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Privatisation is defined as the full or partial transfer of ownership of public assets to the private sector (Reserve Bank of Australia, 1997, p.7). State and Commonwealth Governments have privatised a significant portion of the public sector during the 1990’s and into the millenium. This trend is not unique to Australia, the United Kingdom and New Zealand have similarly privatised public assets. The reasons governments privatise are to promote competition within an industry (as government supported companies can be shielded from market realities and as a result, do not perform to their potential), achieve economic growth, and to generate revenue for the government. The proceeds generated from privatisation are often used to reduce government debt or to fund infrastructure upgrades. Prime Minister John Howard leads Australia’s Liberal Party, whose ideology favours individualism over collective rights, and prefers a smaller role for government enabled by the selling of government held assets. In accordance with this ideology, the Liberal government has privatised several major Australian companies including Qantas, Australia Post, and now [1] Telstra.
The Coalition’s move to fully privatise Telstra, Australia’s largest telecommunications company, has attracted much controversy, particularly amongst rural and regional Australians, who fear that the provision, quality and maintenance of telecommunications services will suffer as a result because Telstra provides most telecommunications infrastructure. Previously a wholly government-owned entity, it has been the Liberal party’s agenda to fully privatise Telstra for 15 years. One third was sold in 1996, another third was sold in 1998, now, in 2005, the Howard government wishes to proceed with the third and final stage of the Telstra privatisation; the sale of its controlling 51.8% stake is estimated to generate around $33.8bn. The move was met with trepidation by Australia’s National Party, led by Mark Vaile, who set down several demands to guarantee that the provision of services would not be adversely affected post-privatisation. One such demand called for a $3bn trust fund to be set up with the proceeds of the sale ($33bn) to ensure the upgrade and maintenance of bush services. After much debate, the privatisation was finally passed by both houses of parliament on September 15th, 2005, accompanied by new regulations imposed on Telstra. To ensure compliance, tough penalties will be handed down for regulation breaches. The government plans to sell its remaining stock in mid 2006, allowing time for Telstra’s share price to recover from steady decreases following the privatisation announcement. Whilst government owned, Telstra is obliged to ensure rural and remote dwellers can access to telecommunications. Now, with the advent and widespread integration of the Internet into people’s daily lives telecommunication companies are under pressure to ensure that access to these services is enabled for everyone, even those in remote areas. Increasingly, high speed broadband is being demanded by consumers, which prompted the Australian Federal Government’s 2004 [2] National Broadband Strategy initiative. The Opposition have argued that Telstra has under-invested in new media technology infrastructure for remote areas, with the $3bn allocated trust fund for the bush inadequate to solve the problem.
Once Telstra is fully-privatised, its accountability to the Federal Government is lessened as shareholders become the major stakeholder in the company. The increased regulations imposed upon Telstra and part funding for infrastructure upgrades by the Federal Government are designed to prevent the ‘bush’ from suffering as a result. The formation of Telstra’s Country Wide division allows rural customers to inform Telstra of the quality of services in their area and suggest improvements. A National Indigenous Directorate [3] has also been formed by Telstra to ascertain the needs of its Indigenous customers. The scope of the internet for economic participation, education and lifelong learning, access to services, political participation and social inclusion (McLaren and Zappala, 2003) means that for rural and regional Australians affected by the digital divide, negative economic and social consequences could result. Newly appointed Telstra boss Sol Trujillo made a promise during a recent press conference that Telstra and the Federal Government will work together to ensure the digital divide between rural and metropolitan areas is eliminated [4] The use of wi-fi [5] technology is being considered as an alternative to expensively ‘wiring’ remote areas. Increased competition resulting from the privatisation of telecommunications companies is likely to improve services for most customers. However, privatisation could also exacerbate the digital divide as profits (rather than universal service) become the main objective, causing rural and regional services to suffer. Sufficient regulations must be put in place by governments to guarantee services for those living in unprofitable areas. Due to Australia's concentrated population, this issue is of increased importance than in countries where the population is more evenly dispersed.
Reserve Bank of Australia Bulletin (1997) 'Privatisation in Australia' p.7. Available: http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_dec97/bu_1297_2.pdf Retrieved 12/10/05
