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  1. #1
    Join Date
    Jul 2003
    Kapiti in New Zealand

    Default Costello warns of rates rise in Telstra battle

    Hehe... any excuse for the Aussie Government!

    Treasurer Peter Costello has warned interest rates could rise if the federal government is forced to set aside billions of dollars to improve Telstra's services in the bush.

    Mr Costello poured cold water on demands by the Queensland Nationals for the government to set up a multi-billion trust to help ensure Telstra's services in regional areas remain up to scratch after it is sold.

    The trust fund is one of five demands the Queensland Nationals want met in exchange for their support on Telstra's sale.

    But Mr Costello said the government would not be forced into making a financially irresponsible decision just to fulfil its plans to sell Telstra.

    "The government will make a decision which will be good for communications, which will be financially responsible and will be consistent with keeping interest rates low and the budget balanced," he told reporters.

    "And that decision will be in Australia's interests.

    "I am not going to take any decision which will put pressure on interest rates, which will put people out of work, which would not be consistent with good financial management and would not be consistent with good communications."

    Mr Costello has previously argued that all the $30 billion proceeds from Telstra's sale be tipped into a Future Fund to pay for public servants' superannuation entitlements.

    The Queensland Nationals today met with their federal NSW and Victorian colleagues in an attempt to get them to back their demands.

    Nationals leader Mark Vaile last week suggested a $2 billion trust be set up, but some Queensland Nationals believe that sum is not enough and up to $5 billion could be needed.

    Communications Minister Helen Coonan said while she was willing to consider setting up a trust, it was unlikely that any more than $2 billion would be needed.

    "I think Mark Vaile is nearer the money as to what could be conceivably spent," she told ABC TV.

    "And if we were to look at a fund it would need to be focused on identifiable need that is not being met."

    Senator Coonan also downplayed any hint of a rift within the Nationals and Liberal Party coalition over Telstra's sale.

    "We all want to make sure that services in rural and regional Australia are as good as they possibly can be and that they will remain that way, given that we don't know what new technology is coming down the pipeline into the future," she said.

    Opposition communications spokesman Stephen Conroy said the Queensland Nationals' demands set the stage for Telstra to be sold.

    "The past days have revealed Queensland National party members as being political prostitutes of the worst kind," he said.

    "Since they've compromised on the principle, now all the government needs to do is haggle over the price."

    Newly elected Queensland Nationals president Bruce Scott said the trust fund was the key to the government winning his party's support for Telstra's sale.

    He said by having a separate trust fund, the government would not have to rely on setting aside money in its budget each year to help improve Telstra's services in the bush.

    "We've got to make sure we've got it locked away so that we can give that guarantee that the money will always be there to secure services when markets fail in the future," he said.


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