
PRIME MINISTER:
I wasn't attacking everybody in the company.
LAWS:
No.
PRIME MINISTER:
And I wasn't attacking the company. I think it's a great company. But I have been critical of some comments by some senior management in the company, and in particular the observations from one apparent leader that he wouldn't recommend the shares to his mother.
LAWS:
Don't you think that was a hasty and foolish thing to say?
PRIME MINISTER:
By him?
LAWS:
Yes.
PRIME MINISTER:
Well yes, but if it's an attitude of mind that's of great concern. And my argument is not that the Telstra management should tell lies. I'm not asking them to tell lies about the company's performance. They have an obligation as we all do, legally and morally to tell the truth. But it is the obligation in my view of the senior management of any company not to talk the interests of that company down, and that's what I said in Parliament yesterday. And what I precisely said was this, I think it is the obligation of senior executives of Telstra to talk up the country's interests, the company's interests, not to talk them down. Now I stand by that and I think most people would. I mean the senior management of the radio station that employs you has an obligation to talk up the company's interest, not go around telling lies about its performance, but not equally to make (inaudible) remarks that denigrate it. But there's a bigger issue involved in all of this and I think the really important thing is simply this, that the events of the past 48 hours have powerfully demonstrated why we should not own the majority of the shares in Telstra. Because when Mr Trujillo and Mr McGauchie came to see my and my senior colleagues on the 11th of August, they came to us in three capacities, we were there in three capacities. We were there as the majority shareholder, we were there as the regulator and we're also there being the Government as the potential provider of money to Telstra to fund a further expansion of Telstra's services. Now that is an impossible conflict of interest and it's been one of the reasons why I have argued, and continue to argue, and why the Government will continue to argue that it's in the best interests of Telstra and the community that we end that conflict of interest. And the only way it can be ended is by us selling the majority of our shares.
LAWS:
Okay, but back to the comment that was made in relation to 'I wouldn't want my mother to buy the shares'. If he really believed that statement to be true, should he not have made the statement ,if he believed that it was correct?
PRIME MINISTER:
Well clearly it was an inappropriate comment to make. I don't want to dwell on, forever on one comment by one...
LAWS:
No I don't either.
PRIME MINISTER:
But it epitomised an attitude.
LAWS:
So should he say nothing?
PRIME MINISTER:
Well the question of his... look I don't want to get into that.
LAWS:
But should he say nothing?
PRIME MINISTER:
Well I think generally, I'm not going to give him sort of a Dale Carnegie lesson, I mean that's ridiculous. All I'm saying John is that it is a general obligation of people in senior management positions to have regard to the interests of the company in the things they say. But let's recognise the reality, we're both over 21, I mean it wasn't just one isolated remark.
LAWS:
No okay, but could I say this to you. If he says nothing because that's prudent, that's commercially prudent, isn't that not like a used car salesman forgetting to tell you that the car was involved in an accident?
PRIME MINISTER:
No I think there's a difference, a complete - I don't think there's any analogy there. I understand the point you're making. I think the obligation is to communicate factual information in accordance with proper corporate procedure. That sort of remark is generally denigratory of a company.
LAWS:
Yeah well it was.
PRIME MINISTER:
Well that's my point. And I think senior executives should refrain from doing that, and I don't think that is helpful. But that doesn't mean to say that they shouldn't combine in making sure that all relevant information that ought to be disclosed, is disclosed, and I don't think they should be reluctant in telling the literal truth in relation to the position of the company. Nobody is asking a company director, or a senior executive of a company to tell lies in the interests of talking up the value of the shares. And I'm not asking for that at all. But I am asking, making a general statement, I think most people in business would agree with me that if you have a senior position with a company, you have a general obligation not to talk against the interests of the company, that's all I'm saying.
LAWS:
Okay. Did you or any government minister pressure ASIC to investigate this?
PRIME MINISTER:
No, no I certainly didn't and I'd be amazed if any of my Government Ministers did.
LAWS:
Do you think they should?
PRIME MINISTER:
ASIC, well that's a matter for them. ASIC is an independent statutory body and ASIC will make a decision. But any suggestion that we sooled ASIC on to Telstra is wrong, absolutely wrong.
LAWS:
Does the... yes, absolutely right, yes.
