BARRIE CASSIDY, PRESENTER: Coming up next here in the studio, the Minister for Finance Lindsay Tanner.
And while he joins us we'll hear from the Communications Minister Stephen Conroy and the Opposition's Nick Minchin on Telstra.
STEPHEN CONROY, COMMUNICATIONS MINISTER (excerpt from ABC Radio National interview): Well Telstra's previous management had a very, very simple and direct approach to both the Howard government and ourselves. They believed that they knew what was best for Australia.
We're moving into a new era so this is a unique opportunity for Telstra, a unique choice for... Do Telstra wants a big part of the fibre future? Do they want to be part of the new mobile spectrum which will deliver these exciting new applications on mobile phones? Or do they want to just stay as they are?
NICK MINCHIN, LEADER OF THE OPPOSITION IN THE SENATE (excerpt from Sky News interview): What Labor announced yesterday was a very radical, different and I think risky policy which Labor has never previously advocated. They did not go to the last election saying they would break up Telstra.
It has 9 million customers in this country. It is the backbone of our telecommunications system.
And this sort of gun at the head approach which Labor has adopted is risky and is radical, is a complete change in direction by the Government.
And I think they've failed adequately to explain why they've taken this step and why they think this is going to help consumers.
I don't think the evidence is in on that.
BARRIE CASSIDY: Lindsay Tanner, good morning, welcome.
LINDSAY TANNER, FINANCE MINISTER: Good morning Barrie.
BARRIE CASSIDY: We'll start with the Telstra, splitting the wholesale and retail arms.
You were for a long time shadow communications minister.
LINDSAY TANNER: Correct.
BARRIE CASSIDY: Ideally when should this have been done?
LINDSAY TANNER: Probably in the mid 90s at some point Barrie. But we shouldn't dwell on history too much. I think governments of both persuasions have made mistakes in this area; understandable mistakes in some cases.
But it's crucial for the long term productivity of Australia that we get world quality super fast broadband that is accessible by service providers on equal terms. We've got neither of those things at the moment.
This is what's needed to give the productivity injection into the Australian economy we so desperately need.
BARRIE CASSIDY: But I guess you're implying it should have happened before privatisation. Because it's been delayed until now, at what cost to the country?
LINDSAY TANNER: Well it clearly should have happened prior to privatisation.
The Howard government was totally obsessed with selling Telstra and had virtually no other policy position.
When I was shadow minister I said over and over and over again, a privately owned Telstra will be a giant private monopoly, too powerful for any government to effectively regulate. And that's effectively what happened in the last few years of the Howard government.
We've now got to fix that. We've got to leap over the residue of that situation and put in place a modern, competitive telecommunications structure. And that's what the broadband proposal is all about.
BARRIE CASSIDY: But what do you think the shareholders are thinking right now and there are about a million of them?
LINDSAY TANNER: Look there is certainly a downside to shareholders losing the monopoly profits that Telstra have been able to extract by owning the roads and owning the trucking companies, so to speak.
But I think people are missing a really important point here Barrie. Twenty-odd years ago Telstra sold phone calls. Then along came the internet and email and guess what happened? They sell a lot more services and other people like Australia Post start selling fewer stamps.
You are going to see an equivalent phenomenon with telecommunications through the broadband network on steroids over the next 10 years.
A lot of things that are currently not done digitally, that are currently parts of the production process that occur physically, will migrate to that network.
And who's the company that is in pole position to dominate the provision of services, to be a really major player in that competitive market? It's Telstra.
So in the medium term Telstra shareholders have got a big plus here and of course the Government is underwriting the investment of this giant new piece of infrastructure for them.
BARRIE CASSIDY: You use the analogy though about owning the trucks and the roads. There was another analogy during the week a bit like Sydney's cross city tunnel. You build the tunnel then you close the other roads around it to make sure that everybody uses the tunnel.
LINDSAY TANNER: Well that analogy was from Henry Ergas who of course is a spear thrower for the Liberal Party so I'm not surprised that he would be criticising our proposals. He has done so in the past.
But also it is not closing off alternative forms of competition. There will be other competitive arrangements in the telecommunications sector. For example wireless is a very important part of that sector and that will compete at least in many areas and many kinds of applications with the broadband network.
But network is going to be the backbone. In the same way that the electricity sector is the backbone of our productive economy now, it's going to be the backbone of our future economy. It's really crucial that we get that in place.
BARRIE CASSIDY: Now clearly Labor and Telstra have had a fairly prickly relationship especially during the Sol Trujillo years. How much of this is personal?
LINDSAY TANNER: Look I don't think it's personal Barrie. I had no significant dealings with Mr Trujillo. I had the odd rather entertaining meeting with Phil Burgess who I note is back in Australia at the moment.
