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Consideration of the Telstra (Dilution of Public Ownership) Bill 1996
CONTENTS

Chapter 5

Employment Issues

In short, coming back to those figures from project Mercury, but I think this also takes us into the heart of the whole debate about Telstra's efficiency, firstly, the benchmarks are not the kind of scientifically accurate, immovable figures they are offered as being. Secondly, when you come to the cruder business of saying, 'The market wants us to cut jobs so that profits will be up and this will look like a good deal for the investors,' you are going to be sacrificing quality if you look at staff reductions of this order. So there is a trade-off all right. There are lots of trade-offs in this. One of the trade-offs is shareholder value and the degree of delicacy. It is like a fashion parade: they like them skinny out there in the market. You are going to trade that against the service quality for Australian consumers, particularly, we would argue, in the regional areas [1].

Introduction

5.1 The terms of reference of the inquiry (l) required the Committee to examine the impact of the privatisation of Telstra on employment and economic activity, especially in regional Australia. A large number of witnesses presented evidence on this issue.

5.2 The Committee received many submissions from the trade union movement relating to their concerns about employment issues if Telstra were to be privatised. These are listed in Appendix 5. Union witnesses also appeared before the Committee at public hearings in Sydney, Melbourne, Adelaide, Brisbane, Perth and by phone hook-up to, Darwin.Union concerns were based both on international precedents, and on the experience of earlier cost-cutting exercises within Telstra. It was argued by witnesses that privatisation was likely to be accompanied by sharp reductions in employment levels, with negative effects on service quality, with disproportionate impacts on regional employment.

5.3 5.4 The Committee also heard evidence from several witnesses as to the growth of employment opportunities as a whole. The Committee concluded, however, that while there was clearly rapid growth in the communications industries, this did not necessarily equate to rapid growth in employment opportunities, especially in regional areas. It was by no means certain that staff displaced from Telstra as a result of its proposed staff reductions would readily be absorbed by the larger communications job market.

Privatisation and Staffing Levels

5.5 Clearly a key aspect of the privatisation process in other industries, and other countries, has been a reduction of labour costs. As the Department of Finance made clear, it is largely (perhaps solely) through the reduction of such costs that the 'efficiencies', claimed to be associated with private ownership of Telstra, are expected to be achieved. The Department believes that a change of ownership structure will facilitate an already overdue reduction of the Corporations workforce:

The fact that Telstra's employment levels remain above the levels needed ... is testament to the inhibiting effect that Government ownership and incumbency have had on the commercial need for staff reductions and on the capacity of management to achieve them. [2]

In fact, no witnesses appearing before the Committee disputed the likelihood of privatisation leading to job losses, although a number argued that the main driver for cost-cutting in Telstra would be increased competition.

5.6 The Committee acknowledges that in some instances it is difficult to separate the effects of privatisation on employment from those of competition and technological change, particularly over the long-term. Nevertheless, the overwhelming weight of international evidence submitted to the Committee showed that employment levels had typically fallen sharply when public utilities were privatised. In the case of the Telecom Corporation of New Zealand, the Committee heard that almost 50 per cent of jobs had been abolished since privatisation:

On the other hand, there is evidence that private ownership creates pressures for sharp and sudden job reductions, often with disregard for the company's actual staffing needs. The service difficulties experienced by Telecom New Zealand in the wake of rapid staff reductions have been noted at par. 98. Telecom New Zealand has slashed staff savagely since privatisation. At its time of corporatisation in 1987 staff numbers stood at 24,500. By the time of privatisation in 1990 they had declined to 16 000. In the ensuing period of time the decline has been precipitous. [3]

Staff numbers at the end of 1995 stood at 54 per cent of those at the time of privatisation. (Refer Table 5.1).

Table 5.1 Telecom New Zealand staffing levels 1991 - 1995

5.7 Behind these figures lie the hidden costs of privatisation. Pressures for constant job reduction lead companies not only to cut staff numbers directly, but also to remove staff from their books by such mechanisms as outsourcing. This latter strategy may even be pursued regardless of any significant cost savings to the company in order to improve employment ratios and satisfy market analysts. The result may be a marked reduction in both consumer service and employee conditions:

In the notorious case of Telecom New Zealand, the company encouraged the technical staff given redundancy packages to purchase their Telecom New Zealand vans and work as contractors back to Telecom. But in moving these staff from permanent employees to contractors, Telecom New Zealand has moved them from the primary to the secondary labour market which is characterised by irregular hours, lack of job security and poor pay. This type of outsourcing as a consequence of privatisation creates jobs with poorer terms and conditions and is a cost on society. In the meantime, the company discovered that its capacity to meet service orders was reduced by the degree of autonomy enjoyed by the contractors. [4]

5.8 In spite of numerous assurances to the contrary, it has been made clear to the Committee that Telstra has itself now embarked on a similar course. Evidence received by the Committee indicates that the company has developed a plan to shed what are considered 'non-value adding' or 'non-core' functions and to substantially downsize the workforce to levels they believe will be acceptable to the market. The Committee believes that this activity is directly related to the proposed privatisation of Telstra, and not merely to the expectation of further competition after June 1997:

Telstra is a big organisation with lots of holes, I suppose. The figures we get are not officially given to us, but we do understand that Telstra is, and I believe this is politically driven, although I have got to say that Telstra management constantly denies it, being prepared for privatisation and people are trying to have staff levels for the prospectus that will match some mythical benchmark overseas. What we are seeing occurring is no logic applied to getting staff out…Because the staff cuts at the moment are driven ideologically, do not take any account of the technical and service impact that they will have. We have been prepared to work on those. We accept there will be some reductions but not 30 000. Thirty thousand will provide a disastrous service for the Australian community. It may make the prospectus look good, but the people pursuing those figures have no knowledge of the impact that will have on services. [5]

Employment Levels in Telstra

5.9 The question of the size and the basis of the proposed cuts to employment levels in Telstra has in fact developed into one of the most vexatious issues presented to the Committee. The Committee was not satisfied with the responses of Telstra senior executives to a direct line of questioning about staff cuts in Melbourne on 3 July 1996, as exemplified by the following exchange:

Senator CARR — Can I just check that you did say to us before that you thought there was not any clear understanding of what likely downsizing would take place? Are there clear targets in terms of downsizing? Is that what you said?

Mr Rizzo — I think I said that we do not have head count targets; we do have cost reduction targets.

Senator CARR - If that is the case, is there a Project Mercury operating at the moment?

Mr Rizzo - There is such a project, yes.

Senator CARR - And does that project have targets established for the reduction of staff, from outsourcing, from July 1996 to December 1996 of 5 000?

