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Last Updated: Wednesday, 25 June, 2003, 10:41 GMT 11:41 UK
Australia prepares for Telstra sale
Australian rural satellite phone user
The government has pledged to improve regional services
The Australian government has announced legislation to push ahead with the controversial privatisation of the national phone company Telstra.

Communications minister Richard Alston said a bill would go before parliament this week to sell the remaining 50.1% stake in the group, Australia's last major state-owned company.

But the coalition government is in a minority in the Senate, where a number of members are opposed to the sale.

Mr Alston said Telstra's share price was still too low for the sale to go ahead immediately, but urged investors to back the privatisation.

"Selling the balance of the government's shareholding in Telstra is in Australia's national interest," said Mr Alston.

"It is in the interest of Telstra itself, its shareholders, the wider telecommunications sector and, most importantly, the Australian public."

Opposition ahead

Introducing legislation now will allow the issue to go to the relevant state committee ahead of a Senate debate.

They are racking up legislation so they can call an early election
Nick Economou, Monash university

"What we're seeking now is authority to sell," said Mr Alston.

But the opposition Labor party has suggested a full privatisation would create an unregulated monopoly with little care for smaller regional areas.

Proponents of the privatisation, however, argue that it would give Telstra more flexibility when raising funds, and remove the conflict between the government as regulator and owner.

The government said it would spend A$181m ($120m;72m) upgrading the telecoms service to improve internet and phone access in regional Australia.

Mr Alston said action would be taken on all 39 recommendations following last year's inquiry into regional telecommunications.

"They are being implemented as a matter of urgency," the government said.

An extra A$15.9m is to be spent on extending mobile coverage to small population areas.

Election tactic?

Australia is hoping to raise about A$35bn ($23bn) from the Telstra sale, its biggest ever privatisation.

But the move is also being seen by some as a political tactic designed to trigger a possible early election.

Under Australia's constitution, if the Senate rejects a bill twice it gives the government the option of calling an early election.

In this case, the government could call for a "double dissolution" or joint sitting of both houses of parliament to push through the disputed legislation.

"They are racking up legislation so they can call an early election then hold a joint sitting and get their agenda through," said Nick Economou, an analyst at Melbourne's Monash university.

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