Actu's Internet Deal Attacked
The Age
Thursday April 13, 2000
The ACTU has been accused of undervaluing its e-commerce asset of two million workers in its landmark computer deal with private industry.
The secretary of the New South Wales Labor Council, Michael Costa, yesterday urged the ACTU to renegotiate its deal with the Virtual Communities group, saying the company needed to return further equity to the labor movement.
``I've argued from day one that I thought there was an undervaluing of our asset. As far as I'm concerned, the deal should be renegotiated and additional equity given," he said.
Under the deal with Virtual Communities, a cut-price Internet access provider, more than 23,000 unionists have bought computer packages worth between $9.50 and $13 a week over three-and-a-half years. The company says there are also more than 60,000 people ``in the pipeline" waiting to access the deal, which undercuts most other industry packages by half.
The ACTU and at least six of Australia's biggest unions have invested in the project in a deal that returns structured dividends.
The package is also offered to parishioners of the Catholic Church and members of several AFL football clubs, and has attracted investment by some of Australia's richest businessmen.
Richard Pratt, Kerry Packer, Lindsay Fox, and the Smorgon, Lieberman and Gandel families are reported to have helped raise funds for the venture. Experts have estimated that, through their involvement, the value of Virtual Communities has leapt to more than $360million, before the company has been listed on the stock exchange.
It is the steep increase in Virtual Communities' value that irks Mr Costa. He says the ACTU should have known the value of its constituency and should have placed a higher price on its partnership.
``I have no problem with the concept of the project but I think the ACTU has undervalued the asset. It's the value of the e-commerce rights. I think the bill is lean on the part of the trade union movement and there ought to be a process whereby we can renegotiate the equity," he said.
The deal, between the ACTU, Virtual Communities, IBM and Primus, is also funded by the giant AXA group and several trade union-linked superannuation funds. The package includes 16 hours a month free Internet access, e-mail and some educational software.
It is seen by all partners as a means by which working people, who cannot afford the $2000-plus outlay for a computer system, can ensure their children don't miss out in the race for information.
A spokeswoman for Virtual Communities yesterday scoffed at Mr Costa's criticism, saying he had been opposed to the deal at the outset ``and now he sees how well it is going, he wants more".
The spokeswoman said the ACTU and several unions had invested in the deal and were receiving rewards based on their investment: ``You put in a certain amount and you are rewarded according to the proportion of equity you put in," she said.
She said the labor movement was happy with the deal.
© 2000 The Age