Mr Rizzo — Not to my personal knowledge. [6]

5.10 Yet, Mr Colin Cooper, Divisional President of the Communications, Electrical and Plumbing Union, on the same day, was able to advise that:

… in the next two years there is going to be a serious attempt to cut the staff in Telstra by over 25,000 staff, possibly up to 30,000, in preparation for the prospectus for privatisation. That will be to present to those they want to invest in Telstra, that on some mythical benchmark overseas, Telstra numbers are in line with an overseas telco. There will be absolutely no regard for the service that will not be provided to the Australian people, no regard for the staff in Telstra and the problems that will create, and no regard for the community and the fact that Telstra will not be able to deliver adequate service in the coming period. [7]

5.11 Community concern over the loss of jobs, if Telstra were privatised, was echoed the following week in Townsville, when former Mayor, Mr Mike Reynolds, responded to a question from the Committee that:

I have been putting to you that it is not a simple matter of identifying which clauses [of the Bill will affect unemployment] and which parts of the operations of Telstra are going to be closed. I have no doubt that, if we have a look at the dichotomy of public and private and we take away the ability for ministers and governments to intervene in the decisions of the Telstra Board, the employment of 700 people in Telstra here will be placed at risk. Whether that means that 50, 100 or 500 jobs go is not known to you, I would say with great respect, and it is not known to me. [8]

5.12 On Friday 12 July 1996, under pressure from the Committee's inquiry, Telstra announced that 9,000 jobs were to go over the remainder of the current financial year. Nearly half of these losses are expected to be from the Commercial and Consumer field workforce, who are responsible for network maintenance and installation. These figures do not include reductions in direct employment as a result of outsourcing. [9] (Refer to Tables 5.2 and 5.3). If the Project Mercury outsourcing targets were included, the total reductions would be close to 17,000.

Table 5.2 Telstra 1996/97 Budget - Business Unit Summary [11]

Figures 5.1 & 5.2

Basis for Proposed Job Reductions

5.13 The question of Telstra's efficiency, relative to other telecommunications companies, has been discussed in Chapter 3. During the course of the inquiry it became clear that claims about Telstra's inefficiency were being used to support a significant restructuring of the company's operations. In particular, the results of Telstra's own internal benchmarking, conducted by the Mercer consultancy, were cited as pointing to the need for cost-cutting. Telstra and the Department of Finance have relied on these studies to argue that Telstra's cost structures are about 30 per cent above world's best practice. This in turn has been used as a basis for staff reductions commensurate with that gap.

5.14 This use of the Mercer study was criticised by witnesses. The unions with coverage of Telstra argued that while the studies had a value in identifying areas where further investigation of cost structures might be warranted, they were 'not sufficiently robust to produce the kinds of headcounts we are now seeing being used by Telstra'. [10] The unions contended that the studies suffered from a number of specific deficiencies:

(a) the fact that the 'best practice' benchmark against which Telstra was being measured was based on a fictional company (an amalgam of US companies) rather than on any actual company's performance;

(b) deficiencies in the procedures used to normalise for the different environments in which Telstra and the US companies operate; and

(c) omissions, from the benchmarked costs, of areas where Telstra spends significantly less than US companies.

5.15 Ms Ros Eason, representing the Communications, Electrical and Plumbing Union, stated:

That Mercer study is looking at so-called world's best practice, it is looking at a composite company, not a real company that exists anywhere in the world. It is looking at a kind of amalgam of a number of the regional Bell operating companies, and you take the best bit of this one, the best bit of that, the best bit of another one, and you draw a so-called floor that represents the best of the best if you could make up this fictional company, and then you see how much other companies are above it.

Because it is based on an American model, there are also various forms of normalisation that have to be done, or attempted, to try to make it look like Australia. For instance, none of those regional Bell operating companies actually offers long-distance services, so what Mercer does is to take AT&T's cost structure, one of the long-distance companies, and attribute its costs across the RBOCs, and then look at Telstra compared to that. But that has some problems too because AT&T's cost structures obviously benefit from enormous economies of scale compared to Telstra's. We operate in a market of about nine million lines, and I think AT&T would operate in a market of about 155 million lines. So you get distortions.

Again, that Mercer methodology involves looking at a whole range of functions that the companies provide or do not provide. ... the difficulty of providing comparisons, because Telstra is probably unique in the wide range of functions if offers, particularly now that it does not have any line of business restrictions in terms of going into the newly emerging multimedia video type of markets.

So, again, normalisation has to be conducted, and some strange things happened there. Apart from normalising things like mobiles, the Mercer study also looked at some areas where Telstra's costs were very much below any of its peers, if you like, in the US; for instance in advertising, where Telstra spends a great deal less. Despite Mr Fist's concerns about where the money was going, Telstra spends considerably less, for instance, on advertising than would be common in the United States. Those figures were just sort of taken out too. So the areas where Telstra was underspending were not captured in that benchmarking study, whereas they were in some of the areas like warehousing, for instance, where Telstra's costs were higher than the RBOCs. That goes to the question of how a company like Telstra can centralise. It might make sense for the RBOCs to centralise but it does not make sense to centralise if you have to service Perth. Those, also, were not adequately captured.

To cut a long story short, we concluded that the Mercer benchmarking study had a use, possibly, in identifying areas where Telstra might look to explain what might be discrepancies between its cost structures and those of the RBOCs, but it is very much at that top line level. It is not sufficiently robust to produce the kind of headcounts that we are now seeing being used by Telstra, by Finance and by the merchant bankers who, for their own reasons, have an interest in seeing Telstra privatised.

When we come down to the ground we see something altogether more crude than even the kind of rather suspect methodology of the Mercer benchmarking study. We see some pretty simple comparisons with US West. US West is often used as a comparison with Telstra because it services a large geographical area, basically, in the American mid-west, and it has a relatively sparsely populated service area. It looks a little bit like an apple. It is still not apples and apples, but it is half an apple, if you like, in terms of comparisons. [12]

5.16 The Committee also noted that Telstra itself appears to recognise that the benchmarking studies have a low explanatory power. In confidential evidence submitted to the Committee, Telstra remarks that the degree to which different factors, such as outsourcing, management practices or network technology, contribute to different cost and staffing levels 'is not well understood by Mercer or Telstra's Benchmarking Group'. [13]

Project Mercury

5.17 Five weeks after the Federal election, Telstra management established Project Mercury, designed to produce a strategy for positioning the Corporation for a float. In comparison to the more complex procedures of the Mercer studies, Project Mercury involved the simple comparison of Telstra's staffing levels and cost structures with those of the US Regional Bell Operating Company, US West. The poor service record of US West was noted by the Committee..

What is Project Mercury?

