Chapter 5
Employment Issues
| Comparative international studies of employees per line
have been given as a rationale for job reductions. The Committee is
concerned, however, that where cost comparisons, rather than needs,
are used to determine employee requirements the result is a loss of
service. The loss of jobs and services will have a particularly adverse
impact on rural and remote communities. On the evidence provided,
it appears that reductions in employee numbers are occurring in the
lead up to privatisation simply to make Telstra appear more attractive
to potential investors. |
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].
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.
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
| Year |
Staffing |
|
1991
|
14,925
|
|
1992
|
13,526
|
|
1993
|
12,338
|
|
1994
|
9,257
|
|
1995
|
8,568
|
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]
| Business Unit |
96/97 Budget
Opening Staff |
96/97 EOY
Variation |
| Commercial &Consumer Total |
| Staff - FTS |
33,134 |
-4900 |
| Staff - FTE |
38,594 |
-5700 |
| Business, Government & International
Total |
| Staff - FTS |
14,235 |
-850 |
| Staff - FTE |
15,883 |
-950 |
| Retail Products & Marketing Total |
| Staff - FTS |
581 |
-31 |
| Staff - FTE |
657 |
-40 |
| Telstra Multimedia Pty Ltd Total |
| Staff - FTS |
368 |
13 |
| Staff - FTE |
532 |
39 |
| DIRECTORIES |
| Staff - FTS |
695 |
-2 |
| Staff - FTE |
765 |
0 |
| Network Technology Group Total |
| Staff - FTS |
21,531 |
-2,600 |
| Staff - FTE |
26,076 |
-3,500 |
| Corp Cent Total |
| Staff - FTS |
6,008 |
-1,300 |
| Staff - FTE |
6,992 |
-1,650 |
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]
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)
| Area |
Staff numbers |
| Pit and Pipe work (part of network installation
and maintenance) |
1,300 |
| Accounts |
170 |
| Properties |
526 |
| Fleet |
250 |
| Visionstream |
2 000 |
| Customer Premises Equipment (includes handsets,
PABX, small business systems, etc.) |
2,100+ |
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
|
TELSTRA |
US West |
Variance |
| Staff per line |
59.7 |
32 |
87% |
| Cost per line |
648 |
509 |
27% |
5 Current Staffing Level
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.
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.
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'
| State |
Metro |
Country |
| Vic |
19 456 |
3601 |
| NSW |
16 372 |
7304 |
| Tas |
978 |
482 |
| Qld |
9376 |
3260 |
| SA |
4814 |
694 |
| WA |
5203 |
727 |
| ACT |
1323 (aggregate) |
| NT |
661 (aggregate) |
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.
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.
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.
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.
| RECOMMENDATION 10:
The Committee recommends Telstra be retained in full public ownership
to ensure that it may continue the nation building role which it has
fulfilled to date, not only in the delivery of services but in the
stimulus its presence as an employer has given to regional economic
development. |
| RECOMMENDATION 11:
The Committee recommends the public interest in creating and retaining
employment in Australia, especially in regional areas, be given due
weight in Telstra's organisational decisions. The Committee opposes
decisions which would see Telstra's operations relocated offshore
in the name of 'efficiency'. |
| RECOMMENDATION 12:
The Committee recommends that Telstra's employment levels be determined
on the basis of operational needs, rather than on 'headcount' targets.
|
| RECOMMENDATION 13:
The Committee recommends Telstra operations be resourced up to a level
which allows for ongoing improvement in customer service quality.
|
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.