PRIME MINISTER:
Absolutely wrong. ASIC operates independently. It has a charter and I mean it will make its decision, I'm not commenting. It's made a decision in its own right and the question of whether information should be disclosed by Telstra to the market is a matter for Telstra, it's not a matter for the Government. The Labor Party is saying we're at fault because we didn't immediately make the information public. That is ridiculous because it wasn't our information to make public, it was the company's information. But because we are simultaneously the Government majority shareholder as well as the regulator, and also the potential source of funds, we're in this impossible conflict of interest. I mean in a way Mr Beazley in saying we should've made it immediately available is making my case. He's demonstrating the absurdity of the Government's current position. It is ridiculous that we're the regulator and the Government and therefore the source of funds, and yet we're also the majority shareholder and have certain rights in relation to that shareholding, and equally the company has an obligation under the corporations law in relation to the minority shareholder. The whole concept of disclosure is to make certain that the rights of minority shareholders are protected. And that just because we're the majority shareholder we don't have privileged access to information. Although we are different as a shareholder than the ordinary shareholder because we're not daily trading in the shares. So once again it just really highlights the absurd complication and conflict of the Government simultaneously being a regulator, a source of funds and also the majority shareholder. And that is why for a long time in the interests of Telstra, we have wanted to sell our majority ownership.
LAWS:
Is it possible that previous Telstra executives have been so prudent or talked the shares up or talked the company up to such a degree that it became unrealistic?
PRIME MINISTER:
Well look I can't make an independent judgement of that because I haven't been privy to day to day discussions. I don't go to Board meetings, that's a matter for the Board. We appoint the Board, or we are involved in the appointment of the Board. There are processes under the Companies Act in relation to that, and the Board appoints the Managing Director. Mr Trujillo was appointed by the Board. They made a decision, I'm very happy to work with him and so lets make one other point, there's a faint suggestion, it's not been directly said but it's inferred that in some way the Government is reacting against Mr Trujillo because there are some brash new Americans in town. Can I say our reaction on certain issues has got nothing to do with some misplaced xenophobia. American executives are very welcome in this country as Australian executives are very welcome in the United States. We live in a globalised world, and the idea that there's some kind of criticism of somebody based on the fact that he or she might be a newly arrived Yank in town, well that is not in my mind, and they are very welcome and the fact that they're Americans is certainly not a source of any criticism from me or from the Government.
LAWS:
Are you aware of the package that Mr Trujillo has?
PRIME MINISTER:
The money you mean? Not entirely. Look, somebody in the Government would have been briefed about it. But I'm not going to get into criticism of that. He's obviously going to be very well paid. I think he's going to be very, very well paid by corporate standards but that's the market we live in. But that was negotiated by the Chairman of the Board and although we would have been briefed, I may have been told the figure and I'm sure it's quite a generous figure. It's the sort of figure you have to pay to get a good man.
LAWS:
I just was going to ask you if part of that package included the purchase of shares?
PRIME MINISTER:
Well I'm not absolutely certain. If you wanted me to find out for you and if I can properly provide it to you without breaching a commercial in confidence understanding I will, but I don't have it in my mind.
LAWS:
It's just that me, because of the slight cynicism that courses its way through my 70 year old body, I was thinking that if he's got a deal where he can buy some shares, the lower the prices, the better at the time he bought.
PRIME MINISTER:
Well look, that is certainly not something that has come into my mind John and look I don't find you cynical at all.
LAWS:
Good.
PRIME MINISTER:
And look I'm not launching some kind of personal attack on Mr Trujillo. I've met him on two or three occasions. I've found him a perfectly pleasant man and the observations I've made are not generic to the company. But I stand very strongly by the argument I put in Parliament yesterday that senior management of a company, it's not their place to talk against the interests of the company. And I think some of the remarks have been against the company's interest. Now you can talk up the interests of your company and tell the truth at the same time. There's no incompatibility between those two things. None whatsoever. But the really major issue out of all of this is the Government has an impossible conflict of interest. You can't simultaneously be a provider of money which Government's always are if they agree, a regulator and also the majority shareholder. And when the management comes to see us, they are talking to us in those three capacities. And it just creates the sort of situation in a way that we now have where people are saying we should have done this, when in reality we had no obligation to do it. That is disclose the information Telstra gave us. Because it's not our information to disclose. Yet because we are the Government we are held responsible for everything related to Telstra. So it becomes an impossible quagmire of conflicted interest and therefore it has to be ended. And in the interests of the company and in the interests of the shareholders, it ought to be ended and that is why we are going to proceed with the sale, or get the sale legislation through. And when the price is right, because we're not, as Peter Costello has said, a distressed seller. We're not going to sell at any price. But we want to get the legislation through giving us authority to sell in a measured way, once the market conditions are right.
