A boil on the country's backside

We shouldn't be surprised to see the $5 million salary package for Telecom chief executive Paul Reynolds. Nor with the $11 million paid to the other six top executives.

Telecom has been a boil on the country's backside for almost 20 years since it was privatised by Labour and National. In the late 1980s Labour split the old Post Office into what became Telecom, Postbank and New Zealand Post with the first two then sold off. US interests bought Telecom and could not believe their luck, or our stupidity. Not only did they get it for a fire-sale price but because it was a public monopoly it became a private monopoly and returned eye-popping profits for their American buyers at the expense of New Zealanders.

In a few words the government sold it for $4.25 billion and when its first shareholders, Bell Atlantic and Ameritech, sold it after a decade they received $12 billion while taking another $12 billion in profit in the intervening years.

The outcome is that today New Zealand is well behind other OECD countries in broadband investment and development and we have among the highest cellphone charges in the world. We were screwed.

In short this company has been run solely in the interest of private shareholders at the expense of Telecom workers and New Zealand taxpayers.

Telecom doesn't believe in competition and has worked overtime to protect its private sector monopoly. One of the ideologues supporting the sale of Kiwi assets, Rod Deane, was on the Telecom board till recently and he talks proudly of his involvement the company. One of the most revealing comments he makes is that the company employs over 90 lawyers. Yes that's right - over 90 - and it doesn't take much imagination to understand why. Telecom's six rugby teams of lawyers are there to protect its near monopoly and prevent government regulation which would see lower prices for consumers and better investment in services. Instead we have has successive governments kept at bay, worried "interfering" may damage our stock exchange as its largest listed company is brought to heel.

Some have criticised the $5 million to Reynolds because he received his full performance bonus despite a 43.9% drop in the company's profit for the year to 30 June. However, we should be pleased at this small piece of good news in the gloom because the drop in profit means less has come from our back pockets to pay Telecom's shareholders who wouldn't know one end of a fibre-optic cable from another.

Union leader Andrew Little describes Reynolds's salary as an example of "shameless greed". There could hardly be any dispute about that. I'm not sure exactly how many accounts Telecom has but a reasonable estimate says every account holder pays close to $20 each every year just to pay the salaries of the seven top Telecom managers. Then we pay close to another $1000 per year each into Telecom shareholder pockets. Yes indeed, it's a very big boil.

Meanwhile Telecom is embroiled in a dispute with its workers who maintain the network and grow the services for New Zealanders. Telecom wants to force these workers to become contractors. Those of us with experience of this type of contracting know it means lower pay and poorer conditions of employment. This is what Telecom wants to force on its employees. Any why? Simply because the shareholders want an even bigger chunk of unearned income.

There's no point complaining. This company only understands action. Give your support to the workers and let Reynolds and his mates know we think it's time to lance the boil.