5.18 Project Mercury was an internal program initiated by Telstra management, in April 1996, to prepare Telstra for privatisation. Its objective was to identify areas where cost savings could be achieved, largely through staff reductions. The aim was to shed 24 000 Telstra staff by July 1998, predominantly through outsourcing functions currently performed in-house and/or through selling off parts of Telstra's business considered to be 'non-core'.

5.19 In addition to job losses associated with outsourcing, Telstra hoped to reduce staff through internal rationalisations. Redundancies caused by this process were to be 'management initiated', not voluntary. In the words of Project Mercury, the objective was 'to ensure that staff without necessary skill and experience are exited from the company in an effective and timely manner'.

5.20 Project Mercury was part of an attempt to carry out what would be the largest company restructuring in Australia's corporate history. It was aimed specifically at:

(a) reducing labour costs by employing contractors at lower wage rates than those of Telstra award workers;

(b) taking other labour costs of balance sheet through mechanisms such as joint ventures;

(c) disposal of assets in areas considered 'non-core'; and

(d) releasing millions of dollars of investment funds

5.21 Such a process would fundamentally change the character of Telstra. Many functions currently performed efficiently by Telstra staff, such as fleet management, would be outsourced. Certain specialist areas (such as Electronic Products and Services and the Information Technology Group) would be handed over to others, with all the consequent risks of skill loss and increased dependency on external suppliers. These considerations appear to be secondary, however, to the push to reduce Telstra's direct staff levels (its 'headcount') in anticipation of privatisation.

(Note: There is no paragraph 5.22)

5.23 Apart from its impacts on staff involved, this radical restructuring has the potential to adversely affect service levels and regional employment. Among the initiatives considered are:

(a) the rationalisation of operator assisted services operations (from 63 centres to 2-6 centres);

(b) new arrangements for provision of the first phone; and

(c) reductions in the size of the field workforce, responsible for installation and fault repair.

Project Mercury established six review teams:

(a) Project Management Process;

(b) Front Office workforce;

(c) Product simplification;

(d) Non-value added activities;

(e) Outsourcing opportunities; and

(f) Field workforce cost reduction.

5.24 These teams have identified 16 separate activities currently undertaken by Telstra, but targeted for contracting out to outside firms.(Refer Table 5.4).

Table 5.4 Telstra 1996 staffing targeted for outsourcing (by identified target group)

5.25 Project Mercury was conducted within the political constraint, that it operate in secret and in the context of privatisation. The Committee heard evidence that unions were not briefed on the numbers of proposed job reductions until the details of Project Mercury were revealed publicly through the Senate Committee. Up to that point, briefings had been somewhat fragmented and superficial as indicated by the following exchange:

Senator CARR - Ms Eason or Mr Cooper, are you aware of any proposals to reduce the staff of Telstra by one-third?

Mr Cooper - As I said in my opening remarks, I believe that is the objective; but it is not owned up to by management, despite constant questioning by us at high levels at a forum called the Telstra Consultative Council. There is no admission. Clearly, this is part of the problem of this debate, that people are not really being open to the public about what the long-term plans are. [14]

5.26 Material showing the existence of Project Mercury was obtained by the Committee prior to its Melbourne Hearing on Wednesday 3rd July. (Refer to Tables 5.5 and 5.6). Further documentation of the project was requested from Telstra and supplied under conditions of commercial confidentiality. The Committee has not made this latter documentation public. However, it has been cited where the Committee does not consider that the issues raised are commercially sensitive.

5.27 As indicated above Project Mercury involved the identification of areas of Telstra's business where cost savings could be achieved through rationalisation functions, outsourcing and/or sale of current operations. Guiding principles, outlined in the Project Mercury documentation obtained by the Committee, include:

(a) A focus on eliminating non value adding activities in line with positioning the company for the sale:

Non value adding is broadly defined to include any activities where there is no value added to the customer products or services and no clear link to increasing shareholder value. [15]

In conjunction with this bottom up approach, a top down view of the company will be developed. The top down view will be based on a high level, armchair, functional/process model of what the company should look like bearing in mind what is acceptable/desirable in the market place. The purpose of the top down view is to have a frame of reference in which to judge the bottom up. [17]

The ultimate successful achievement of a VPL (Visionstream) privatisation will demonstrate there can be 'life after Telstra'. [18]

There will not be significant financial gains in the short term — in fact redundancy costs will have a negative impact. However, the recommendations are consistent with achieving a better focus on core business within Telstra. [19]

(b) Outsourcing of non-core divisions as the primary means of substantially reducing staffing levels to achieve market targets of headcount benchmarking:

The business objective of the “Outsourcing Decisions” task is to clearly identify, scope and analyse the business benefits of outsourcing opportunities and to obtain Mercury Steering Group decisions to outsource specific activities. Decisions to outsource may involve the divestment, sale of organisational elements, competitive contracting with external suppliers or formation of joint venture alliances. [20]

Outsourcing is aimed at achieving business benefits from reduced capital requirements, lower unit activity costs, converting fixed costs to variable and achieving greater workforce flexibility to respond quickly to changing market conditions. Outsourcing will also reduce the number of direct staff employed by Telstra. [21]

Mercury Steering Group to decide 'in principle' on implementation of the recommendations including how outsourcing will be done and the line manager who will be held accountable for implementation. In each case implementation of the outsourcing decision will be become a clearly defined task in its own right. The Steering Group may also decide implementation of particular outsourcing decisions will be project managed by the Mercury Project Team. [22]

(c) Develop recommendations to improve the prospectus by utilising off-balance sheet options:

Reduction of costs to and removal of funding requirements from Telstra (Fleet Services). [23]

Exploration of off balance sheet options which would maximise cash injections without exposing Telstra to greater future operating costs, consistent with privatisation of Telstra.'(Fleet Services). [24]

Table 5.5 Project Mercury [16]

PROJECT MERCURY

Leader - [name deleted]

Some Issues

1 Management Initiated Redundancy

Objective - To ensure that staff without necessary skill and experience are exited from the company in an effective and timely manner.

2 Outsourcing Leader - [name deleted]

	Staff Loss	Cumulative Total
July 1996 to December 1996	5 000	5 000
January 1997 to June 1997	5,100	10,100
July 1997 to December 1997	3,500	13,600
January 1998 to July 1998	1,900	15,500

3 Total Staff Losses

	Staff Loss	Cumulative Total
July 1996 to December 1996	8 300	8 300
January 1997 to June 1997	8 500	16 800
July 1997 to December 1997	4 800	21 600
January 1998 to July 1998	3 400	24 000

4 Benchmarks

Worlds Best Practice


	TELSTRA	US West	Variance
Staff per line	59.7	32	87%
Cost per line	648	509	27%

5 Current Staffing Level

76,961

5.28 Despite the fact that Government policy requires that Telstra be sold as a whole entity, consideration was given to the sale of several sections of the Corporation which were considered to be non-core, such as Fleet Services, Electronic Products and Services (EPS) and Visionstream. (Refer Chapter 3).

