The senior party in Australia's coalition government will consider a demand by its junior partner for a A$2 billion ($1.5 billion) rural telecommunications fund in return for its vote on the sale of Telstra Corp Ltd.
The Queensland state arm of the National party, the junior partner in the federal coalition government, set conditions at the weekend to ensure that phone services and prices in rural areas are on par with cities after Telstra is privatised.
The votes of Queensland's two National Party senators are crucial for the government to pass legislation approving the A$30 billion-plus sale of its 51.8 percent Telstra stake as it has a majority of just one seat in the upper house Senate.
Communications Minister Helen Coonan, a member of the government's majority Liberal party, said on August one that the Nationals demand for a "permanent and significant trust fund" from the expected Telstra sale in late 2006 would be discussed.
"Instead of shooting in the air, I have said (a fund) needs to be focused and based on identified need, not to be picking technology and not to be spending taxpayers money on work that would be undertaken by carriers," Coonan told Australian radio.
"The matter will be discussed by government, but until now where there have been areas of unmet need in telecommunications the government has met it from recurrent funding."
Queensland Nationals senator Barnaby Joyce has said in the past the fund should be A$5 billion, but federal National Party leader and deputy prime minister Mark Vaile has called for a A$2 billion fund.
Prime Minister John Howard and Treasurer Peter Costello have said the Telstra sale proceeds would go into a so-called Future Fund, set up with an initial A$16 billion, to cover future public service pension liabilities.