Federal Cabinet will review a National Party proposal to establish a $3 billion fund to improve bush telecommunication services.
The fund which includes $1 billion for a rural broadband network following the full sale of Telstra is designed to safeguard rural telecommunications services.
The proposal will be put forward today by Communications Minister Helen Coonan and Finance Minister Nick Minchin.
Queensland National Party Senator Barnaby Joyce said the proposal also includes the separation of Telstra's internal operations in a bid to boost competition in the market.
He said the actual $3 billion would be worth much more, as some of the proposed works would be matched by funding from the private sector.
"We'll be seeing billions of dollars beyond what is actually been put on the table here being invested in regional infrastructure; of course that is a good thing," he said. Cabinet is expected to debate Telstra's $30 billion sale today.
But it is unclear if the sale will be able to proceed, with Senator Joyce standing by his threat to cross the floor unless services in the bush improve. Telstra chief executive Sol Trujillo last week asked the government to contribute to a $5 billion plan to roll out hi-tech services in the bush.
However, Prime Minister John Howard is refusing to say if the government still plans to introduce legislation to parliament this month enabling the sale.