Privatization Of Telstra
What
are the advantages of privatizing Telstra and how does this impact it\'s ethical
conduct while striving to satisfy community expectations? I believe that putting
important public assets into select private hands is not in Australia\'s
long-term interests, and oppose the partial/full sale of Telstra for the reasons
that the Government has given. The argument the Government has given for the privatization
and corporatisation of Telstra has been a budget conscious one where the
proceeds of Telstra will provide a "one-off" opportunity to: 1)
abolish Telstra\'s pastoral call rate and provide untimed local calls in extended
zones in remote Australia; 2) increase funding for Networking the nation; and 3)
pay off foreign debt left over by the previous government However, this is not
true as the Minister, Senator Alston already has the power to direct Telstra to
provide services and upgrade infrastructure (points 1 and 2). If the USO
(Universal Service Obligations Act) or performance standards under the CSG need
changing, then the Minister should invoke his power to direct, and these changes
should be made distinct from any attempts to sell Telstra. Statistics also show
that the sale of the first third netted a total of $0.37 billion loss to the

Commonwealth. By the year 2000, it is estimated that Telstra earnings will
exceed $2 billion annually. The Howard Government estimats an interest saving of
about $2.4 billion per year. This doesn\'t take into account the income that will
be lost to the government every year in revenue earnings from Telstra. By 2007,
the sale of Telstra is expected to create a budget black hole of $4 billion. The
government cites that the "Mums and Dads" of Australia will benefit by
purchasing shares in the float, which is true. But eventually the real
beneficiaries will be the multinational companies who will have the controlling
majority, not the Australian public. This can have detrimental effects on
society, especially to the rural regions of Australia. The Democrats and the

Labor Party also disapprove of the privatization of Telstra for the above
reasons. Privatization is when a Government Business Entity (Statutory Body) is
sold to the general public and becomes a public company. There is a belief that

Government run businesses are inefficient because their motive isn\'t necessarily
money, although there is no consistent evidence that privatization increases
efficiency. However in the case of Telstra, there have been clear signs of
deterioration in services since it\'s partial privatization. Delays are longer on
connection and service times. Recent changes to the charging regime for
community calls will impact on costs, particularly for small business, in rural
and regional areas. (One in three rural customers were denied connections to new
services SMH 5/2/99) Rural and regional customers also suffered the biggest
fall in standards for repairing faults. The Telstra Communications Network is
also set to suffer shutdowns along the lines of the power cuts in Queensland and

Auckland. All these factors can contribute to the downward spiralling of the
essential qualities of life for country families. This deterioration in services
has been a direct consequence of privatization, where the focus of the company
has shifted to profits rather than providing a cheap and efficient service.

Another example of this can be seen when according to the Media (ABC), Telstra
reaches an excess of funds of up to $1.5 billion as a result of staff/service
cuts. The Board of Directors are urging for a special dividend to shareholders
or a share buyback (to increase share prices). No one is suggesting the obvious,
strategic investment. Privatization has also made an impact on the working
conditions of employees. One of the first stages of structural reform that

Telstra implemented was downsizing and the cutting of working conditions of over

60 000 workers (formerly) employed by Telstra, after experts claimed that there
is an excessive labour load of about 27000 strong. As Telstra was previously a

GBE, it\'s structure was "suboptimal" in a business sense ie: Telstra\'s
activities exceed what it would have undertaken in a free market. This has given
it one of the worst staff to phone line ratios in the advanced world. After 15
months of negotiations with the Communications Electrical and Plumbers Union (CEPU),
the standardisation of ordinary hours for full time employees, introduction of 3
main work streams and the extension of shift arrangements to all sections was
agreed upon. Many workers suffered pay losses when they were re-graded. The

Financial review (17/2/99) records that in 1998, Telstra\'s labour costs dropped

7.7% (the number of it\'s employees fell by 20000), despite a huge increase in
the expansion of Telstra\'s business.