But I've got a lot of respect for David Thodey and Catherine Livingstone. I think they are very capable people who are both committed to delivering for their shareholders but understand also that the world is changing.
And I think they realise that the opportunity is there for Telstra to grow. It is the one company that's best positioned to invest in new applications, new business models and to develop a much stronger position in telecommunications generally.
People are making a mistake in thinking that all that's going to happen over 10 years is that your typical vanilla monthly plan is going to migrate from a 1 Meg network to a 100 Meg network.
All kinds of things that we cannot even imagine now will be developed in health, in education, in business applications, that will turbo charge productivity in this country and also will present great opportunities for people like Telstra.
BARRIE CASSIDY: Maybe that's why Paul Keating said that this is the first decision by this Government on infrastructure that makes your heart skip a bit faster. That's sort of a back-handed compliment in a way; but the Conroy reform is the kind of reform that I did. Do you accept that?
LINDSAY TANNER: Look I think that's absolutely correct. And it really is something that was perhaps too hard back at the beginning of the 90s. Paul Keating did push these kind of ideas but ultimately had to settle for just opening up to competition.
Remember that where we started in 1990 in government on these issues was 100 per cent public sector monopoly of telecommunications. So in government we did a lot of reform. It would've been good to have gone a bit further but that just didn't prove to be possible.
We did make one significant mistake and that was to allow Telstra into Foxtel because in other countries, virtually every other developed country, the main competitor to the traditional phone network is the cable TV network.
Here the same company owns both. That's been dreadful for competition. That's why we're keen to challenge that situation too.
BARRIE CASSIDY: And are you confident that you can separate the two?
LINDSAY TANNER: Oh absolutely. But it's ultimately going to be a choice for Telstra because what we're saying to them is...
BARRIE CASSIDY: But what sort of a choice?
LINDSAY TANNER: Well the choice is that if they want to continue to grow in wireless, in mobile, with more spectrum that's going to become available, then they have to get out of Foxtel.
We do not accept that you can have one company that is so totally dominant across the entire sector because that stifles competition and innovation.
Telstra are still nearly two-thirds of the entire sector. People are worried about competition in banking, which is equally important to the health of the entire economy and other businesses as communications.
Imagine if we had one bank with two-thirds of the whole sector and what people would be saying? This is not a healthy situation for our economy.
BARRIE CASSIDY: Well just further on the national broadband network and of course this is about that in part, the commitment of $43 billion. Now that's a huge investment. Have you done an adequate cost benefit analysis given proportionally with the size of the commitment?
LINDSAY TANNER: Barrie cost benefit analysis of the orthodox kind are basically captives to the assumptions you feed in. So if you fed in my assumptions you'd get one result. If you fed in Henry Ergas's assumptions you'd get a very different result because we're dealing here with long term unknowables.
When the mobile phone first appeared was anybody saying at that point, this is going to be a camera, it's going to be a video camera, it's going to be an alarm clock, it's going to send text messages, it's going to do all these other things? Yet within 10 or 15 years that's where it ended up.
Was anybody saying that it would spread throughout the developing world, the third world, even more quickly than it has in the developed world? No, they weren't.
So you're dealing with things that are inherently unpredictable. So the kind of traditional cost benefit analysis that is done for a rail line or something would only tell you exactly what the assumptions and the prejudices were of the people drafting the initial terms of reference.
BARRIE CASSIDY: So you can't say for sure that it will return $43 billion to the economy. That's a lot of money to come back into the economy?
LINDSAY TANNER: Well the amount that is ultimately going to be contributed as equity by the Government is going to be way below the $43 billion. But we can't specify precisely how much because we are anticipating private investors up to 49 per cent.
And of course, the company as do other GBEs, government business enterprises, will borrow off its own balance sheet.
So it will have part equity, part debt. So if you assume it will be roughly 50/50 government money and private investment, it may get to that level, it may not, but let's assume that, and if you assume a gearing ratio of debt to equity of maybe 50/50, then that means that the initial government equity may be not much more than a quarter of that $43 billion.
No we can't be certain of that because we don't know exactly how these things will unfold but we can be pretty clear that it's not the Government stumping up $43 billion.
BARRIE CASSIDY: Okay, new research on population growth - 35 million people by 2049. Wayne Swan says this presents a social and economic challenge right up there with climate change, the two most daunting challenges facing government finances. Do you agree with that?
LINDSAY TANNER: The overall population scenario yes is a major challenge for Australia because we have got the need to absorb a growing population.
That's got lots of strengths and positives for us. As we're here in Melbourne one of the things that's really driving Melbourne's economy is population growth in recent times.
