Labor attacks ‘hysterical’ Costello fund claims

GOVERNMENT claims that it private sector will complete building a high-speed national broadband network without taxpayer assistance were fanciful, Labor communications spokesman Stephen Conroy said.

Senator Conroy also attacked Treasurer Peter Costello’s claims that Labor’s plans spend $4.7 billion on a broadband network would leave government unable to meet its superannuation obligations as hysterical.

Communications Minister Helen Coonan’s claim that the private sector would go ahead with building a national broadband network within three years ignored the major telecommunications companies deep concerns about the regulatory system, Senator Conroy said.

“Unfortunately she’s choosing to ignore that Telstra have written to the stock exchange and said that they cannot and will not build the network without significant change in the regulatory settings,” he said.

“G9 the alternative proposal have also said that they will need regulatory change. And Helen Coonan is on the record repeatedly as saying she won’t be changing the regulations until 2009.”

“We’ve said we’ll make the regulatory changes, we’ve said we’ll contribute to the funding of this, because what we want to see is all Australians with access (speeds),” Senator Conroy said

Labor leader Kevin Rudd last week announced a plan to build a 12Mbps fibre to the node network to reach 98 per cent of the population.

He said Government would invest up to $4.7 billion in a joint-venture with the private sector to build the network, using the $2 billion Communications Fund and up to $2.7 billion from the Future Fund to bankroll the project.

The Future Fund was set up as a “locked-box” investment to be used to fund government $90 billion superannuation liability, with budget surpluses tipped into the scheme.

When it was set up government said it expected to cover the liability by 2020 – and Mr Costello argued last week the Labor “smash and grab” plan would leave the Future Fund short.

But Finance Minister Nick Minchin has distanced government from Mr Costello, saying the Future Fund was now expected to meet its targets years early.

“Nick Minchin in this morning’s papers admits that the Future Fund will be reaching its target early and that they will not be putting future surpluses into the Future Fund,” Senator Conroy said.

“What we are seeing at the moment is a bunch of broadband sceptics that just don’t get it,” he said. “John Howard seems to believe that the Great Wall of China was built by the emperor Nasi Goreng to keep the rabbits out.”

“Peter Costello’s attack last week was so desperate, so over the top, that even the fund managers who are looking after the fund have indicated that the fund will meet its surplus and meet its targets. And that’s why Nick Minchin has today belled the cat.”

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Telstra shares push Future Fund to $50 billion

THE Federal Government has transferred its remaining 17 per cent Telstra shareholding into the Future Fund, boosting the value of the fund to more than $50 billion.

The final Telstra stake moved to the fund is worth about $8.9 billion and represents the residual shareholding that was not allocated last November in the T3 offer.

Finance Minister Nick Minchin said the transfer of the shares to the Future Fund represents the final step in the full privatisation of Telstra. The Future Fund was set up after the 2004 federal election as an investment arm to deal with ageing population issues, specifically government’s unfunded superannuation liabilities.

The transfer of the remaining Telstra shares also relieves Government of being both the industry regulator and a major shareholder of the industry’s dominant player.

Senator Minchin said the Telstra share’s transferred to the fund would be held in escrow for two years. Any sell down decision thereafter would be an arms length decision made by the Future Fund Board.

He also said the investment performance of the Future Fund would be judged independently of its Telstra shares until the Telstra stake could be reduced to a level that did not dominante the fund.

“The transfer also finally ends the Government’s untenable conflict of interest as the regulator of telecommunications companies and the owner of Telstra,” Senator Minchin said in a statement.

“I have also issued a Ministerial Direction to the Future Fund Board of Guardians today to reflect the two year escrow period for the Fund’s Telstra shareholding, subject to the limited exceptions outlined in November’s T3 prospectus.

“With the sale of the Government’s shareholding in Telstra now complete, the benefits of a privately-owned Telstra are increasingly evident. All Australians are benefiting from a reinvigorated Telstra investing in better networks and competing vigorously for customers, Telstra’s shareholders are seeing their investment increase in value, and all taxpayers are benefiting from the sale returns,” he said.

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