Tough man for a tough job

By GREG ANSLEY

In probably September or October, according to the best guess of Treasurer Peter Costello, Prime Minister John Howard will take his Government to the polls in the hope of winning a fourth straight term and the chance to settle unfinished business.

This week, a 54-year-old merino stud breeder from Victoria was placed at the heart of this aim.

Donald McGauchie was appointed chairman of Telstra, the telecommunications titan in which the Government still holds a majority share, but which it wants with all its heart to sell.

Telstra is virtually the last remaining piece of the Commonwealth silver that the Labor administrations of Bob Hawke and Paul Keating otherwise sold off at the height of their reformist zeal.

It is also the prime supplier of telecommunications services to vast areas of rural and outback Australia, which regards even the partially privatised giant with deep suspicion and very little trust.

For these reasons, Telstra is, in a way, common cause for important sections of Australia that normally huddle in mutual antagonism at opposite ends of a long and divisive political pole.

Unions oppose Howard's determination to flog off the rest of Telstra.

So do the farmers who vote for his junior coalition partner, the Nationals.

And, importantly, so do the four independents who for the moment hold the balance of power in the Senate.

McGauchie's appointment was widely seen as a means of easing the Government's way around the impasse, by placing a tough, war-scarred battler from the bush at the helm, hopefully helping to win over rural Australia, ease pressure on the Nationals and pave the way for another concerted tilt at the Senate.

The new chairman, a long-time advocate of full privatisation, has the credentials for such a stoush.

He is a gritty campaigner who as president of the National Farmers Federation joined the Government in its successful waterfront war against the Maritime Union in 1998 and who, for four years, campaigned against the High Court's Wik decision on native title.

But he has a lot of convincing to do. The Nationals, still struggling to reverse a long-term slide in support, will not support full privatisation of Telstra unless it can provide promised levels of improved service to the bush.

The Farmers Federation is equally firm on the point.

McGauchie, a political creature, is well aware of the sensitivity of his appointment.

He declined all requests for interviews after the news broke, instead issuing a brief statement in which he focused on Telstra's corporate future: "I look forward to working with the board and the chief executive officer, Ziggy Switkowski, to implement the strategic direction outlined in the board's recent capital management statement ... Our great challenge now is to deliver shareholder value."

This may be the greater challenge for McGauchie, a man of considerable boardroom experience.

A member of the Telstra board for six years, he is also a director of the Reserve Bank, National Foods, James Hardie Industries and Nufarm, and deputy director of Ridley Corp.

An immediate need is to smooth the turbulence of the earlier split over strategic direction - predecessor Bob Mansfield's lust for muscle-adding acquisitions and the diversion of new media interests through the Telstra network, versus the insistence of the opposing faction (of which McGauchie was a member) on lifting dividends and returns to shareholders.

Mansfield lost and resigned after the board rejected his plans to take over the Fairfax media empire.

Instead, Telstra last month returned to a focus on core Australian operations and cash for shareholders.

McGauchie will now need to use a steady hand on the tiller.

He also faces the more significant, long-term requirement to bring Telstra into the forefront of 21st century telecommunications. Even with diversion into wireless broadband, Telstra faces a A$30 billion bill to replace its copper network with fibre, posing enormous corporate and political strains on the organisation.

At the same time, it must not only compete with competitors such as Optus and feisty rivals on the mobile market, but also plan for the growth in competition from far cheaper internet phone services.

It is a complicated picture that will tax McGauchie and his board.

And if McGauchie is to help Howard sell the Government's controlling stake, he will need to address the problems in the bush.

The Government last year showed its determination to lift Telstra's feet out of the rural bog by introducing a A$181 million plan to address the 39 essential requirements identified by a national inquiry into rural telecommunications.

Some have been met, such as a reduction from six months to one in the time taken to provide new phone services where infrastructure did not exist. That is now roughly the same as in towns and cities.

The Government is also pushing broadband internet services to the bush under a A$108 million subsidy scheme to help meet farmers' demands for equal access to telecommunications.

But much remains to be done, and McGauchie's appointment alone will not sway hearts or minds.