5.29 Minutes of the meetings of the Project Mercury team indicate that Telstra management were sensitive to the possibility that such asset sales might constitute a breach of Government policy. The Committee is not aware, however, of any action having been taken by Government to prevent such sales proceeding, despite the fact that at least some of these areas are profit centres for Telstra.

5.30 The potential for conflict between Government policy and the proposals being considered by Project Mercury may partially explain departmental reticence on the subject such as that displayed by Mr M. Hutchinson, Deputy Secretary, Department of Finance:

Senator CARR — Can you assure this committee that the government has no plans under any guise to sell Visionstream?

Mr. Hutchinson - The issue has never been raised with me or in my hearing. I had never seen any papers that refer to it until I read over breakfast this morning the article you refer to.

Senator CARR — So you are saying that you are not aware of any plans?

Mr. Hutchinson — Correct.

Senator CARR — That is all you are saying, though, isn't it?

Mr. Hutchinson — That is all I can say.

Senator CARR — Good. That is all right. The last time you were before this committee you mentioned that -

Mr. Hutchinson — Sorry, Senator. Perhaps in view of the inference that might have been left at the end of the question, I should say I am unaware of any plans and I believe, if there were any, I would be aware of them. [25]

In fact, the CS First Boston Scoping Study team (which answered directly to an interdepartmental task force, consisting of officers from the Departments of Finance and of Communications and the Arts) was briefed by the Project Mercury 'taskowners' on the 27 June 1996, when proposals for the sale of Visionstream were already well advanced.

5.31 Telstra acknowledged that they were actively considering the sale of Visionstream:

Senator CARR — Are there any plans within Telstra for the sale of Visionstream?

Mr Rizzo — I believe Visionstream is one of those activities that we are looking at to see whether we can handle it in some other way. Mr Shore might comment on that.

Mr Shore — That is right. It is one of the parts of the company that we looking at with a view to seeing whether we can outsource it, along with other considerations about outsourcing.

Senator CARR — Just outsourcing? No sale?

Mr Shore — The options include whether you sell Visionstream, which is a contracting or building activity, or whether you outsource the work that the people in Visionstream do. [26]

Minutes of the Project Mercury Steering Group, Meeting 3, confirm that, as early as 6 May 1996, a 'top 5' priority item was to assess the viability of outsourcing/selling Visionstream.

5.32 The Committee considers that Project Mercury was clearly aimed at positioning Telstra for public sale. It was aimed at producing what would be considered an appropriate staffing profile for the privatisation prospectus, irrespective of the operational needs of the company.

5.33 Material supplied by Telstra to the Committee, relating to Project Mercury, reveals concern over the public perception that staffing levels are too high. While it was acknowledged by the participants that costs are a better basis for efficiency measurement than staffing levels, the project specifically considered the impact of each initiative on overall headcount. In fact, it was agreed that outsourcing would be pursued even in cases where it brought no cost benefit to the company but where it could reduce direct employment levels. At its meeting of 28 May 1996, the Project Mercury team reached 'agreement in principle':

… that outsourcing will be [the] preferred outcome when the cost benefit of outsourcing is equal or marginal to retaining inhouse. This will assist in bridging the gap between Telstra and best practice in relation to headcount benchmarking. [27]

It was acknowledged, for instance, that the outsourcing of Telstra's fleet services was unlikely to produce substantial reductions in operating costs, as the company already enjoys significant economies of scale in this area. Similarly, the proposal to sell Electronic Products and Services was pursued despite the fact that this is a profitable area of Telstra and one which provides niche services which other suppliers may find hard to replicate. Together, however, these two initiatives would remove staff from Telstra's books.

In the Committee's view, such irrationalities can only be explained by the external pressures being placed upon Telstra to meet headcount benchmarks, however, crude and inappropriate, in the run up to privatisation. These pressures may come, in part, from the views of market analysts, as reported in the media. It is also probable that such pressures were transmitted by the CS First Boston group which conducted the Privatisation Scoping Study of Telstra on behalf of the Government. CS First Boston, senior Telstra management, senior officials of the Department of Finance and members of the Scoping Study have all worked very closely together on a range of cost cutting initiatives, in the preparation of the prospectus. [28] CS First Boston briefed the Board of Telstra during a two hour presentation on 11 July 1996. [29]

5.34 According to press reports, CS First Boston has advised the Government that Telstra is too exposed to risk as a result of its Pay-TV activities. This could 'dampen investor enthusiasm' when the Commonwealth Government issues the proposed prospectus. CS First Boston has highlighted Telstra's $3.9 billion investment in building its broadband network, and also the fact that the Pay-TV business plan does not forecast a return until the year 2004. [30] Telstra is also spending some $3 billion upgrading the public telephone network through its Future Mode of Operation program. CS First Boston has expressed its concern that 'prospective shareholders would be given a distorted picture through the prospectus'. [31]

5.35 These concerns highlight the danger that the short-term needs of the Government's privatisation programme may compromise Telstra's long-term planning, both in terms of capital expenditure and resourcing levels. Telstra officials are quoted in the press as indicating that the prospectus 'was only looking at one year', while the return on the Pay-TV investment would not be evident for 'eight to ten years'. For instance, according to documents made available to the Committee and tabled on 20 July 1996, Visionstream, Telstra's cable construction company, was costing $200 million a year and returning only $20 million in revenue. [32]

5.36 The Government has received a number of draft reports of the Scoping Study from CS First Boston. It was claimed that this report remains unfinished, although it was clear that the key findings had been conveyed to Telstra executives and Government officials. [33] On his recent visit to America, Senator the Hon Richard Alston and his adviser were given a special briefing by CS First Boston in New York. In early August, the Minister wrote to the Board of Telstra, in what has been viewed as a reference to the CS First Boston report, over the issue of broadband networks. [34]

5.37 It is understood that key issues to emerge from the CS First Boston study are:

(a) staffing levels and the need to make greater use of contractors;

(b) Telstra strategic investment performance and objectives;

(c) the capacity of Telstra to secure greater revenue from its customers; and

(d) options for non-legislative route to privatisation through structural separation of broadband network, mobile phones and Yellow Pages. [35]

5.38 CS First Boston's final report was not received by Government by the close of the Committee's inquiry. It is not clear what level of parliamentary scrutiny of the report will be allowed by the Government. These factors have limited the Committee's ability to make a final assessment of the impact of the Scoping Study activity on Telstra's present and future activities. There is little doubt, however, that the large staff reductions now being proposed are directly related to these activities.

