Treasurer wades into Telstra's offshore jobs row

The federal treasurer Peter Costello has fired a shot across Telstra's bows over the redeployment of 450 IBM code-cutting positions at Telstra to India, urging Telstra (and presumably IBM) to examine all options very carefully before axing the positions.

"If Telstra is not performing profitably it won’t be able to generate jobs for Australians. I think that where ever possible those jobs ought to be located in Australia; I think Australia has a highly skilled workforce, I think we have great language skills in this country and I think that where ever possible, Australian employers should give Australians a go in their operations.

"That is why I’d say that Telstra ought to look at that situation very carefully. It has to have a very good reason to show that it can’t find adequate Australian employment opportunities and Australians to fill them," Costello said.

The treasurer's entry into the debate signals that the government is becoming increasingly troubled during an election year over Telstra's preferred cost-saving option of sending work offshore.

A source close to the government described the treasurer's intervention as "quietly reading the riot act", adding that some of Telstra's "more intriguing investments in human capital and non-performing infrastructure" had occurred in marginal seats.

Reacting to a question on Telstra's privatisation, Costello said that government corporations were just as capable of moving jobs offshore as non-government but would need to justify their actions.

"Telstra is a government owned corporation. Let’s be clear about this, this is a government owned corporation – majority-owned corporation; this has got nothing to do with privatisation.

"In fact, this demonstrates that government-owned corporations can move jobs offshore just as much as anybody else. Australia has people who are still looking for work and Telstra would have to have a pretty good reason why it couldn’t fulfil its employment needs from this country," Costello said.

In the face of an invigorated opposition, a looming election and a surplus-swollen war chest at the ready, Telstra will now be forced to sell those reasons to the government a whole lot harder than first expected. And its profitability will probably come second to electoral survival and populism.