Labor is basing its decision on a report by Institutional Analysis titled Separating Telstra: Protecting the Interests of Minority Shareholders, which was funded by the Chifley Research Centre.
"After considering the detailed advice in this report, Labor believes that whatever the telecommunications policy merits of full structural separation of Telstra may be, the existence of the minority private shareholding in Telstra and the cost and complexity therefore associated with such separation, make that an inappropriate strategy for reforming Telstra," said Shadow Minister for Communications Lindsay Tanner in a statement today.
Senator Richard Alston, the Minister for Communications, Information Technology and the Arts, referred to the change of heart as a "humiliating backdown".
"Mr Tanner's rejection of structural separation is a belated recognition that his proposal was alway a costly and deeply flawed theoretical exercise to the detriment of Telstra, its shareholders, the wider industry and consumers," said Alston in a statement.
A structural separation of Telstra had been the most controversial proposal from Labor's discussion paper, 'Reforming Telstra', released in May 2002. Since then, Labor has been trying to engender a public debate about the structural separation of Telstra, and appeared to succeed late last year when the government announced an inquiry in the proposal, conducted by the House of Representatives Standing Committee on Communications, Information Technology and the Arts.
The Inquiry had received 57 submissions by the due deadline of January 31, and the first hearings will begin on Friday February 7.
Apart from remaining steadfastly opposed to any further privatisation of Telstra, Labor is yet to finalise its position on the telecommunications company. It will focus its "future reform approach on improvements to the regulatory accounting framework and/or the 'virtual separation' option". Labor claims to be concerned about Telstra's role in Foxtel, and is waiting for a report from the Australian Competition and Consumer Commission to the Government before forming a solid position on the subject.
