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Monday, 23 March 1987
Page: 1150


Senator TATE (Special Minister of State)(6.22) —I move:

That the Bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows-

RADIO LICENCE FEES AMENDMENT BILL 1987

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 only assessable 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 period 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 audit, 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 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 the first of 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 affected licensees.

I commend the Bill to the Senate.

TELEVISION LICENCE FEES AMENDMENT BILL (No. 2) 1987

The purpose of this Bill is to amend the Television Licence Fees Act 1964 to improve arrangements relating to the assessment and collection of licence fees from companies licensed to broadcast commercial television services. The amendments complement amendments made in the Broadcasting Amendment Bill (No. 2) 1987 and in the Television Licence Fees Amendment Bill (No. 1) 1987, which was introduced and passed by this House in the Budget sittings 1986 as the Television Licence Fees Amendment Bill 1986 and is currently before the Senate.

Honourable senators will recall that in 1986 I introduced the Television Licence Fees Amendment Bill (No. 1) 1987 as part of the package of equalisation legislation. That Bill amends the definition of `gross earnings' which is central to the assessment of licence fees. This Bill provides for the calculation of licence fees based on a period other than one year where a licensee obtains approval to alter the dates of its annual accounting cycle.

Honourable senators will note that the Radio Licence Fees Bill 1987 which I am introducing concurrently with this Bill includes both the amendment to the definition of gross earnings and the change in assessment periods.

For details of the relevant amendments contained in this Bill I refer honourable senators to my speech on the Radio Licence Fees Bill 1987. The provisions in this Bill differ from the equivalent provisions in that Bill only in that they apply to television licences rather than radio licences.

The improvements to the provisions for assessments and collection of licence fees contained in this Bill and the others in this package represent commonsense administrative improvements rather than any dramatic change of policy direction. Although I have referred to the equalisation legislation, honourable senators should note that these amendments are in no way tied to that legislation. These amendments introduce amendments which will be of great value irrespective of the passage of equalisation or other major government policy initiatives in relation to broadcasting.

I commend the Bill to the Senate.

BROADCASTING AMENDMENT BILL (No. 2) 1987

The purpose of this Bill is to amend the Broadcasting Act 1942 to implement a Government decision to impose penalty fees for the late payment or non-payment of radio and television licence fees. These fees are payable by licensed broadcasters under the radio licence fees and television licence fees Acts 1964. The Bill complements amendments in the Radio Licence Fees Bill 1987 and the Television Licence Fees Bill (No. 2) 1987.

Neither the broadcasting Act nor the licence fees Acts presently contain any penalty provisions for the non-payment or late payment of licence fees. The only sanction available to the Australian Broadcasting Tribunal, which is the delegated collection agency for licence fees, is the ultimate and disproportionate sanction of revocation, suspension or non-renewal of a licence. The Bill provides an additional sanction through the imposition of a monetary penalty calculated as a percentage of the amount owing.

The provisions will provide for a small amount of additional revenue from penalty fees for late payments and will assist in ensuring collection of the full revenue due to the Commonwealth.

I now turn to the detail of the amendments.

Section 6 of the radio licence fees and television licence fees Acts provide for licence fees to be paid by licensees on each anniversary of the date of commencement of the licence. Sub-section 86 (11d) of the Broadcasting Act empowers the Tribunal to refuse to renew a licence if it is satisfied that the licensee has failed to pay the amount due under the relevant licence fees Act. An equivalent provision, paragraph 88 (1) (b), deals with suspension or revocation. Use of this ultimate sanction would be so drastic that there is, in effect, no effective penalty for late or non-payment.

In the past, the Tribunal has expressed concern that some licensees were allowing time to elapse after an assessment had been issued before paying their licence fees. Any delay in payment of fees is, of course, a cost to the Commonwealth in terms of interest foregone. The amount of revenue due to the Commonwealth in the form of broadcasting licence fees is quite considerable. The total licence fees payable by commercial radio stations during the period 1 July 1985 to 30 June 1986 was $7,396,452 and for commercial television stations during the same period the amount was $60,915,505.

The principal provisions in this Bill are contained in clause 5. New sub-section 123a (1) provides for the imposition of a penalty fee at the rate of 20% p.a. on overdue fees. The penalty provisions operate only where the fee becomes overdue by two months, but in these circumstances the penalty fee is calculated from the due date. The existing provisions in section 123 of the Act allow six months from the end of each accounting period for the licensee to prepare accounts and documentation. Consistent with these provisions, new sub-section 123a (6) provides that the due date for the purpose of the penalty fee provisions will not be before six months after the end of the accounting period.

New sub-section 123a (2) provides for the Minister, or an authorised officer, to remit the penalty fee. The decision to remit must take into account such factors as whether the delay was due to the fault of the licensee, whether the licensee had sought to minimise the delay and whether there are special circumstances which mean it would be fair and reasonable to remit the fee.

Honourable senators should note that the penalty fee and associated remission provisions are closely modelled on relevant provisions in sub-section 207 (1a) of the Income Tax Assessment Act 1936.

Clauses 3 and 4 of the Bill amend sections 86 (licence renewal) and 88 (licence suspension or revocation) to take account of the new penalty fee provisions.

Instead of the licensing sanctions of the Tribunal being applied for a failure to pay fees, the Tribunal must consider whether there has been unreasonable or repeated delay in licence fees payment. In considering whether to exercise these licensing powers, which are still the ultimate sanction for failure to pay licence fees, the Tribunal will clearly be required to assess whether the exercise of power is warranted in the individual circumstances of each case.

Clause 6 of the Bill is a technical provision to ensure that the amendments in the Bill apply equally to old system licences; that is, licences which have not yet been converted to the service-based licensing system.

The provisions in this Bill form part of a package of measures to introduce greater certainty and more efficient administration in the assessment and collection of radio and television licence fees, in particular, this Bill will help to ensure full and prompt recovery of fees owing to the Commonwealth.

I commend the Bill to the Senate.

Debate (on motion by Senator Kilgariff) adjourned.