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Go Telstra, defender of free markets

By Mark Christensen - posted Friday, 24 April 2009

Instead of lamenting the combativeness of Telstra Chairman Donald McGauchie and outgoing CEO Sol Trujillo we should be congratulating them for trying to elevate the policy debate in this country. Telstra is the only corporate willing to rail against our cultural sensibility of “don’t rock the boat, government knows best” by aggressively confronting Australia’s growing obsession with regulation.

Most corporations conveniently conclude it is pointless and expensive to contest the efficacy of regulation, especially when the bulk of the costs can be easily passed onto consumers. Those questioning its divine status risk being politically marginalised with a fervour akin to the Spanish Inquisition’s. Hugh Morgan hit on the dark psychology when he was president of the Business Council of Australia:

“When we suggest, in the most deferential language, that we do not like what is being done [in terms of increased regulation], and that we will campaign against it, the amused response is: Make my day!”


The strategy employed by Telstra in recent years has been brave and correct. It complained, argued, pleaded and got nowhere. When things got uncomfortable because it upped the ante, it was then branded bellicose and self-serving.

So, does Canberra believe it’s possible to regulate our way to an efficient economy? If yes, then surely it makes sense to control everything and do away with the market? If no, when are we to move on?

This Socratic method, provided your audience is openly engaged, may well win an admission that, yes, regulation is not the answer. If this is given, however, it’s immediately followed by a shrill proviso believed to somehow cancel out the truth of what was just agreed. Regulation, you see, is mandatory because business cannot be trusted.

OK, assuming for a moment this is correct, how does this alter the earlier acknowledgement that regulation is not the solution and intervention, regardless of its justification, contradicts free market principles?

Sensing the truth to be a trap of some kind, the debate is rudely shut down and logic suspended, while the bureaucrats resume shelter amidst the cynicism that originally brought them and their policies into existence. (Or, if you’re Kevin Rudd, you draft a rambling essay aimed at drumming up sufficient fear to ensure the laissez faire philosophy that delivered Australia its prosperity is now perceived as naïve and uncaring.)

At this point, as Morgan also observed, further arguments designed to shake the resolve of governments and their advisors to rethink their re-regulatory ambitions always fail to achieve traction. Emotion condemns us to an ill-reasoned loop: regulation exists because business cannot be trusted ergo any suggestion by Telstra or others that regulation must be wound back is evidence to support its retention – indeed, it’s likely a sign it should be ramped up!


Telstra’s recent regulatory rampage is a consequence of it choosing to resist following the other bunnies down this rabbit-hole. It would be a shame if McGauchie and the new CEO go soft like the rest, effectively conceding the continued poor outcomes for telecommunications are about Telstra rather Canberra’s unwillingness to be honest about the fundamental short-comings of its regulation.

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First published in the Australia Financial Review on April 22, 2009.

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About the Author

Mark is a social and political commentator, with a background in economics. He also has an abiding interest in philosophy and theology, and is trying to write a book on the nature of reality. He blogs here.

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