The Guardian September 14, 2005
TAKING ISSUE — Marcus Browning
Put people before profits
In a sense Sol Trujillo, the privateer appointed by the Howard government to finish off Telstra, is an innocent. "Come on over Sol", you can hear John Howard saying. "We’ll give you $10 million for privatising the remaining 51 percent. Your previous expericence in cutting and service slashing in the telecommunications area is unsurpassed." Armed with such encouragements, Sol came. What he found was a network plagued with faults and coming apart at the seams.
So he told it as it is — that Telstra shares are over-valued — and brought a howl from Howard, who called the new Telstra management "disgraceful". But it turns out that Howard and his Communications Minister Helen Coonan were informed in no uncertain fashion, in a report by Telstra to the Australian Stock Exchange early last month, that Telstra had been borrowing billions of dollars to pay major shareholders dividends instead of investing in the network. Further, that management knew this was unsustainable.
As Kenneth Davidson pointed out in The Age newspaper last week, Trujillo told the government and the public nothing less than the truth. The report says that $2-3 billion "should have been spent" on the network — where one in seven phone lines is faulty.
The report warned that there was "no assurance about the future level of dividends". The government didn’t make the report public because it knew that the share price would drop. Now it says Telstra is to be split into three parts and sold.
All this, of course, doesn’t mean Trujillo and his pirate crew are simply floundering on a sea of government deceit. Trujillo has a lot of connections in the global telecommunications market. If the price of Telstra shares falls then his corporate mates can clean up big at bargain basement prices when the remaining 51% is sold. Telstra has shed $9 billion on market value since he was appointed just a few months ago.
The fact is Telstra has been run down over a long period in preparation for its sale. Tens of thousands of its workers have been thrown out of a job, many of its services have been hived off and privatised, and investment in its infrastructure — which gave the network world cutting-edge technology — has been dumped.
Thus, one of the most important pieces of infrastructure in the country, which has a profound affect in the economy, has a bargain basement price tag of $50 billion and falling. Meanwhile, the government is pouring $55 million a day into the military.
The big selling point is "competition". But we know that this translates to private sector monopoly based on profit above all else. Polls show that 86 percent of Australians do not want Telstra privatised, and certainly people living in remote and rural Australia are only too aware of the disastrous outcome for their telecommunications services if the remainder of Telstra is sold. Its universal service obligations, with the cross subsidisation of services outside the major, profit-making population areas, will be scrapped.
No private telecommunications operator is going to put the needs of people before profit. Telstra should be fully publicly owned. That is the only real solution and way forward.
Finally, the posturing of the Labor Party on this issue should be noted. The Labor Party began this fiasco, and would have brought it to its conclusion — the final sell off — no less determinedly than the government had they remained in office. Their criticism of the government is nothing less than rank hypocrisy.