5.39 Project Mercury has been an integral part of the process of meeting the demands from the Government, the Scoping Study, and more specifically CS First Boston, that Telstra be restructured in preparation for sale. Telstra's Corporate Plan is the vehicle for the achievement of this project. The board has deferred a final decision of this three year Corporate Plan until after this Senate Committee Report, that is, until the September 1996 meeting of the Telstra Board. However, the reported targets for downsizing are currently 26 000 over a three year period.

5.40 In the light of this extensive evidence, the Committee concluded that the partial privatisation of Telstra was likely to lead to severe pressures on employment levels within the company, and to an ongoing drive for staff reductions. Supporters of privatisation have stated that job losses in Telstra would be offset by growth in the telecommunications industry. Committee members, however, believed, on the basis of historical evidence, that such job losses were not likely to be made up by growth in the industry, especially in regional and rural areas.

Industry Growth and Development

5.41 The telecommunications industry is one of the most rapidly expanding areas of the world economy. In terms of annual turnover, the industry's rate of increase in Australia has been estimated at around 10 per cent per annum. However, much of the expansion is into capital intensive areas. People are being replaced by machines. Data on employment in the Communication Services Industry Growth and Employment sector point to this conclusion. Past employment levels in the industry, are shown below. [36]

Over the 11 years shown in Figure 5.3, there was an increase of 8% in employment, or an average of only 0.7 per cent, per annum. Clearly employment opportunities are not expanding at a rate matching that of the industry itself.

5.42 The 1994 Bureau of Transport and Communications Economics (BTCE) study, Communications Futures, confirms this trend. While there was considerable growth in employment in the 'recreation, personal and other services' category during the period 1980-81 to 1991-92, employment in the 'communications' category remained relatively constant. (Refer to Fig. 5.4). Based on these trends, BTCE concluded that future employment growth in the converging communications, information and entertainment industries was more likely to occur in the area of content, rather than in carriage provision. [37]

5.43 During the inquiry hearings, the Committee received no evidence that contradicted the thrust of these findings. Certainly there was no evidence provided that indicated that the privatisation of Telstra would, in itself, create job opportunities in the telecommunications industry. New opportunities are obviously appearing as a result of liberalisation of the industry, however, the net effects on employment levels would appear to be negligible.

The Committee was presented with no evidence which led it to believe that particular employees retrenched from Telstra would have the appropriate skills to find work in other sections of the industry. At worst displaced employees, particularly if unskilled, semi-skilled, over 50 years old, or in regional areas, would join the unemployed. [38]This outcome is indeed made all the more likely by Telstra's current proposal to select candidates for retrenchment on the basis of their 'unsuitability' for the job. This amounts to branding workers as unfit for employment in the industry.

5.44 Some witnesses did contend that 'competent workers' laid off by Telstra would be readily absorbed by the expanding telecommunications industry. [39] Government agencies provided evidence of Telstra's recent growth in staffing levels and down-played increasing community concerns about the effects of job losses in the company and in regional Australia as a result of partial privatisation.

5.45 The Minister for Communications and the Arts, Senator the Hon Richard Alston, supported the view that job growth would result from privatisation when he stated that 'job cuts could boost employment because improved Telstra efficiency would open up jobs outside the company' [40] The Committee, however, found little evidence to support such assertions, especially in relation to employment opportunities in regional and rural areas. Even those with the most sanguine views of future employment growth were obliged to acknowledge this problem:

Mr Moriarty — Therefore, our feeling is that the net employment is certainly going to grow. It will be different. It will be in different entities and organisations over time, as the industry expands.

Senator SCHACHT -It won't be in the bush.

Mr Moriarty — I think it is possible that, in parts of Australia, there will be reductions and there will be a balancing. [41]

5.46 These findings have major ramifications for rural and regional communities, and call into question the current Government's commitment to support, and sustain, levels of employment in regional centres and small rural towns.

Impacts of Privatisation on Regional Employment.

5.47 The Committee found that the issue of regional and rural employment, along with the issue of the impact of privatisation on rural services, became a major focus of the inquiry. The concerns of rural and regional Australia were evident in the proportionately higher number of submissions from North Queensland, and Tasmania, compared to those from more populous regions. The former Mayor of Townsville, Mr Michael Reynolds, summarised the impact of the then proposed Project Mercury job losses:

I see a major impact on customer services … can I say to you [Senator Tierney] that there is a great deal of concern when you say to public sector employees, `It's okay. Your job is going to be made redundant, but at the end of the day there will be a private employer to take you along'. We are talking about real families here. We are talking about real, individual economic units in the community. [42]

5.48 Throughout Australia, the Committee received numerous submissions highlighting the interdependence of the public and private sectors of the economy in regional and rural areas. South Australia, for example, has built up over the years a very strong public infrastructure, which it is essential for the State to retain. This is particularly important in regional areas of South Australia, where there is very high unemployment, and where the impact of recent Government cuts to employment and training programs, and Government policies of privatisation of fundamental utilities, have been most severe. [43]

5.49 The Committee believes that while the currently proposed job losses are likely to be concentrated in metropolitan south-east Australia, all states would ultimately feel the impact of the rationalisations that would accompany privatisation. This belief is based on both the evidence from the Project Mercury program and from the experience of previous Telstra restructuring.

South Australia/Northern Territory

5.50 The South Australian Liberal Government submission acknowledged:

The clearest employment impact of the Telstra privatisation would be in regional centres where Telstra offices are major local employers. [44]

However, they went on to say:

The impact of the sudden closure of a major employer is well understood. The state would support that preceding the privatisation, some form of impact assessment should be conducted to assist affected communities to plan for the closure of major offices. [45]

The Committee believes that this response fails to address either the short-term impacts of job losses on communities, or the long-term question of regional depopulation and decline.

5.51 Evidence received by the Committee indicated that in Darwin and Alice Springs Telstra had commenced a management program of 'resource rebalancing' which was perceived as a euphemism for plans for large scale redundancies. All employees within Telstra are being rated on a scale of 1 to 5. The rating program has already commenced and, as early as July 1996, was said to already have had an impact on customer service:

Mercury — and Telstra uses the term `resource rebalancing' — whilst I'm here in Darwin this week, management is already undergoing training of supervisors to undertake this assessment process between 1 and 5 of all staff in the Territory. It is clear that the whole aspect of this — what I have referred to as a hit list — has caused quite a bit of concern amongst our members in the Territory. It is having a detrimental affect in terms of their concentration on their job and doing it properly. I must say, our members in the Territory work in extraordinary conditions and are extremely dedicated in providing services to some of the most remote communities in Australia.