But also it exposes great pressures. It puts enormous pressure on infrastructure systems, service delivery and the like. So it does have a mixture of impetuses in the evolution of a very fast growing population.
But on the other hand the bigger challenge of course is ageing of the population. And we should be glad that we have got a relatively rapidly growing population because that helps us to cope with that.
The countries around the world that face enormous challenges are those like Japan that have both got a dramatically ageing population and a falling population.
BARRIE CASSIDY: But nevertheless an ageing population in Australia. Did you go far enough then by raising the pension age to 67? Should you have gone further?
LINDSAY TANNER: Look I don't believe so. But we've got a range of other issues we have to deal with of course as we look at the long term structure of the budget.
And I've been trying to emphasise to people that getting the budget back into surplus is actually quite a lot harder than it looks because it was structurally in deficit when we took over to the tune of about $12 billion because the froth through the tax system of the mining boom was artificially creating a surplus. That's gone and most of it's not coming back in a hurry. So we've got to make up that gap.
And in a few years' time you'll start to see the impact of the population ageing phenomenon on the numbers. And that means we just have to keep running faster to stand still.
BARRIE CASSIDY: Okay, Brendan Nelson's appointment to the EU. Former defence minister so obviously qualified, but is he any more qualified than those already in the Diplomatic Corps or more qualified than any of the retired ALP politicians?
LINDSAY TANNER: I note that some people have been doing the numbers here that there's more retired Liberals than Labor people getting appointed to some of these things.
Well there is actually a simple explanation for that Barrie and that is that we just had 11 or 12 years of Liberal governments. There is a lot of retired Liberals to go around who have got very good qualifications for these kind of positions.
There is no question that people like Brendan Nelson, Kim Beazley are eminently qualified for these roles. Brendan Nelson has been a defence minister, an education minister and a medical practitioner and head of the nation's doctors' organisation. So he is superbly qualified to deal with policy issues in the European forum and to represent Australia.
Everybody knows how well qualified Kim Beazley is for his particular role in Washington.
You've got to look at these appointments on their merits. And I would have to say, yes there's lots of very talented, able people in the Diplomatic Corps but I've got no qualms about saying Brendan Nelson is the best person available for that position.
BARRIE CASSIDY: So there's not simply though certainly an element of making a point, a point about bipartisanship by appointing people from the other side of politics?
LINDSAY TANNER: No look I don't believe so.
I think people are entitled to toss these things around. But it's one of the problems in Australian politics that we underutilise our retired former senior political leaders; both ex-leaders, senior ministers, many of whom are very able people with a great contribution to make, many of whom sometimes involuntarily because their party loses office are out of their traditional job in their 50s, like Brendan Nelson, and who don't have too many opportunities for other things.
They sometimes they go on company boards, they, or go into academia or whatever.
So we need to be getting value out of these people because leave aside people's contempt for politicians and partisan differences; whether it's Brendan Nelson or Kim Beazley you're dealing with very, very able, experienced people who should be able to contribute more to the Australian nation.
BARRIE CASSIDY: You're talking about though getting value out of these people. Do you think generally you get value out of your diplomatic representation overseas? As Finance Minister, how do you feel about that?
LINDSAY TANNER: Oh look I think we do and I think they do have a very good job and they've got a very tough road to hoe in many countries of course. And in some cases it's actually quite a dangerous occupation. So I think we do get value out of our diplomatic representation.
The world is globalising rapidly so the workloads of many of these places have diversified and increased. So I've got no qualms about saying that the Diplomatic Corps is highly professional and does a good job for Australia.
BARRIE CASSIDY: And just finally, does the Prime Minister have a problem with his temper? Another report this morning and we've already heard from the Prime Minister in New York about an expletive laden spray at his own back bench.
LINDSAY TANNER: Well I did read that report and I think it tells me two things. One is that we faced a very difficult issue about this abuse of printing entitlements that we inherited from the previous government which were too loose, ambiguous and open to being misused. We have clamped down on that vigorously and inevitably a few toes have been trodden on. So we make no apology for that.
But secondly I thought one of the amusing things in the article was the suggestion that Labor backbenchers might have been horrified at somebody swearing at them.
Without making any confessions or anything like that, the truth is that politics whether it's on our side or the other side is a robust business where exchanges of views can sometimes be laced with less than polite descriptions and that's life, you know.
So I've got no, I wasn't in the meeting, I've got no idea what Kevin may or may not have said but these discussions can sometimes be robust. And all I can say is let he who is without sin cast the first stone.
BARRIE CASSIDY: On that note, thanks for your time this morning.
LINDSAY TANNER: Thanks very much.
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