The alleged outbreak of peace between Telstra and the federal government yesterday should smell almost as fishy for investors as the money being spent to convince them T3 is worth buying.

Aside from the advertising budget, the core confidence sapper was in the lead for Tony Boyd’s AFR story this morning:

The federal government will offer retail stockbrokers more than $376 million in some of the most generous selling commissions seen in the Australian market this year to ensure strong support for the $8 billion Telstra share offer.

The retail broking commission of 1.25% of the total amount for each T3 share is 2-and-a-half times the amount paid to brokers in the T2 share offer in 1999.

But the government has defended the higher than normal brokerage fees, saying they are necessary to ensure “brokers work as hard as possible on the sale”.

Oh dear. It’s not commission on the scale of the Westpoint scam or the average rural managed investment scheme, but it still says all is not rosy with T3. It suggests brokers need to be offered a little extra commission bribe to talk their clients into taking more Telstra shares instead of any number of other opportunities available on the ASX. Remember that when a share salesman calls.

The sickly-sweet words, spoken by Minchin and Telstra’s chief head-kicker, Phil Burgess, were themselves a worry. The Smage quotes Burgess saying: “It gives me confidence that a man of Senator Minchin’s stature, balance and experience is leading the charge on privatisation.”

Meanwhile Minchin reckons Sol Trujillo is “turning what is an old Government department, the PMG, into a fully-fledged, highly competitive, globally oriented, commercial telecommunications company.”

Minchin also said retail investors would be the backbone of the T3 exercise – which is why every retail investor should wonder why the wholesale professionals aren’t enthused.