Mike Byrne
On September 14, Queensland National Party Senator Barnaby Joyce finally delivered PM John Howard's Coalition government the one vote required to secure passage of the bills for the full privatisation of Telstra through the Senate.
After weeks of wavering, and under immense pressure from his own party bosses and with the National Farmers Federation wading into the debate, Joyce voted for the sale of the remaining 51.8% of Telstra. Afterward, Joyce stated that he was only 65% sure of his decision (which is less than the 70% of the general public that opposes the sale).
Telstra has been front-page news for the last month with some amazing exchanges between new CEO Sol Trujillo, his advisers and the Howard government.
Trujillo, appointed to the job by Howard's man in Telstra, former National Farmers Federation president Donald McGauchie, to drive through the full privatisation of the telecommunications company, has fast become an embarrassment for the government.
Trujillo's public release of a briefing paper delivered to the government last month exposed the true state of affairs in Telstra — with faults on 14% of phone lines and with massive underfunding of infrastructure and staff training due to the diversion of investment funds to pay high dividends to the company's private shareholders — prompted Howard to call a meeting with McGauchie to silence the outspoken CEO.
However, with control of the Senate and Joyce pulled into line by his party, Howard was able to have a gag imposed on debate in the Senate on the privatisation bills, which passed with a vote of 37-35.
On the day of the Senate vote, Telstra shares closed at $4.36, which is a long way short of the $5.25 factored into the government's budget calculations in May for its privatisation sale price. Since Trujillo's appointment on July 1, Telstra's stock market value has plunged by $9 billion, representing a $4.6 billion write off of the publicly owned 51.8%.
Following the Senate vote, communications minister Helen Coonan claimed that the government's promises to Joyce and the National Party had secured more than $3 billion in government funding to ensure "adequate" telecommunications services now and into the future.
Taking into account the $3.1 billion bribe to win the support of the Nationals, the minimum $600 million windfall that will go to financial institutions that manage the privatisation and the loss of $2.3 billion per annum of revenue the government receives from Telstra share dividends, this starts to add up to a very bad deal for the majority of telecommunications users who have paid, through usage charges and taxes, to build the $80 billion telco.
Following a record profit announcement on August 11 of $4.4 billion, Telstra announced only its third ever future earnings downgrade.
Phil Burgess, Trujillo's regulatory chief and former colleague at US telco US West, has led the charge in attacking the government on every piece of regulation under which Telstra operates and publicly declared that he wouldn't recommend buying Telstra shares "to his mother".
Burgess was not present at the Senate inquiry into the legislation as many senior government figures refused to deal with him. Trujillo sent regulatory managing director Kate McKenzie, who carried the same message, attacking expanded regulation for "dulling competition and reducing shareholder value".
In defending his support for the legislation, Joyce was quoted in the September 14 Brisbane Courier Mail as saying: "I think we are going to have to support it because the alternative is to let Sol and Phil off the leash to have a scorched earth policy on telecommunications."
Joyce also told reporters: "I hope I have done the right and just thing". However, he described the $3.1 billion deal as "a ripper" and called for local representation from such diverse groups as AgForce and the Country Women's Association to be included on a new government-appointed committee to examine the state of phone and internet services in country areas.
In contrast to the recent miserly 2.5% pay increase won by Telstra staff in their new enterprise agreement, it was announced in a report to the stock exchange on September 9 that Telstra bosses had doubled their collective salaries from $13.2 million to $25.2 million in the previous year, with McGauchie tripling his salary to $497,000.
These huge pay increases for the Telstra bosses have taken place in a situation in which Telstra has had a hiring freeze and threats of mass sackings hang over its staff.
The $100 million flagged for redundancies by Telstra chief financial officer John Stanhope on August 11, which was widely expected to equate to 1000 job losses, has been smashed by figures currently circulating within Telstra, which project redundancies of 10,000-14,000 employees. If implemented this would mean the sacking of 20% of the Telstra work force and a further reduction on customer service at all levels.
From Green Left Weekly, September 21, 2005.
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