Labor says no Telstra sale will save millions

The federal government could save hundreds of millions of dollars if it dropped plans to sell Telstra, Labor senator Nick Sherry told parliament on Monday.

Speaking for a Senate committee, Sherry said the Department of Finance and Administration (DoFA) estimated that the government would save $255.5 million between 2004 and 2008 if it kept hold of its 51.8 percent shareholding in Telstra.

He said there would also be an ongoing positive financial impact of $140.6 million for the government in the 2007/08 financial year.

Labor was given the figures after asking the department last October to estimate the savings the government would make if it remained Telstra's majority owner.

However, department officials at Tuesday's committee hearing were unable to provide further details about the figures and did not provide estimates on how much the government is likely to earn from Telstra's future dividend payments.

"Would it be reasonable to expect the cost savings would increase over time given that the dividends tend to grow in real terms over time?" Senator Sherry asked.

But the department's branch manager Mark Heazlett said it was difficult to estimate the impact of Telstra's future dividends.

"The precise effect will vary depending on the assumptions," he said.

"There has been historically some real growth in Telstra dividends, whether you can project that forward is a difficult question to answer."

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