The two closest confidants of John
Howard on the Telstra board, John Ralph and Tony Clark, are retiring
after almost ten years of service next week and the PM was delivering
laudatory eulogies to both them on ABC Victoria with John Faine this
morning.

As the government contemplates the impending bunfight
with the National Party over the final sale of Telstra, those remaining
directors shouldn’t kid themselves that they’ll get to choose who will
join them on the board after it becomes a fully privatised listed
company.

The Telstra board is making much of hiring executive
search firm Stuart Spencer to find up to four new directors, but John
Howard said this morning it would be a matter for hand-picked chairman
Donald McGauchie and his two responsible Telstra ministers, Helen
Coonan and Nick Minchin.

McGauchie’s original appointment was a
sop to farmers and a thank you for his efforts during the 1998
waterfront dispute on behalf of the National Farmers Federation. Does
that mean the Nats will insist on more rural friendly directors being
unilaterally appointed to the Telstra board in return for their support
of T3?

In some senses Telstra has put the cart before the horse
in appointing a hard-nosed American like Sol Trujillo as CEO because
his claims that the telco’s universal service obligations commitments
are “unsustainable” just serve as a red rag to a bull in the bush.

The
PM was in damage control this morning claiming that Peter Costello
wasn’t really suggesting that a cave-in to National Party demands for rural
pork barrelling would push up interest rates. You read the quote
and judge for yourself: “If we were to make financially irresponsible
decisions then interest rates will go up and that is in nobody’s
interests, least of all rural and regional Australia.”

The
Telstra sale is shaping up as a major hit to the federal budget because
Treasury will lose the annual dividend flow and not benefit from
interest on the proceeds. Instead, the cash will be deposited into the Future
Fund, which is actually a Past Fund because it deals with almost $100
billion of liabilities which have already accrued.

If billions
of dollars are promised to the bush, it might not even be worth
the effort. The question that Howard, Costello and company should be
asked is this: “How do you stop Telstra abandoning the bush after
privatisation – just as the Commonwealth Bank did when it led the
banking cartel out of town after town after it was fully privatised in
1996?”

Peter Fray

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