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Wednesday, 25 February 1987
Page: 726

Mr DUFFY (Minister for Communications)(5.02) —I move:

That the Bill be now read a second time.

The purpose of this Bill is to amend the Radio Licence Fees Act, in accordance with a government decision, to improve arrangements relating to the assessment and collection of licence fees from companies licensed to broadcast commercial-including supplementary and remote-radio services. The amendments complement amendments made in the Broadcasting Amendment Bill (No. 2) 1987. The Radio Licence Fees Act provides for substantial fees to be payable by commercial radio licensees based on the gross earnings derived by the licensee company from activities related to broadcasting. The fees, which are payable on each anniversary of the original grant of the licence, are assessed as a percentage of the gross earnings during the accounting period preceding the anniversary. A sliding scale is provided so that the percentage rate increases for higher levels of gross earnings.

The proposed amendments can be summarised as follows: The definition of gross earnings in the Act is clarified by limiting its application exclusively to income received from the licensee's broadcasting activities. The Bill also seeks to correct an anomaly in the legislation which enables licensees to vary accounting periods in relation to gross earnings, but does not empower licence fee assessments to be made for periods other than the standard 12 months. The amending provision will allow for the calculation of licence fees based on a period other than one year where a licensee obtains Australian Broadcasting Tribunal approval under sub-section 123 (2) of the Broadcasting Act 1942 to alter the dates of its annual accounting cycle.

The amendments are not intended to alter significantly the amount of fees payable to the Commonwealth. They will remove from consideration, as part of `gross earnings', those earnings derived from the non-broadcasting activities of licensees and make it clear that earnings are assessable only in respect of advertisements and related matter broadcast by a licensee. The Australian Broadcasting Tribunal, which is the delegated collection agency, expends a great deal of time and effort in determining whether licence fees are assessable for non-broadcasting activities; yet earnings from these activities constitute only a small percentage of total gross earnings. This, in turn, has created a frustrating administrative burden for licensees. The net savings effect of the amendments should be significantly more than the anticipated cost of $30,000 to 35,000; the latter cost arises from employment of an extra person by the Tribunal to cover the additional work load involved in a more comprehensive assessment of licensees' returns. A small loss in revenue will also arise from the narrower definition of assessable earnings. I now turn to the detail of the proposed amendments.

Gross Earnings

The definition of `gross earnings' in section 4 of the Radio Licence Fees Act has caused considerable difficulties in its interpretation by the Tribunal. The Tribunal has attempted to clarify the definition by specifically listing the component items of gross earnings in its licence fees return form. The definitions of these items were based on legal advisings and included such matters as sale of programs, hire of facilities, and recoupment of landline expenses. Some licensees, however, contested the validity of the Tribunal's interpretation in relation to such items. On the other hand, it was considered that an attempt to list in legislation all the various items which could be included in `Gross earnings' would result in a continuation of time consuming problems of interpretation and administration. The provisions in the Bill provide a precise definition of gross earnings which is tied to revenue received by licensees from their broadcasting activities only; that is, revenues which arise out of the transmission of programs-including advertisements-to the general public. Receipts from a licensee's non-broadcasting activities will not be taken into account for licence fee purposes.

In addition to the examples I have already mentioned, the items which will not be assessable under the amended definition of `Gross earnings' include amounts earned from the production of advertisements, recoupment of expenses incurred by licensees on behalf of advertisers, and receipts from the sale of programs by licensees in transcript form.

Assessment Periods

Licence fees under the Radio Licence Fees Act are currently assessed on the licensee's earnings over a 12-month period. However, sub-section 123 (2) of the Broadcasting Act 1942 permits a licensee to adopt another accounting period, while the period of assessment remains fixed at 12 months. As a result, where an accounting period is put back, a gap will arise between the end of the former period and the commencement of the following period. This will have the effect of excluding an amount of gross earnings from licence fees calculations. Conversely, where the licensee brings the accounting period forward, the assessment periods will overlap and gross earnings will be double counted in licence fee calculations.

This inability to make assessments for periods other than the standard 12 months drew adverse comment in the Auditor-General's April 1985 report to the Parliament. In one instance observed by the Audit Office, following a change in accounting dates from 30 June 1982 to 30 September 1982, licence fees were paid for the period 1 October 1982 to 30 September 1983 but were not paid for the period 1 July 1982 to 30 September 1982. The amendments in this Bill will allow greater flexibility to accommodate such changes in accounting periods by allowing for the calculation of licence fees over a period of more or less than one year. The amendments will ensure that all periods are assessed, and are assessed at the appropriate percentage rate on the sliding scale.

The approach taken in the Bill is to take account of all earnings between the end of the last assessed accounting period and the end of the new accounting period as assessable gross earnings. For the purposes of determining what percentage rate should apply on the sliding scale set by the Radio Licence Fees Act, the gross earnings figure for that period-which may be more or less than one year-is converted to represent an annual rate. The percentage set in the Act for that annual rate is then applied to the gross earnings for the period.

Transitional Amendments

The Bill includes a consequential provision to ensure that the amendments outlined above apply equally to broadcasting station licences which have not yet been converted to the new service based licensing system under the Broadcasting and Television Amendment Act 1985. By virtue of section 11 of the Broadcasting Stations Licence Fees Amendment Act 1985, the Broadcasting Stations Licence Fees Act, as it was before 1 January 1986, has continued application to such old system licences.

The measures in this Bill will provide greater certainty in the assessment and collection of radio licence fees, will be difficult to circumvent and will lead to greater ease of administration both for the Tribunal and for affected licensees. I commend the Bill to the House. I present the explanatory memorandum to the Bill.

Debate (on motion by Mr Tim Fischer) adjourned.