Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

My question is to Senator Minchin, the Minister for Finance and Administration. Doesn’t the T3 prospectus that the minister signed off on yesterday identify that Telstra considers government regulations and the proposed appointment of Mr Cousins as serious risks to the future of the company? Doesn’t Telstra say that these risks could impact on the delivery of the promised 28c dividend in 2007? Given that the government refuses to agree with Telstra’s assessment on these issues, how on earth are mum and dad investors supposed to know who is telling the truth? Do they believe the government and assume that Telstra is misleading them? If the government thinks the board’s assessment is wrong, does that mean Telstra has breached its duty to accurately inform investors?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Regrettably, and with great respect, that question reveals the complete lack of any commercial capacity, knowledge or awareness on the part of the ALP. Most of these senators were not around, I guess, when the Labor Party sold Qantas, the Commonwealth Bank and Commonwealth Serum Laboratories, and therefore they were not part of the process of preparing prospectuses on those companies. Clearly the senators on the other side have no idea about the legal and corporate obligations on companies and shareholders to issue full risk disclosure. These requirements have become even more onerous in the last few years. So the company is required by law—and, as I said, there are 10 teams of lawyers all over these documents—to list all those risks no matter how theoretical or unlikely they may be. This of course is all in the interests of—

Opposition Senators:

Opposition senators interjecting—

Paul Calvert (President) Share this | Link to this | Hansard source

Order! I call to order senators on my left.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Senator Wong interjecting—

Paul Calvert (President) Share this | Link to this | Hansard source

Order! Senator Wong.

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

This is done to the end objective of ensuring that investors are fully informed. We support that objective that, of course, they should be aware of all the theoretical risks. For a company like Telstra, which is probably the most heavily regulated company in Australia, and of course those opposite want it even more heavily regulated—so why they cry crocodile tears now about the level of regulation, I am not sure; again, it is a reflection of their incoherence—it is important that investors, in considering whether to participate in this offer, are fully informed about that regulatory environment. What Telstra’s lawyers have told them, they are required to say about those risks, albeit that most of them could well be described as theoretical. So that is a proper statement that needs to be set out in the prospectus. That is also the case with respect to Mr Cousins.

It is an obligation on the company to set out for the sake of investors its legal obligations with respect to the theoretical risks if Mr Cousins were found to be, according to their tests, not independent. If you read the prospectus, you will see that of course it is heavily couched in that sort of language. We understand the company’s legal obligations. We understand that they are required by their lawyers to put down all these sorts of theoretical risks in the prospectus. But what is important is that people understand that we have made it quite clear, as has Mr Cousins, that he will act independently in his capacity as a director.

The crocodile tears we see from this lot reflect the incoherence of their position. They are the ones saying that the government of this country should retain 51.8 per cent of the shares in this telephone company—that we should have $23 billion tied up in a telephone company. But when we come to exercise the responsibilities that go with that 51.8 per cent shareholding they attack us for so doing. It is an utterly incomprehensible position to adopt. You say that the government should have those shares and be the majority shareholder and elect directors at AGMs, but then when we elect a director at the AGM we are attacked for so doing. It is an incomprehensible position. It makes them look utter fools and the community will treat them as utter fools. It is our responsibility to fill the vacancy that exists on the Telstra board at the AGM. We will be the majority shareholder at that AGM. We have indicated that we will elect Mr Cousins as a director at that AGM. We stand by our statements that he will act independently on that board. He will bring great quality to that board. In pursuing this line, you are calling Mr Cousins a liar. He has made it quite clear in his public statements that he will act independently. He is an experienced public company director, with a fine record of acting independently, and I would call on the ALP to stop questioning his integrity.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Should the minister’s mother believe him or Telstra in considering whether or not to buy more shares? Will the minister give a 100 per cent guarantee on the 28c dividend for 2007, despite Telstra’s assessment of the risks? How can the government expect small investors to put billions of dollars into Telstra when it fundamentally disagrees with the board over the risks faced by the company?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

Existing shareholders in Telstra, of whom there are, I think, 1.6 million—shareholders like my mother, like Warren Snowdon MP, like Peter Garrett MP—will all receive prospectuses in the mail. I would urge all members of the Labor caucus, including Mr Snowdon and Mr Garrett, to read the prospectus very carefully, to look through the risks statement, to examine the very attractive offer that we have provided: our 10c a share discount, our one in 25 share bonus, the minimum entitlements which they will receive and the 14 per cent dividend yield they will get if they participate in this offer. I encourage them all to read that very carefully, to talk to their financial advisers and to make a considered decision as to whether they participate in this offer.