Treasurer calls for Telstra resolution

On the eve of the Federal Budget, Treasurer Peter Costello has called for the Telstra position “to be resolved”.

The Senate has twice blocked the government's plan to sell its 51.05 percent holding in Telstra, stirring the government to threaten a double dissolution election trigger.

In a doorstop interview with journalists Costello declined to comment on media reports the government was looking at repackaging Telstra's sale before an election later this year. However, he said the debate over Telstra's ownership structure must be resolved one way or another.

“The position of Telstra has to be resolved. You can't have a corporation which is half-owned by the government and half-owned by the private sector,” Costello said.

“We have a situation now where Telstra is investing in software companies, where Telstra is investing in cable television, where Telstra is investing in Asian ventures. Telstra is not a basic phone company. Telstra is now a highly entrepreneurial media conglomerate. With the government owning it, the government is now investing, on behalf of taxpayers, in some highly speculative investments,” he added.

“It is not right that the government should have a shareholding in a company which is engaging in these kinds of matters, so its position has got to be resolved.

“It can be resolved two ways: it can be a private sector company as nearly all other telcos in the world are, or you can re-nationalise it. And maybe the Labor Party will offer to re-nationalise it but you have got to resolve it one way or another.”

Costello hinted that the Federal government would use the funds from selling the government's 51 percent stake in Telstra on major projects in an effort to win political support for a sale.

“The point about Telstra is this. It is an asset which the government owns. If you sell off an asset and just spend the money on your day to day bills, at the end of the year, your bills will still keep coming in and you will have lost your asset. That is what Labor did with the Commonwealth Bank and Qantas,” he said.

“I have always said, if we sell off an asset then we have got to have either an equivalent asset or an equivalent capital debt reduction, and that is what we have done in relation to those two sales.”