INTRODUCTION

The purpose of this Information Paper is to outline the treatment of Telstra Corporation Limited and controlled entities (Telstra) in ABS statistics following the completion of the Telstra 3 share offer (T3) late last year.

2 A key dimension to many of the economic statistics produced by the ABS is classification of the data into public sector and the private sector. The privatisation of Telstra, and the its resulting move from the public sector to the private sector from the March quarter 2007, will impact on a number of key ABS statistical outputs including :

1. Australian National Accounts: National Income, Expenditure and Product (cat no 5206.0) - while estimates of economy-wide activity such as gross domestic product are not affected by the sector for which businesses are classified, there are a large range of data series for which a public/private sector dimension is provided that are affected by sector classification;
2. Government Finance Statistics, Australia (cat. no. 5519.0.55.001) - the data in this publication relate only to public sector units;.
3. Business Indicators, Australia (cat. no 5676.0) - the data in this publication relate only to private sector units;
4. New Capital Expenditure and Expected Expenditure, Australia (cat. no 5625.0) - the data in this publication relate only to private sector units;
5. Wage and Salary Earners, Public Sector, Australia (cat. no. 6248.0.55.001) - the data in this publication relate only to public sector units;
6. Australian National Accounts: Financial Accounts (cat. no. 5232.0) - presents quarterly balance sheet data for financial assets and liabilities including a public/private sector dimension.

3 This Information Paper discusses the ABS' proposed treatment of Telstra in ABS statistical outputs following the Telstra 3 share offer. Issues discussed in this paper include the principles of public/private sector classification, the conceptual treatment of the various entities involved in the privatisation, and the date of effect of the privatisation from both a conceptual viewpoint and in terms of presentation in ABS statistics.

Background

4 In October 1997, the Australian Government sold (T1) one third of its equity in Telstra on an instalment payment basis. Investors bought 4.29 billion shares (33% of Telstra) and were issued with a partly paid security known as an 'instalment receipt' evidencing beneficial ownership of an underlying share. Instalment receipts were listed on the Australian Stock Exchange on 17 November 1997.

5 The first instalment was payable at the time of the share offer with the price fixed at $1.95 per share for retail investors and $2.00 per share for institutional investors. The final instalment amount of $1.35 for retail investors and $1.40 for institutional investors was payable on 17 November 1998. The Telstra shares were transferred to the investor following payment of the final instalment.

6 On 21 June 1999, The Telstra (Further Dilution of Public Ownership) Act 1999 was passed in the Senate. This legislation facilitated the sale of up to a further 16.6% of Telstra (T2).

7 Investors bought 2.13 billion shares on an instalment payment basis, under a structure similar to that used in the T1 share offer in 1997. A first instalment was payable on application in November 1999, with the price fixed at $4.50 per share for Australian retail investors and $4.75 for institutional and other investors. The final instalment was payable by 2 November 2000. The final instalment was set at $3.05 per share and was payable by institutional investors and retail investors, although Australian retail investors were entitled to a loyalty discount of $0.15 per share in certain circumstances.