Treasurer

Doorstop Interview

Malvern Town Hall, Malvern

Friday, 12 August 2005

12.25 pm

SUBJECTS: Telstra, interest rates, Senator McGauran, Mr Stephen Vizard

JOURNALIST:

On Telstra, given their poor outlook and their share price fall and given that

you have previously said that it wouldn’t be worth selling Telstra below

$5, do you still think it is still worth selling at these levels?

TREASURER:

Look, in relation to Telstra first its ownership has to be resolved, secondly

if legislation passes to allow us to resolve the ownership question in relation

to Telstra the Government will make a decision based on the commercial outcome.

We have always said that we would get a commercial outcome to protect taxpayers

so, there are really three steps in this, resolve the question of ownership,

pass the legislation and then the final step is the commercial one.

JOURNALIST:

Sol Trujillo has asked for the Government to throw in some money for investment

in the bush. Is the Government going to do that?

TREASURER:

Look, various proposals are put by various people. There are various people

in Parliament who put proposals, there are various people outside of Parliament

who put proposals. So at the end of the day the Government will decide these

issues after considering all of the different options that are put to us and

I wouldn’t elevate any one more than any other.

JOURNALIST:

Back to Telstra, how soon are you to making some kind of a decision?

TREASURER:

Well the Government has decided that we have to resolve the ownership. We can’t

have a half privatised – half nationalised company…

JOURNALIST:

So how close…

TREASURER:

…so I don’t think anybody has got a plan to re-nationalise Telstra

so what that means is eventually you have got to allow Telstra to operate with

a clear ownership structure. That is what the Government’s view is. Secondly,

you would have to pass legislation, has to pass through the House of Representatives

and the Senate. Obviously that is something that we will be looking at over

forthcoming months. And the third thing is, after you have passed legislation

then you get down to making sure you take the right commercial decisions on

behalf of the Australian public.

JOURNALIST:Is it unrealistic for Sol Trujillo to expect the Government to contribute

all of the $5 billion he says he needs to upgrade rural networks?

TREASURER:

Well, I don’t think he has said that. Telstra will put various proposals

to the Government, Senators put proposals to the Government, Backbenchers put

proposals to the Government, financial market analysts put proposals to the

Government. What the Government will do is it will consider all of the material

that is put to it but it will decide what is in the interests of taxpayers.

That is all we will do.

JOURNALIST:

At a time of record profits, should taxpayers be chipping in more money to

Telstra?

TREASURER:

Well look, I don’t know whose proposal you are talking about but if you

want to know about what Mr Trujillo says, you had better go and ask him, don’t

ask me.

JOURNALIST:

What about regulating the other telco providers in the same way as you did

Telstra?

TREASURER:

Well, Telstra is subject to provisions which require it to be competitive.

That is because it was a market monopoly, it still is a very large player in

the market and if you want to have genuine competition against a monopoly or

near monopoly you have to ensure that it is competitive. That is why we have

provisions to allow other competitors to get into the market.

JOURNALIST:

(Inaudible)?

TREASURER:

Well then there are community service obligations which Telstra is actually

paid to perform.

JOURNALIST:

Can I just ask you about, Ian Macfarlane has told a Parliamentary Committee

this morning that there is an even chance that interest rates will rise or fall

and that there is no longer more than a 50 per cent possibility of an interest

rate rise, what is your reaction to that?

TREASURER:

Well, we think that the Australian economy is continuing to grow. It is growing

in a stable and solid way with inflation low. Provided we keep inflation low

between 2 and 3 per cent – at the moment it is well within that band –

we can keep interest rates low. But the trick here is to keep inflation low.

The demands are to continue to run strong economic policy. The importance is

to continue on with reform because if Australia gives away economic reform,

if it gives away low inflation it would give away low interest rates and that

is what we are focussed on.

JOURNALIST:

Senator McGauran’s gesture in Parliament, the Prime Minister has described

it as unacceptable behaviour this morning, would you agree with that?

TREASURER:

Well, I don’t think you should make rude gestures in Parliament or anywhere

else for that matter and I don’t think it is the right thing to do in

Parliament or on the street. Whether or not that was a rude gesture, I think

he thinks he was counting, doesn’t he?

JOURNALIST:

Treasurer, did you make any contact with the Australian Securities and Investment

Commission over the Vizard matter?

TREASURER:

Well, I spoke to the ASIC in the course of their investigations when they gave

me a report on what they were doing, yes.

JOURNALIST:

But in relation to whether they should do via the criminal route or the…?

TREASURER:

No, that is a matter for them, that is a matter for them.

JOURNALIST:

Treasurer, would you consider a sale of Telstra shares below $5 a share a commercial

outcome for Australian taxpayers?

TREASURER:

Look, at the moment you can’t sell any shares because there is no legislation

enabling it. If you have got the legislation enabling it you would have to look

at market conditions at the time but you can’t sell any at the moment.

Okay thanks.