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Nick Minchin

Leader of the Opposition in the Senate
Shadow Minister for Broadband, Communications and the Digital Economy
Liberal Senator for South Australia
Nick Minchin

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Senator the Hon Nick Minchin

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Kent Town SA 5071

36 Grenfell Street
Kent Town SA 5067

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RUDD SPRUIKS FOR INVESTMENT ABROAD, BUT INCREASES SOVEREIGN RISK AT HOMEEmail this pageBack

Tuesday, September 22, 2009 Printer Friendly Version

While Kevin Rudd is out in New York spruiking the benefits of investing in Australia to leading business figures, back home he has increased sovereign risk with his moves to force the break up of Telstra, one of this countries biggest publicly listed companies.

Shadow Minister for Broadband, Communications and the Digital Economy Senator Nick Minchin said the Rudd Government, in forcing structural separation on Telstra, had reversed long-standing policy to use its power to destroy shareholder value in a top 10 Australian company.

"While Mr Rudd is out in New York touting for investment in Australia, back home he is making all sorts of legislative threats against Telstra which will erode shareholder value," Senator Minchin said.

"Telstra's 1.4 million shareholders invested in the company in good faith with no plans on the table from either the Coalition or Labor to force the structural separation of the company and the divestiture of its key assets."

Following the announcement of the Government’s Telstra plans, Southern Cross Equities head of institutional dealing Charlie Aitken outlined the new risks in a note to his major institutional clients.

"Our elected representatives in Canberra have shown their true colours yesterday in relation to Telstra (TLS)... it has reminded me we are dealing with a very different regime in Canberra and it does have ramifications for stock selection and portfolio construction because regulatory and legislative risk is clearly increasing across a variety of sectors," he wrote.

Mr Aitken also urged caution in relation to investment in our major banks, financial services industry as well as steel and mining stocks.

"I really think the TLS development yesterday is negative for the broader market as it confirms the increased role of government in business. It also suggests the Federal Government have no qualms about destroying shareholder value if it comes in the way of their views of what is best for the greater good."

Senator Minchin said: "I think any would-be overseas investor would be taking a very cautious approach as a result of the Rudd Government's preparedness to force major changes on a company the scale of Telstra.

"Investors would be quite rightly asking, if they are prepared to do this to Telstra, who will be next?" he said.

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