Privatization Of Telstra Essays - Telstra, , Term Papers

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