LAWS:
Okay, second last question because I know you've got to go to the War Memorial, I think, what advice would you give, if you're in a position to give advice, or what would you say to the mum and dad investors who invested like seven bucks a share in Telstra and now they find the situation as it is? What would you say to comfort them? Because many of those people, they'd be the only shares they'd have. They might be the first shares they ever bought in their lives and it hasn't haven't worked out all that well at this stage.
PRIME MINISTER:
No I understand that. Although the dividends haven't been too bad, that ought to be said. There's no doubt in my mind that the long term position of Telstra is very strong and very good. But all Telcos around the world, all what are called incumbent Telcos, that is Telcos that really were originally there in a monopoly position, all of them are incurring greater competition. Its competition and not regulation that Telstra has to deal with and there's nothing wrong with that. Nobody can complain about competition in a free market economy. And the argument that Government regulation has degraded Telstra's profit to a major extent is not an argument we accept. We reject that. The thing that has had some impact on Telstra's profit has been greater competition, particularly in the mobile phone areas. Less so in the more traditional areas. Now what I would say to investors, and I'm not going to get in to giving...
LAWS:
No, no, no.
PRIME MINISTER:
Specific share advice. I can't and won't do that but I do believe that the company's assets and the company's prospects in the long term are extremely good. Like all Telcos in a similar position around the world, it is facing greater competition and it obviously has to respond. And the Government won't be in any way critical of legitimate responses by the company to greater competition but I'd have to say to the company, and I stand by this very strongly, that their problem is not Government regulation. Their problem is Government ownership. And when the burden of Government ownership can be lifted from their backs, they will find it easier to compete.
LAWS:
Okay, final question. Petrol is now $1.39 a litre in Sydney. What price will petrol have to reach before you step in and cut the excise?
PRIME MINISTER:
Well it has fallen. The price, the bench price fell a little overnight. We are going through a very bad period because Katrina has had a further adverse effect in the short term. We hope that will be short term. It is a very difficult situation. It is 100% due to world market circumstances. There is very little room for the Government to move. We cut the excise a few years ago and removed automatic indexation. If that had not been done...
LAWS:
God knows where it would be.
PRIME MINISTER:
I'll tell you. We would now be paying six and a half cents a litre more. Six and a half cents a litre more than what we are now paying if we had not taken those steps. And just to give you a dimension of what's involved in the excise; and we're not getting any extra excise, we're not. The excise is fixed. Its 38 cents per litre. It's a volumetric charge.
LAWS:
But are you likely to cut that excise?
PRIME MINISTER:
No. I don't see that we have a capacity to do that and just to give a measure of what's involved if you cut it by one cent, that's $380m. So people would say, a cut of less than five or ten cents, it would be inadequate. And if you're into that sort of thing, which, I'm sorry, and I know this is not a popular thing to say, and I know people are hurting. But the fact is, to have any appreciable impact on the price, you're looking at billions and billions.
LAWS:
You see, I think the average Joe doesn't understand the enormity of it.
PRIME MINISTER:
It's $380m per one cent.
LAWS:
Yeah wow. That's a lot.
PRIME MINISTER:
That's a lot. And it's a measure of the difficulty and so we don't get any extra money when the price goes up from excise. There is an increase in the GST collection, but all of that goes to the States and to be fair to them, to be fair to them, if people have got to spend more money on petrol and they have a set amount of money each week, well they end up spending less on something else. And if the something else is something that attracts the GST, well what goes up with GST collections on petrol, goes down with GST collections on those other items. So you don't necessarily have an increase in GST collections, or not a big one.
LAWS:
Okay, Prime Minister thank you very much for your time. I hope we haven't overstayed our welcome.
PRIME MINISTER:
No, no, no. I'm very happy to talk to you.
LAWS:
Thank you very much.
PRIME MINISTER:
Thank you.
[ends]