Every other week a group of merchant bankers flies into Canberra to stoke the Government privatisation fires in the hope that John Howard will find some way of igniting the biggest bonanza in Australian broking history.
The current languishing stockmarket means fewer shares overall are being traded, broker commissions are light on, and long business lunches and bonuses are not as frequent or fat as they were during the dot.com boom.
The US market is now at a four-year low. with no prospect of an immediate turnaround.
Sale of the third tranche of Telstra,T-3. stands out as the great hope (and perhaps the only hope) of the Australian financial industry being showered with hundreds of millions of dollars in fees and commissions in the foreseeable future. But despite the increased hype, and belated frenetic activity by the telco giant itself to improve services in the bush, full privatisation still faces enormous hurdles.
Swinging a deal in a boardroom is a different thing to a political deal where cheques cannot always be written to nullify principles, personal interests, reputations or sheer stubborn politicians. The economic arguments put by the bankers in favour of selling the final 50.1 per cent of Telstra are indeed formidable.
Telstra would become a better performing, more profitable company; it would be able to take its place as a truly international telecommunications player; it would no longer be the servant of two masters, government debt would be eliminated; and the Government would be free of the private-public utility camel once and for all.
But Telstra nirvana, if there is any such thing, is still a long way away. Mr Howard and Communications Minister Dick Alston appear to have already convinced the National Party that Telstra should be sold, and it has somehow convinced itself that the bush is now amenable to the sale.
However, four individuals still stand in the way of the Government’s desire to get its hands on the $30 billion cash (which is no small incentive itself) that T-3 could bring.
Raw numbers have not changed for the new Senate which will be sworn in when Parliament resumes early in August, though there is a slight change in composition with a new Green Senator Kerry Nettle replacing Australian Democrats Senator Vicki Bourne in New South Wales.
The new Senate comprises 35 Coalition Senators, 28 from the ALP, eight from the Democrats, two from the Greens, a solitary One Nation Senator, and two independents (Brian Harradine and Labor defector Shayne Murphy). The Government needs 39 votes to pass a Telstra sale bill which means it needs to convince an extra four Senators from either the Greens, One Nation or the independents to get the sale through.
Though none have said so to date, it could be expected that Senators Harris, Harradine and Murphy might be convinced of the merits of selling the rest of Telstra if the Howard Government sent enough cash to Tasmania and Queensland as an incentive. Count Harris, Harradine and Murphy as possible yes votes. Both Bob Brown and Meg Lees have flirted with the idea in recent weeks and then backed off under pressure from their respective parties.
Brown said he might be persuaded if all tree-clearing was banned in Australia.
It was a mad ambit claim which, had it been agreed to, would simply have turned the National Party back against the sale anyway. Forget about Brown. Perhaps temporarily, Meg Lees has recanted from her musings about selling Telstra, agreeing to a pact with her parliamentary colleagues that the Democrats will not vote to sell until at least the next election.
Just how locked in Lees is to this pact though depends on the state of her relationship with Senator Stott Despoja.
If the Democrats fall apart before the next election, which is not inconceivable, Senators Lees and Western Australia’s Andrew Murray could swing across. Lees and Murray are long shots.
So the agreement for the sale to go ahead still looks dicey at best, and realistically likely to founder.
The Government could go to a double dissolution election on Telstra and other bills it wants to pass, but this is risky as well because, while voters may have softened a little on Telstra, every poll shows they still prefer it to remain in government hands.
The other factor not even considered yet is the difficulties of selling $30 billion worth of stock in an out-of-favour sector (telcos) in the middle of a bear market to a group of investors whose fingers have already been burnt badly by shares.
If the T-3 deal were to go ahead it would be far and away the biggest equity raising not only in Australia but in the world. There will be a lot of shares to sell in T-3 to hundreds of thousands of “mum and dad” investors who have yet to see a profit from their T-2 investment, and who are also watching their superannuation funds shrinking by the month.
Of course it is possible the market will bounce back in time for the T-3 float, but in the meantime, the political and economic factors are conspiring against the sale going ahead.
Perhaps the Government will have to start looking at some of the radical alternatives to the full sale including splitting Telstra into two with the Government keeping the infrastructure arm (wires, satellite equipment etc) but selling off the commercial retail arm.
This would force the Government to remain accountable to all Australians desiring access to a reasonable phone service while allowing telecommunications competition to flourish.
Alternatively, the Government might like to look at the proposal put forward by newspaper commentator Terry McCrann, who has sent shivers down the spine of every merchant banker in the country with his suggestion that every Australian (or every voter) simply be “gifted” a parcel of Telstra shares. Even Labor would have to agree to that.
After all, at least in theory, it is the people who still own Telstra, not the Government.