We all know people who are consistently wrong. We don't trust them with our wallet. Then there are people who maintain consistency as history overtakes them. With today's ALP policy launch Kim Beazley is slipping into this category. The public wallet is at risk.
Mr Beazley has again promised not to privatise Telstra. To this extent he is publicly consistent. In the mid 1990's he said that it was not the time to privatise Telstra (then Telecom). At the same time he produced the most cogent and persuasive defence of Labor's then massive privatisation program which included the Commonwealth Bank, Qantas, Aussat, the Sydney-Moomba Pipeline, CSL, ANL, AIDC, SMEC, HLIC and 250 local airports.
Furthermore, we now know that the Hawke government was seriously considering the sale of Telstra at that time.
There was never any ideological barrier here. It would always be a matter of timing.
That was 1994. Now is 2001. And, given lead times for privatisation, we are in the decision zone for 2005. Much has changed in the world and especially in the accelerated world of telecommunications.
Some of the old arguments for keeping Telstra in the public sector now look silly:
- No-one now thinks our share market would be swamped by a Telstra float.
- Monopoly concerns have receded, as competition in the sector is ferocious among the 60 telecommunications carriers.
- Several overseas players dwarf Telstra, which anyway always has the ACCC hanging onto its coattails.
- The Government has regulated the provision of essential community services and low prices; it does not need to own Telstra to do this.
- Partly as a result of this, the argument that Telstra would pay high returns to government now no longer applies if it ever did.
Mr Beazley's 1994 reasoning as applied to Qantas et al now applies to Telstra. As he said:
... government ownership may no longer apply, either because of Australia's changed economy, the development of our markets or advances in technology.
We've had all three. The Australian economy is now wired to the world, we compete in international telecommunications markets to a degree we never did (because we must) and new communications technology is steadily displacing the old hard-wired systems.
The world has moved on in other ways.
First, one half of Telstra is already sold. There are hundreds of thousands of Australians and scores of their pension funds with a direct interest in Telstra profits. Telstra is the only Australian-owned major carrier. This seems to have escaped Mr Beazley who foresees a bright future for Telstra delivering non-paying community services. As if this were not enough, the real Board of Directors for Telstra is Parliament where the balance of power is held by the Democrats who will have even more ambitious plans for Telstra to do social work.
Being "half pregnant" in this way is the worst way to run a business. The Government's conflict of interest as both owner and regulator is profound and unresolvable. The pressures to provide government largesse off budget through Telstra are irresistible. The financial markets know this and have punished Telstra accordingly.
As Finance Minister Beazley admitted in 1994:
The Government (has to take) account of many more non-commercial considerations which constrain the management of public sector companies.
Second, the telecommunications world is moving too fast to wait for the slow wheel of government to turn.
We will never have Barry Jones' Knowledge Nation off the back of a corporation that has to traipse off to Canberra every week to explain its operational decisions to the ACCC, the ACA and countless point scoring Parliamentary Committees. Canberra is a business graveyard where every customer complaint becomes a national issue.
Finally, both of the major political parties have now effectively trashed the Budget. We have higher taxes than at any time in our history and have not yet been presented the final bill. When the hangover from this appalling binge is over, is it reasonable to expect that the Government will provide its share of the investment capital Telstra will require to march into the 21st Century on equal terms with its giant overseas rivals? Or is it more likely that Canberra will grab a hefty cash dividend instead as they have in the past?
The fact is government will not have the capacity to support Telstra, only the capacity to force it into uncommercial activities.
The current state of the world makes it more not less imperative that we continue to create a flexible economy. Counties that freeze their policies will fall behind. A Prime Ministerial aspirant with the vision for Knowledge Nation will need the vision to reassess old policies and sell the remaining half of Telstra before the fiscal situation forces his hand.
As Ralph Waldo Emerson said:
A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
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