CANBERRA (AAP)

Federal Labor has unveiled plans to raid the Future Fund to build a $4.7 billion national high-speed broadband network.

Under the plan, Labor will sell up to $2.7 billion worth of Telstra shares held in the Future Fund to help pay for the project.

The project will connect 98 per cent of Australians to broadband services with a speed more than 40 times faster than most current speeds.

Labor leader Kevin Rudd said it was a historic decision to build a world-class national broadband network.

"We believe this is a critical step when it comes to Australia's long-term economic future," Mr Rudd told reporters.

Labor proposes to invest up to $4.7 billion - including the existing $2 billion communications fund - in a partnership with the private sector to build the network over the next five years.

Mr Rudd said Australia was lagging behind the rest of the developed world on broadband take-up rates and available bandwidth.

"Nation-building in the 19th century was about building a new national railway network for Australia," Mr Rudd said.

"Nation-building for the 21st century lies in building a new national broadband network. It's part of our pathway to the future."

Home-based small businesses could not operate properly without a high-speed network and Australia needed the investment to remain globally competitive, he said.

"There has been inaction - inaction big-time - when it comes to the development of an effective national broadband network to meet the future demands of the Australian economy," he said.

"This is a gaping hole in the government's economic performance to date.

"It is retarding the development of Australian business, in particular small business into the future, and we look forward to taking this proposal forward to the Australian community."

Federal caucus signed off on the plan after a robust debate on Wednesday morning and it will now go to next month's Labor national conference for approval.

Opposition finance spokesman Lindsay Tanner defended the plan to dip into the Future Fund, saying Labor had to accept that it had lost the battle to keep Telstra in public hands.

He said there were no guarantees that the government would not sell off some of its 17 per cent Telstra shareholding - currently parked in the fund - before this year's election.

"We have fought a long hard battle, myself more than most, to keep Telstra in public ownership," Mr Tanner said.

"We accept we've lost that battle.

"We think, that rather than a passive investment which will ultimately be transferred into investments in other shares ... (in which) Telstra shares will be traded for Coles-Myer shares or BHP shares, we intend to invest some of those proceeds in building the future broadband network that will set Australia up for the 21st century."

He said the broadband network would be a revenue earner for the government as people would have to pay to connect to it.

There was a clause in the Future Fund legislation which allowed the government to sell Telstra shares, he said.

Prime Minister John Howard accused Labor of being reckless and short-sighted in proposing to raid the Future Fund to pay for a high-speed broadband network.

"This appears to be an economically irresponsible way of funding a program," Mr Howard told parliament.

"It also appears to be short-sighted with no regard for the future and no regard to the fact that of all the challenges this country faces none is greater than the ageing of our population.

"Raiding the Future Fund is recklessly indifferent to the welfare of future generations of Australians."

Treasurer Peter Costello described the opposition's plan as "shameful economic vandalism".

Mr Costello said the IMF had lauded the establishment of the Future Fund as leaving Australia well placed to meet the challenges of an ageing population.

"All of this is under threat in what I regard as the most irresponsible announcement of the past 11 years made today by Labor," he told parliament.

The treasurer said legislation would have to be changed to retrieve the money, making the fund vulnerable to further raids.

"Once that Future Fund is open it is open for all purposes and the only losers will be future generations of Australians."

Mr Costello said Mr Rudd's announcement was a humiliation for Labor treasury spokesman Wayne Swan, who in 2005 said the fund should be a "locked box".

The Future Fund was set up to pay for the superannuation entitlements of public servants.

Communications Minister Helen Coonan says Labor's plan to raid the Future Fund to help pay for a high-speed broadband network is a recycled policy of former leader Kim Beazley.

"Labor has today announced yet another warmed-over, reheated Beazley policy, one which stole its title from the Victorian government," Senator Coonan told parliament.

"And it's come from a dumped Telstra commitment."

Finance Minister Nick Minchin said Labor had wasted a decade in "ideological opposition" to the Telstra sale.

"Following the success of T3 in November last year, Labor made it clear ... they would oppose any further selldown of Telstra shares transferred to the Future Fund," Senator Minchin said.

"All that's gone by the board. Today we saw one of the great policy rollbacks of all time from the Labor Party.

"Now, within just six months of an election, they've announced not only that they accept the full privatisation of Telstra, but apparently they're going to hasten the sale of the remaining shares by the Future Fund in order to raid the fund to get their hands on the money."
21/03/2007 01:13:09 PM