On the issue of employment impacts in regional Australia, at Alice Springs we have what is called a Directory Assistance Exchange. Telstra has indicated that it may well rationalise a number of these exchanges around Australia. The impact on employment in places like Alice Springs, if that were to close, would be quite substantial. We are talking in the order of 30 or 40 staff who all of a sudden would be seeking employment in Alice Springs. That would have significant impact on the local community in that area.

Overall, the impact for regional Australia, particularly … in the Northern Territory, of such moves to downsize will certainly affect Telstra's staff's ability to provide service in a reasonable period of time. [46]

South Eastern Australia

5.52 An analysis of the location of existing Telstra jobs shows that the majority of jobs to be cut are concentrated in Victoria and New South Wales. A 40 per cent job cut is projected for Victoria, including 1500 positions in country areas. The following Table 5.7, 'Where the Telstra Jobs Are', appeared in The Age in April 1996. [47]

Table 5.7 'Where the Telstra jobs Are'

This negative impact on jobs in south-eastern Australia was further detailed in a breakdown of the Consumer and Commercial Division surplus positions. (Table 5.3). Although all states and all sectors in the Division are targeted for staff reductions, Victoria and Tasmania will suffer the brunt of job losses. [48]

5.53 Furthermore, a possible shift of corporate functions from the current Melbourne headquarters to Sydney would exacerbate the severity of job cuts in Melbourne and Tasmania. This aspect was first raised when Mr Frank Blount took up the position as Chief Executive Officer, Telstra Corporation. This issue were discussed by the Committee at its public hearing in Canberra on 26 July 1996.

5.54 Impacts of this nature would be in line with those experienced during previous rounds of job-cutting in Telstra, brought on by the pressures of corporatisation and deregulation. Historically, regional areas have suffered badly from such exercises. The Committee heard evidence, for instance, of the effects on employment in Tasmania from such processes over the last decade.

Queensland

5.55 At another end of the continent, Queensland had also experienced major job losses, often at the expense of service quality in the region. For instance, excessive job cuts in Queensland during the 1992-3 period led to Telstra being forced to employ, and train, new staff as it became impossible to maintain the telephone network.

5.56 Technology in telecommunications is now such that if it was not for political intervention, by way of government employment strategies and regional development policy frameworks, telecommunications jobs in regional Queensland could not be guaranteed. As the Community, Electrical and Plumbing Union remarked in relation to customer service centres:

When you get to a situation where the only thing that you are considering is the commercial effectiveness of an operation, then those questions about where they are become questions of real importance, particularly to the people that are employed in those jobs. It is a constant battle with Telstra about keeping them out there. They keep telling us that they can get efficiencies by combining those centres. All that they get by combining those centres is they get rid of the OIC. There is very little in it for them, and the ones in the country are particularly efficient in that there is a more stable staff and a better working environment. [49]

5.57 The Committee was advised that the current industrial agreement between Telstra and its employees concerning Customer Service Centres has been in operation for some time. It expires in less than 12 months. [50]

5.58 Telstra's key centre in Townsville employs 700 workers. Its sales and service division at River Quays currently services all of Queensland. This centre is supplemented by regional field depots and Telstra Shops. Directory assistance and emergency services numbers are provided out of centres in Maryborough, Rockhampton, Mackay, Cairns and Roma. These regional centres are a significant source of employment for women. In Roma, the Telstra customer services centre is the biggest industry in the town. All of these jobs are at risk to a market oriented approach to delivery of service.

Together with the 700 in Townsville, all of that work could be anywhere. It could be in Brisbane, it could be in Melbourne and it could be offshore. The only requirement if it is to go offshore is that it would have to go somewhere where they speak English. The Philippines would probably be the most likely source of that labour.

The other problem is that the recent announcements that came out of this Senate committee about the Mercury project and the proposals to outsource 24 000 jobs in Telstra, which are a real consideration if you are looking at preparing the company for privatisation, is that that type of work is a prime target for outsourcing. We would be very concerned about all those jobs in provincial Queensland going to a contractor who would choose the location for that work on the basis of their interests. [51]

5.59 While Australian regional centres contract as a result of rationalisations, Telstra plans to outsource off-shore. Project Mercury documents reveal that management proposes the establishment of an Operator Assistance Service (OAS) centre in the Philippines. [52] At the same meeting, the Project Mercury team reported that the customer service units on the Gold Coast, Sunshine Coast and Rockhampton were facing rationalisation. [53]

Tasmania

5.60 In June 1986 Telstra in Tasmania employed 2 608 employees. In 1996 that number had been reduced to 1 460 employees. Calculated on the basis of an average salary of $40 000, the Tasmanian economy was poorer by $58.4 million per annum. In this period Tasmania has regressed from an administrative region in its own right to a combined Victoria/Tasmania region administered from Melbourne. This resulted in the functions of marketing, human resources and finance being centralised in Melbourne.

5.61 Within Tasmania, customer services have been centralised in Hobart resulting in the closure of customer service centres in Burnie and Launceston. Telstra management, as part of the current cost cutting measure, plan to close the Hobart customer service centre which employs 120 people. Three operator sites in Tasmania located at Burnie, Launceston and Hobart have been downgraded from the multifunctional sites to single function sites, eg, Directory Assistance. This contraction has had a substantial impact on the quality of jobs available and the career paths of Tasmanian telecommunication workers. Job cuts announced on 12 July as part of Project Mercury stage one will hit Tasmania and Victoria the hardest. Further reductions resulting from the privatisation process would decimate the remaining Tasmanian Telecommunications workforce and lead to ever greater centralisation of services in Melbourne and Sydney.

Other Employment Issues

5.62 Over and above the employment impacts canvassed above, the Committee considers that the privatisation of Telstra has the potential to affect employment in the telecommunications industry adversely.

The Government has indicated its intention of preserving the current Industry Development Arrangements, which provide support to local industry through carrier purchasing commitments. However, while the Exposure Draft of the post-1997 legislation contains a requirement that the carriers develop industry plans, it imposes no specific obligations for them to source locally.The Committee accepts that Australia's participation in international covenants designed to promote free trade may constrain Government's ability to place overt and specific purchasing requirements on carriers. It would appear, however, that these constraints may effectively allow carriers more leeway in their purchasing policies than has previously been the case.Any erosion of Telstra's current local sourcing levels would depress employment levels in the Australian electronics industry. The impacts would be felt most sharply in Victoria, which currently accounts for 61 per cent of industry supply to Telstra. [54]

5.63 The Committee was also concerned that privatisation would lead to a decline in high-level communications research and development expertise in Australia. The Committee noted that Telstra plans to slash 154 staff from its Telstra Research Laboratories (TRL) this financial year and 250 staff in less than 4 years. This represents a reduction of 44 per cent of TRL's capacity. The Committee believes that this decision is another example of short-term shareholder interests being advanced to the detriment of Telstra's (and Australia's) long-term R&D capabilities which was discussed more fully in Chapter 4.

