The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 14/09/2005

Interview with Jon Faine
ABC, Melbourne

Wednesday, 14 September 2005
8.35 am

SUBJECTS: Economy, Trade Practices Act, Competition, Telstra, Scoresby, Latham

FAINE:

Mr Costello, good morning.

TREASURER:

Good morning Jon, good to be with you.

FAINE:

The International Monetary Fund is saying that further industrial reform is needed in Australia. Have you in some way asked them to intervene in the Australian political debate about industrial relations reform, have you invited this report?

TREASURER:

No Jon, the IMF does an annual report on every member country, every country that is a member of the IMF, there are 184 countries that are - practically every country in the world - and once a year it sends a mission to the country, it investigates the economy and it does a report. This is the annual report on the Australian economy which finds that, as the IMF says, Australia is in economic terms one of the leading countries in the world. It says that our budget policies and our interest rate policies are very firmly grounded, that our growth prospects are strong and then it makes some recommendations as to what could be done to further improve our economic prospects and one of those recommendations is industrial relations reform.

FAINE:

But they go into so much detail it almost looks from the reports I have read of this particular IMF report it looks as if they have had a script written for them from your office.

TREASURER:

Oh no, they send a delegation out, I think it is probably about five people. They come through all the main centres of Australia, they speak to private sector, government sector, they go back to Washington and these reports are actually peer-reviewed by about 20 member countries including all the big economies like the United States, France, Germany, Japan and it is signed off by the body in Washington. And this is done for every country and if you want to, you could pick up the IMF report on the United States or the UK, but if you did, you would find that they do not get the kind of report that Australia gets out of the IMF.

FAINE:

We will see whether or not it in some way derails the trade union campaign. Meanwhile the Financial Review on its front page reports that you are about to release changes to the Trade Practices Act to help small business deal with anti-competitive conduct. This has long been called for. What exactly will you implement?

TREASURER:

Well I think what we have put forward is pretty well-known. There will be two areas for small business under a Bill that is going through at the moment, they will find it easier, really small businesses, to collectively bargain and that is a Bill that is going through at the moment. There was also a Senate report some time ago which said that Section 46 could be clarified and we have indicated that we are quite willing to clarify that so where people misuse market power under the Trade Practices Act you will be able to take proceedings.

FAINE:

So this is for instance the small liquor store that finds it can’t compete with the big supermarket chain, is that the sort of thing you have got in mind?

TREASURER:

Well the object of the Trade Practices Act is not to stop competition, you have to be very careful about that because consumers like competition, it gives them lower prices so you don’t want to stop competition in a market…

FAINE:

No, but if a big chain is selling something at cost in order to drive competitors to the wall in the neighbourhood, that is anti-competitive.

TREASURER:

…it is anti-competitive if they misuse their market power and the Trade Practices Act has provisions to stop the misuse of market power, you are quite right.

FAINE:

So you will be strengthening those provisions. Is there going to be a small business commissioner especially looking out for the interests of small business against big business?

TREASURER:

Yes we have had a small business commissioner for a while and the idea is that we will have somebody who is very focussed on small businesses as a deputy in the Commission so that you will have somebody that is focussed on small business and somebody that is focussed on consumers.

FAINE:

Peter Costello, the Telstra legislation may be going through the Parliament, well imminently, when do you expect it to go through finally?

TREASURER:

Well it is through the House of Representatives Jon, and it is now in the Senate and the Senate I believe, has fixed tonight as the deadline for the vote on Telstra. So, I hope that it goes through tonight.

FAINE:

Will there be massive job losses when Telstra is fully privatised?

TREASURER:

No look, there has been a story that was put around by the Labor Party to this effect and yesterday the company secretary of Telstra wrote to the Australian Stock Exchange - I have got his letter here in front of me - he says Telstra has not taken any decisions to cut jobs as claimed by the Labor Party, Telstra is not aware of the specific document they claim says this and it also notes that the Labor Party was claiming there were cuts of around $12 billion and he says that the whole total operating expenses of Telstra is only $11.9 billion. So, if that were right it would be closing the whole company. So you know, they put these stories around honestly Jon, and they get into the press and there you have it from Telstra itself and it has written that letter to the Australian Stock Exchange.

FAINE:

Can you give an undertaking absolutely that there will not be large scale job losses, whether it be 14,000, 12,000, 10,000, doesn’t matter, when Telstra is fully privatised?

TREASURER:

Well it is not me…Telstra has indicated that that is a false story.

FAINE:

Yes but you are controlling more that half the shares as of today…

TREASURER:

Well hang on Jon, as of today controlling half the shares, the Government doesn’t control the number of employees in Telstra, it never has.

FAINE:

…but you can put conditions on the further privatisation of the company you control.

TREASURER:

Right, and Telstra as a company today decides its employment levels – not the Government – Telstra, Telstra. 49 per cent of this company is owned by private shareholders, it is run by a management accountable to a board, a board that has to relate to the Australian Stock Exchange. The Government doesn’t decide employment levels in Telstra and the only point I am making, the only person who has suggested that there is going to be massive job losses was Senator Conroy of the Labor Party and there is the letter from Telstra that says that his suggestions were false and they have now written to the Stock Exchange.

