Government considers buying back Telstra.

Half-privatised Telstra is worst option: Costello

GOLD COAST: Treasurer Peter Costello has called for an end to fence-sitting on the sale of Telstra and wants the telecommunications giant to be either fully owned by government or fully privatised.

Mr Costello described as "sensible" comments from former National Party leader Tim Fischer that a half-privatised Telstra was the worst of both worlds.

"If you think the Government needs to own the telephone telecommunications companies, we should nationalise the lot," Mr Costello said.

"If you think the private sector can provide these services, as it does in all the other countries of the western world, then we should be in a position to offer private equity.

"It's got to go one way or the other and I think the point Mr Fischer was saying was that this has got to be resolved and it does."

Mr Fischer, now a consultant for Deloitte Touche Tohmatsu, argued yesterday that a half-privatised Telstra would never work in the long term.

"I think half-half half-owned by individual shareholders and half by the Government directly is ultimately going to be half-hearted about the future of telecommunications in this country," he told ABC radio.

"The Federal Government at this stage has its feet on both sides of the fence, half-owner of Telstra but also the umpire and regulator and that's ultimately not a tidy circumstance."

The Government maintains there will be no sale until services in the bush improve, despite Budget estimates showing plans for the remaining 50.1 per cent of the carrier to be sold during the next three years.

Mr Costello said it was Government policy to ensure Telstra improved services in rural and regional Australia before offering additional shares to the public.

"We won't be proceeding until the job is done, and the sooner the better," he said.

"I'm not sitting back here saying let's improve services in the bush so we can offer further equity. I'm saying let's improve services in the bush because people in the bush deserve better services."

Telstra will announce new products and prices for regional areas at the National Farmers Federation conference in Western Australia tomorrow in a bid to win farmers and country residents over to plans for full privatisation. A Telstra spokesman said the products included a satellite phone for remote areas.