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Telstra cuts jobs amid bleak outlook

Date

Clancy Yeates, Tim Colebatch

Telstra has unveiled a sweeping overhaul of divisions that contain half its staff.

Telstra has unveiled a sweeping overhaul of divisions that contain half its staff. Photo: James Davies

Telstra is poised to make deep cuts to its 30,000-strong Australian workforce, as consumer confidence has slumped and mining investment has gone into decline.

The telecommunications giant unveiled a sweeping overhaul of the divisions that contain half its staff on Wednesday, in a move that could lead to substantial job losses.

The announcement came as federal Treasury and the new Parliamentary Budget Office blamed both sides for Australia's slide into a structural budget deficit - a deficit Treasury warns is now likely to remain for another six years.

The combination of news was a blow to government hopes that activity and jobs growth in the non-mining sectors would help to fill the gap left by a fall in spending by resources giants.

The government's official commodity forecaster confirmed the resources investment boom had peaked this year. Cost blowouts had caused $150 billion of projects to be scrapped or delayed in the past year, the Bureau of Resources and Energy Economics said, as it predicted mining investment would decline from its current level of $268 billion.

The Westpac Melbourne Institute index of consumer sentiment dropped by 7 per cent this month, from 104.9 to 97.6, a level where pessimists outnumber optimists.

The fall, which came despite this month's cut in interest rates, was blamed on a budget that removed key benefits from households and forecast deficits until 2015-16.

Myer's chief executive, Bernie Brookes, said confidence was patchy and there were no signs of a significant turnaround in consumer sentiment.

''We'll continue to invest, getting ready for the consumer to come back but the budget as evidenced by the consumer sentiment is not particularly good,'' he said.

Although the overall reading of confidence fell sharply, a sub-index on whether now is a good time to buy a house jumped by more than 10 per cent in the month and is up by a fifth in the past year.

In its debut research paper, the budget office estimates Australia will still be in significant budget deficit in 2016-17, even though the budget papers forecast a $6.6 billion surplus by then.

If so, the paper says, it would be only because mineral export prices remain unusually high, swelling tax revenues. It predicts the structural balance - which assumes long-run average prices and levels of activity - will then be in deficit by between $5 billion and $28 billion.

In a separate paper, Treasury gives similar estimates, saying the budget will remain in structural deficit until 2018-19, three years after it is officially forecast to be in surplus.

With Glenda Kwek, Peter Cai

9 comments

  • I'm curious where theage got the numbers of job losses from? I'm a Telstra employee, and our communication clearly states that there are NO redundancies at the moment, and that any RE-STRUCTURING is from a top management level. So... Where'd these facts come from?

    Commenter
    nousernameselected
    Date and time
    May 23, 2013, 7:54AM
    • Mate, I work there too, and if you can't read the writing on the wall then you should probably be one of the first to go.

      The place is far too big to be sustainable going forward. It needs to be smaller, more agile and geared up for the growth businesses into the future. They can't keep the same head count year after year and expect to remain competitive and profitable. It just becomes a life support system for those with deprecated skills.

      Commenter
      Also work at Telstra
      Location
      MELBOURNE
      Date and time
      May 23, 2013, 8:09AM
    • the top-management re-structuring is what is happening now - you need to go back and re-read the email you got, then click on the link and go the FAQ's

      Commenter
      david
      Date and time
      May 23, 2013, 8:30AM
    • I find this hard to believe as Julia & Wayne keep telling us how rosy our economy is with them at the helm. The people at Telstra & the thousands of others who have lost their jobs in this State in the past few years can always get a job from the 900,000 jobs Wayne & Julia claim to have "created".

      With bad economic management and huge deficits comes pain for the working man.

      Commenter
      emma
      Date and time
      May 23, 2013, 8:31AM
  • Citing "Consumer Confidence" ???? How many years have people been telling Telstra how bad they can be ?? They are only just now starting to realise it ????

    You idiots !!

    Commenter
    BigG66
    Date and time
    May 23, 2013, 8:07AM
    • Heard of the GFC? It's a wonder their not cutting more, but they will once hockey cripples the NBN and cuts $70B out of the economy before increasing taxes. Things are rosy now by comparison.

      Commenter
      FrankM
      Date and time
      May 23, 2013, 8:27AM
      • Don't worry. RBA says the housing market will save us. Safe as houses.

        Commenter
        Escen
        Date and time
        May 23, 2013, 8:45AM
        • So is it to be called Telstra LittlePond?

          Commenter
          Joe
          Date and time
          May 23, 2013, 9:31AM
          • One wonders at the level of "confidence" the Telstra shareholders have as the share price has risen steadily in recent times. These cuts will probably increase the price even more.

            I also wonder if these same shareholders that were apparently going to sue the government when the Telstra share price was low are now going to make a donation to the self-same government now the price is way higher? Didn't think so......

            Commenter
            DC
            Location
            Melbourne
            Date and time
            May 23, 2013, 9:45AM
            Comments are now closed
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