Telstra's Attitude to the Committee

5.64 The Committee believes Telstra's response to direct questions on Project Mercury and job losses were most unsatisfactory. It became clear to the Committee during the course of the inquiry that senior Telstra executives were misleading the Committee about job losses proposed within Telstra:

Senator SCHACHT — But you have not given me one example. You have not given me one example of how you, as a senior manager, will be more efficient in a privatised company than in a GBE. Give me one example of how, in your own performance, you would help reduce that 30 per cent by doing things which you would not want to do now.

Mr Rizzo — It is the right of the Senate to call us here, but I think the fact that senior management could be elsewhere is one example. [55]

5.65 While Telstra maintains that it did not have a head count target, documents received by the Committee clearly indicated evidence to the contrary. In fact, one official who appeared before the Committee had been present at a minimum of one meeting where head count benchmarks had been discussed by the Project Mercury taskforce. Subsequently, it was demonstrated that Telstra officials qualified answers on projected targets for job losses by asserting that, at the time, officials appeared before the Committee, redundancy targets were not 'the final number that went to the Board, it was `work in progress'. [56] In fact subsequent numbers that were put to the Board were higher than those indicated in documents available at the time evidence was given to the Committee.

5.66 The Committee was hampered in its deliberations by Telstra's failure to make available the Outsourcing Final Report which was to be presented to the Project Mercury group meeting on 12 August 1996. The committee understands from Telstra that the meeting was postponed.

5.67 Telstra senior management's lack of candour before the Committee might be explained by the bad timing of their appearance. Mr. Rizzo indicated that it was:

... an unfortunate coincidence that we appeared before the Senate Committee on 3rd July and we had not finalised our plans at that point. We were desperate to finalise the first year of the plan (the corporate plan). We did that at a board meeting on 11th July. We were almost two weeks into the first year of the budget plan. We needed the first year of that three year plan. [57]

The Committee believes that this was not an adequate explanation for not providing full, frank answers to direct questions by Senators. Telstra officials are reminded that there are means available for the legitimate use of in camera proceedings, and providing answers calculated to mislead was not an appropriate alternative.

5.68 Equally, the use of commercial-in-confidence or in camera evidence to avoid legitimate public scrutiny and debate should not be abused by public sector officials. Telstra agreed to provide all relevant documents pertaining to Project Mercury. Some 200 pages of minutes, reports and other papers were provided to the Committee on a commercial-in-confidence basis. The Committee noted that this was not a complete set of documents, and Telstra's response that other documents were withheld on the basis of uncertainty as to their status was not a satisfactory explanation for withholding relevant documents from the Senate's inquiry.

5.69 The description of documents that were provided as commercial-in-confidence was, in the opinion of the Committee, an abuse of that term. While some documents were clearly politically sensitive, and in terms of industrial relations, embarrassing, the use of commercial-in-confidence to avoid public scrutiny and accountability is not appropriate. When challenged by the Committee, Telstra management maintained that all 200 pages of these documents were confidential, even though some documents had been previously published and there had been widespread public debate concerning their contents, before the Committee and in the media.

5.70 Telstra finally agreed to some parts of the documents being used by the Committee, however in the most contemptuous manner. Telstra indicated that all text should be removed, leaving the most innocuous of headings. (See Appendix 6.)

5.71 Another explanation of the failure to answer questions candidly can be found in the Scoping study term of reference (h) which states that the Government and the company representatives must take a consistent approach to public presentation on all issues. While Finance Department officials deny that they instructed Telstra management on any issues, the Committee believes that there had been close co-operation between Telstra management, the Government, and departmental officials.

5.72 Mr. Hutchinson indicated that term of reference (h) is a reference to:

... investigate how an appropriate, consistent approach to public presentation of the issues can be brought about. It is not a direction to anyone. It is merely a reference for an investigation that is being conducted as part of the Scoping study. The fact of the matter is, when we approach the market to sell the shares, it is going to be very important commercially and legally that the messages be consistent, authorised and accurate. We need mechanisms to ensure that that happens.

Senate CARR - Politically it is important for you to maintain a consistent line?

Mr Hutchinson - Politics have nothing to do with it. [58]

5.73 Telstra executives were not the only witnesses representing the Government whose evidence appeared to be contradicted by documents received by the Committee. When questioned about the documents entitled `Outsourcing Status Report' dated 17 June 1996, Mr Hutchinson was evasive:

I have not seen that document to the best of my knowledge, nor have any of my colleagues in the Scoping study task group. It may be that that document has been made available to CS First Boston. We probably have a copy of it somewhere, but we have not got any conscious. [59]

5.74 Later in the same hearing, Mr. Hutchinson indicated that it is was Telstra's responsibility to determine employment planning and that it was not up to the department to set employment figures. While it was a matter for the Scoping Study to know the levels that the company was planning, and while Mr Hutchinson indicated that departmental representatives on the Scoping Study were aware of Telstra's options for staff reductions, he suggested that at the time that he had given evidence to the Committee, Telstra had only provided the Department of Finance with some of their plans for job reductions, 'they had not told us all of it.' [60]

5.75 The Committee reminded Government officials and Telstra management of the Standing Orders of the Senate where commercial-in-confidence (like public interest immunity or the sub judice convention) was a matter for the Committee to determine. The Committee may decide to restrict its questioning, but usually only if it is given an acceptable reason why the material is commercial-in-confidence. In other words, it was something for the Committee to determine, not the witness.

5.76 A government department or statutory authority has no power to unilaterally withhold information simply because in its own opinion the information should be confidential. This principle should be borne in mind when commercial contracts are entered into. Details of contracts may be called for and made public by the Parliament or a Parliamentary committee at any time.

Conclusions

5.77 The Committee believes that the part-privatisation of Telstra will have a detrimental affect on employment in Telstra itself, and on regional and rural development in Australia. The move by the Government towards the partial privatisation of Telstra is already having a distorting affect on Telstra's strategic investment and employment decisions. Privatisation will lead to job losses in much greater numbers than can be accounted for by technological change or competition. Job losses in Telstra will not be made up by greater demand for labour in an expanded industry. The Committee believes that the growth in the total size of the industry does not necessarily translate into growth in jobs in the same proportions. In fact the historical evidence suggests that over the last eleven years while the industry may well have doubled in size, the growth in employment has remained virtually static. The Committee believes that the cost of privatisation should include the cost to individuals and to society, particularly in regional areas, where lost jobs are the most difficult to replace.