FAINE:

You can impose conditions on Telstra’s further privatisation and in order to appease Barnaby Joyce, you have. You can impose conditions in relation to other things, why can’t you impose conditions on sustaining employment within Telstra?

TREASURER:

Well look, the Government has telecommunications regime which is designed to get services to people and to get them at lower costs. But the Government doesn’t manage employment levels in Telstra and never has any more than we decide who gets the jobs in Telstra. We don’t sit down and say, there will be this job and Mr A will get it and there will be this job and Mr B will get it. Telstra is a company listed on the Stock Exchange Jon, there are millions of Australians who have shares in it, it has a board of directors who appoint a management, the management runs the company. Now, if anybody in Australia thinks that by Government running a company you get a better company or a better service, I beg to differ with them. Governments don’t run these businesses, boards of directors accountable to shareholders run these businesses.

FAINE:

Why should you know more about what goes on in the future of Telstra than other shareholders? You have been given access to more than 100 pages of Telstra confidential information, why shouldn’t other shareholders have the same information that you have got?

TREASURER:

Well shareholders should have the information, any information that is material to the price, they should, and the company has an obligation to disclose that to the Stock Exchange and as I understand it, the company says it has.

FAINE:

But the company gave the Government a confidential briefing some months ago which other shareholders didn’t get.

TREASURER:

Well hang on, I am not sure that it was material that it hadn’t been disclosed to the market, but let’s not answer that question now…

FAINE:

Because it is the subject now of an ASIC investigation.

TREASURER:

…that is right…

FAINE:

And it could embarrass you and your colleagues enormously.

TREASURER:

…well, no, no, hang on, Jon, it is not the Government that has an obligation to disclose the affairs of a company to the Stock Exchange, it is the company. You have got, this is the point I am trying to make here. Telstra is listed on the Stock Exchange, it has millions of shareholders, it has a board of directors, the directors are responsible for the affairs of the company and the law says that the company must disclose any material, any information which is material to the share price. Now the company claims that it has, that there will be an investigation to see whether or not that is right. But you can’t say it is the Government’s obligation, it is the company’s obligation and we will get an investigation and then we will know whether they were right or not.

FAINE:

I know time is pressing Peter Costello but I have to ask you, according to today’s Australian newspaper front page story, Mr Sol Trujillo has entered into a private business venture with a number of people for communications ventures in China including Mr Marcelo Claure who he has also offered a contract in Australia from Telstra to. In other words, his mate who is his joint venture partner in China is being offered Telstra work here in Australia. Is that a conflict of interest?

TREASURER:

Well Jon, I don’t know whether that is true or not, I can’t make a comment on it because I don’t know the facts and…

FAINE:

(inaudible) need to find out.

TREASURER:

…well, it is 8.30 am in the morning, it is on the front page of The Australian, I am sure that during the course of the day some inquiries will be made, not necessarily by me, probably by the Minister for Communications or the Minister for Finance but I am sure during the course of the day inquiries will be made Jon.

FAINE:

Do you smell a rat?

TREASURER:

Look, you know, I have been around long enough in this business to know that just because something is on the front page of the newspaper it doesn’t mean the facts are right and it is a bit dangerous to give an opinion on the facts until you know them.

FAINE:

Not relying on any newspaper reports but on my own information Peter Costello, I can tell you that this week we are expecting your colleague in the Liberal Party in Victoria Robert Doyle, to announce his tollway policy for the Scoresby. Are you going to bail him out with federal money here?

TREASURER:

What the Victorian Opposition announces as policy in relation to Scoresby of course is determined by them and ultimately what happens on Scoresby will be determined by the Victorian voters. I just want to make this clear, Robert Doyle is the leader of the Victorian Opposition, it is his policy. He will announce his policy and put it to the Victorian voters who I hope will endorse it, but it is his policy.

FAINE:

Yes but are you going to do anything differently for him than what you would do for Mr Bracks, the Premier, the Labor Premier?

TREASURER:

Well, let’s just wait and see what is announced Jon before we set any hares running here.

FAINE:

And enjoy reading the Latham diaries this weekend when they are published in The Australian won’t you.

TREASURER:

I probably will Jon, I will probably buy a copy, I think it might be a good read and I tried to do a bit to advance publicity in the Parliament yesterday as you might have noticed.

FAINE:

Well I think everybody is enjoying this one except just a few in the Labor Party.

TREASURER:

Well I think even they will have a few wry smiles, I am told that most of the Labor Members are trying to get an advance copy to see what he says about them, but you know, I made the point yesterday in the Parliament that they are running around as if nobody in the Labor Party even knew Mr Latham or supported him. Well, 12 months ago they all tried to make him Prime Minister.

FAINE:

We will draw our own conclusions when we read the copy on the weekend. Thank you.

TREASURER:

Thanks very much Jon.