Nats selling out the bush on phones, free trade

The National Party can no longer hide behind the opposition parties in the Senate to block legislation instigated by its Liberal coalition partners that harms the interests of its bush constituency - and which is arguably against the national interest as well.

Farmers got nothing out of the free trade agreement with the United States.

National Party deputy leader and Trade Minister Mark Vaile should have taken the advice of his advisers and walked away from the agreement. The FTA was the antithesis of free trade in that it was designed by the US to shore up American corporations' intellectual property rights and copyright at the expense of net intellectual property importers such as Australia.

Vaile has already put Australia behind the eight ball in the FTA negotiations with China.

Australia's main negotiating coin was support for China's request for market status in the World Trade Organisation forum. This support has been effectively promised, even though in the preliminary discussions, the Chinese senior trade negotiator, Ma Xiuhong, warned that "Australia should be fully aware of the sensitive nature of the agricultural issue . . . if (they) are not properly handled, economy-wide and society-wide problems might eventuate".

The Australian response was to argue that any increased penetration of the Chinese market by Australian farmers would be at the expense of other exporters to China, rather than Chinese farmers.

Vice-Minister of Commerce Ma said she hoped "the recent surge in prices of Australia's iron ore, which has adversely impacted our bilateral trade, will not happen again". This suggests China's main aim in these negotiations is to create conditions allowing China to obtain strategic leverage over Australian production of minerals and energy vital to the maintenance of China's hyper-growth rate.

The more immediate dilemma for the Nationals is the sale of Telstra.

The telephone is the vital piece of infrastructure for people in the bush. If their local hospital and GP are gone, they can still ring the outside world for help. The telephone reduces the social isolation, and enables telephone banking and other services previously provided at banks.

Maintenance of these rural telecommunications networks is much more expensive per customer than maintaining city networks, so even if services in the bush (in terms of fault rates and service times) are comparable with the city now - as the Estens report asserts - there is no guarantee that the quality of the basic service will be maintained after full privatisation of Telstra.

The Estens inquiry was set up by the Coalition to reconcile the bush to the full sale of Telstra. Even so, it said that the standard internet access for rural users would be 19.6 kilobits per second compared with about 50 kilobits per second in Melbourne and other capitals.

In other words, under the standards suggested as satisfactory in the Estens report, the most rural telephone users can expect is an inferior email service in which exchanges that take minutes in the city could take hours in the bush, and access to the riches of the World Wide Web would be prohibitively expensive.

So what is the National Party's answer to this? According to a report by the Nationals' new think tank, the Page Research Centre, it is a regulatory regime promoting more competition in the bush.

Are they serious? Telstra's main competitor, Optus, has invested about $14 billion in developing an alternative network (which duplicates the most profitable parts of the Telstra network) for a return so far of about $250 million profit.

How much would have to be invested in the bush to provide a broadband service - according to the Page Research Centre, the cost would be $7 billion (they don't provide the evidence for this because it is "commercial in confidence") and Telstra has guessed that the cost would be upwards of $20 billion.

Given the size of the market and the cost of providing and maintaining even the present basic telephone service, either Telstra will provide it or it won't be provided at all.

The provision of a telecommunications network worthy of the name is a natural monopoly - especially in a country such as Australia that is the size of Europe, with a fraction of the population, largely concentrated on the eastern fringe of the continent.

Australia has a choice. Continue to use the ACCC to maintain an artificial competitive network irrespective of cost or put the interests of consumers first, meaning allowing the natural monopoly to reassert itself with regulation focused on ensuring the monopoly's profits are used to cross-subsidise the maintenance of a truly first-rate national network.

The choice rests largely with the Nationals, who hold the balance of power in the Senate. At present, policy is directed by those hell-bent on getting a share of the half-a-billion dollars in commissions and fees from the T3 sale process.

The probable outcome in terms of a two-tier telecommunications system is merely collateral damage in the service of greed and ideology.