Footnotes

[1] Ms R.Eason, Senior Industrial Research Officer, Communications, Electrical and Plumbing Union, Official Hansard Report, 3 July 1996, p.213.

[2] Mr M. Hutchinson, Deputy Secretary, Department of Finance, Official Hansard Report, 26 June 1996, p.83.

[3] Communications, Electrical and Plumbing Union/Community and Public Sector Union, Submission No.296, Vol.10, p.1894, (s.132).

[4] Communications, Electrical and Plumbing Union/ Community and Public Sector Union, Submission No.296, Vol.10, p.1895, (s.134).

[5] Mr C. Cooper, Divisional President, Community and Public Sector Union (Telecommunications), Official Hansard, 3 June 1996, p.221.

[6] Official Hansard Report, 3 July 1996, p 115; and at the hearing on 26 July 1996, the same claims were made by Mr Rizzo and Mr Shore, Official Hansard Report, 26 July 1996, pp.819-20.

[7] Official Hansard Report, 3 July 1996, pp.200-201.

[8] Official Hansard Report, 10 July 1996, p.334.

[9] Mr P. Shore, Managing Director, Commercial and Consumer, Telstra, Official Hansard Report, 26 July 1996, pp.824-25.

[10] Ms R.Eason, Senior Industrial Research Officer, Communications, Electrical and Plumbing Union, Official Hansard Report, 3 June 1996, p.211.

[11] Information provided to Senator K. Carr and tabled at public hearing, Melbourne, 3 July 1996.

[12] Ms R.Eason, Senior Industrial Research Officer, Communications, Electrical and Plumbing Union, Official Hansard Report, July 3, p.211.

[13] Project Mercury documentation, 22 May 1996.

[14] Mr C. Cooper, Divisional President, Communications, Electrical and Plumbing Union, Official Hansard Report, 3 July 1996, p 210.

[15] Project Mercury, Non value-adding Task Group, 17 May 1996.

[16] Edited version to delete names of senior Telstra management. Information provided to Senator K Carr.

[17] Project Mercury, Non value-adding Task Group, 17 May 1996.

[18] Project Mercury, Outsourcing Task Group, 14 May 1996.

[19] Project Mercury, Outsourcing Task Group, 28 May 1996.

[20] Project Mercury, Outsourcing Task Group, 17 May 1996.

[21] Project Mercury, Outsourcing Task Group, 17 May 1996.

[22] Project Mercury, Outsourcing Task Group, 17 May 1996.

[23] Project Mercury Outsourcing, Task Group, 20 May 1996.

[24] Project Mercury, Outsourcing Task Group, 20 May 1996.

[25] Mr M. Hutchinson, Official Hansard Report, 26 July 1996, p.755.

[26] Mr P. Shore, Managing Director, Commercial and Consumer, Telstra, and Mr Rizzo, Group Managing Director, Telstra, Official Hansard Report, 26 July 1996, p.828.

[27] Project Mercury, Steering Group, 28 May 1996.

[28] Mr M. Hutchinson, Deputy Secretary, Department of Finance, Official Hansard Report, 26 July 1996, p.748.

[29] Mr P. Rizzo, Group Managing Director, Telstra, Official Hansard Report, 26 July 1996, p.811.

[30] Foxtel Group, 'Profit and Loss Statements', Official Hansard Report, 26 July 1996, p.774.

[31] Australian Financial Review, 22 July 1996.

[32] Australian Financial Review, 22 July 1996 and 1 July 1996, respectively.

[33] Mr M. Hutchinson, Deputy Secretary, Department of Finance, Official Hansard Report, 26 July 1996, p.748.

[34] Australian Financial Review, 15 August 1996.

[35] Australian Financial Review, 19 August 1996.

[36] Ausstats, Australian Bureau of Statistics: Labour Force - Industry Quarterly, May 1996.

[37] 'Emerging Communications Services - an Analytical Framework', Communications Futures, Bureau of Transport and Communications Economics, 1994. Fig. 5.2, Source, Australian Bureau of Statistics, (1987), (1993).

[38] See also 'Telstra's Massive shake-up', Australian Financial Review, 5 July 1996.

[39] Mr A Horsley, Submission No. 202, Vol.8, p.1493.

[40] 'Job Cuts at Telstra May Lift Employment' Age, 27 June 1996.

[41] Official Hansard Report, 3 July 1996, p.136.

[42] Mr M. Reynolds, Official Hansard Report, 10 July 1996, pp.325 & 327.

[43] The Hon. M.R. Rann, Leader of the Opposition, Parliament of South Australia, Official Hansard Report, 23 July 1996, p.727.

[44] The Hon. D. Brown MP, Premier of South Australia, Submission No.352, p.2720.

[45] The Hon. D. Brown MP, Premier of South Australia, Submission No.352, p.2720.

[46] Mr G. Kandelaars, Secretary, Telecommunications and services Branch, South Australia and Northern Territory, Communications, Electrical and Plumbing Union, Official Hansard Report, 23 July 1996, p.679.

[47] Mr R. Myer, 'Rural warning on Telstra Job Cuts', The Age, 18 April 1996.

[48] Telstra document supplied to Senator K. Carr.

[49] Mr I. McLean, Branch Secretary, Communications, Electrical and Plumbing Union, Official Hansard Report, 11 July 1996, pp.416-417.

[50] Mr P. Shore, Managing Director, Commercial and Consumer, Telstra, Official Hansard Report, 26 July 1996, p.822.

[51] Mr I. McLean, Branch Secretary, Communications, Electrical and Plumbing Union, Official Hansard Report, 11 July 1996, pp.416-417.

[52] Project Mercury Steering Committee, Meeting 7, Non value added task group, 20 May 1996.

[53] Project Mercury Steering Committee, Meeting 7, Non value added task group, 20 May 1996.

[54] Estimates Committee C, Addition information provided to Estimates Committee during the Committee's examination of proposed Expenditure 1992-3, November 1992, p.414

[55] Mr P. Rizzo, Group Managing Director, Telstra, Official Hansard Report, 3 July 1996, p.109.

[56] Mr P. Shore,Managing Director, Commercial and Consumer, Telstra, Official Hansard Report, 26 July 1996, p.825.

[57] Mr P. Rizzo, Group Managing Director, Telstra, Official Hansard Report, 26 July 1996, p.822.

[58] Mr M. Hutchinson, Deputy Secretary, Department of Finance, Official Hansard Report, 26 July 1996, p.758.

[59] Mr M. Hutchinson, Deputy Secretary, Department of Finance, Official Hansard Report, 26 July 1996, p.756.

[60] Mr M. Hutchinson, Deputy Secretary, Department of Finance, Official Hansard Report, 26 July 1996, p.756.

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