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Thursday, 10 February 2011
Page: 441


Senator McEWEN (11:56 AM) —Following the receipt of satisfactory responses, on behalf of the Senate Standing Committee on Regulations and Ordnances, I give notice that on the next day of sitting I shall withdraw four notices of motion to disallow, the full terms of which have been circulated in the chamber and that I now hand to the Clerk. I seek leave to incorporate in Hansard the committee’s correspondence concerning these instruments.

Leave granted.

The document read as follows—

SENATOR STEPHENS

AT THE GIVING OF NOTICES

10 FEBRUARY 2011

NOTICE OF INTENTION TO WITHDRAW NOTICES OF

MOTION TO DISALLOW

Twelve sitting days after today

Business of the Senate─Notices of Motion Nos:

1. ASIC Market Integrity Rules (ASX Market) 2010 made under subsection 798G(1) of the Corporations Act 2001. [F2010L02211]

2. Australian Wine and Brandy Corporation (Annual General Meeting of the Industry) Amendment Regulations 2010 (No. 1), as contained in Select Legislative Instrument 2010 No. 218 and made under the Australian Wine and Brandy Corporation Act 1980. [F2010L02114]

3. Electoral and Referendum Amendment Regulations 2010 (No. 3), as contained in Select Legislative Instrument 2010 No. 227 and made under the Commonwealth Electoral Act 1918 and the Referendum (Machinery Provisions) Act 1984. [F2010L02131]

4. Producer Offset Amendment Rules 2010 (No. 1) made under section 376-265 of the Income Tax Assessment Act 1997. [F2010L01826]

ASIC Market Integrity Rules (ASX Market) 2010

28 October

The Hon David Bradbury MP

Parliamentary Secretary to the Treasurer

Room R1.89

Parliament House

CANBERRA ACT 2600

Dear Parliamentary Secretary

The Committee’s function is to examine all legislative instruments subject to disallowance or disapproval by the Senate to ensure that they comply with broad principles of personal rights and parliamentary propriety. In accordance with that function, the Committee is writing to you in relation to the following instruments made under subsection 798G(1) of the Corporations Act 2001.

ASIC Market Integrity Rules (APX Market) 2010

This instrument specifies market integrity rules in relation to the licensed market operated by Asia Pacific Exchange Limited. The Committee’s consideration of this instrument has raised the following matters.

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. Subrule 1.2.1(4) notes that for the purposes of Part 1.2, ‘waiver’ means a waiver under rule 1.2.1. Rule 1.2.4, which is located in Part 1.2, permits ASIC to establish and maintain a register for recording details of ‘relief’ granted under Rule 1.2.1. It is not clear whether the term ‘relief’ has a meaning that is different from ‘waiver’. If not, it would assist clarity in application of the rules if rule 1.2.4 was amended to refer to ‘waiver’.

Secondly, rule 1.4.3 includes a definition of the term ‘prohibited conduct’. Paragraphs (b)(iii) and (iv) refer, respectively, to short selling and cornering. These terms are not defined in the Rules. It may be that these terms are thought to be well understood in the finance community but given their status as prohibited conduct, it would assist the application of the Rules if there was greater specification of the conduct that is being referred to (for example, does short selling include covered and naked short sales?).

ASIC Market Integrity Rules (SIM VSE Market) 2010

This instrument specifies market integrity rules in relation to the licensed market operated by SIM Venture Securities Exchange Limited. The Committee’s consideration of this instrument has raised the following matters.

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

The second matter arises from a comparison of the definitions provided in these Rules with those provided in the ASIC Market Integrity Rules (APX Market) 2010. While the definitions must obviously reflect the different circumstances of these two markets, there are some common terms in both sets of Rules the definitions of which are drafted in different ways—see the definitions for ‘bid’, ‘immediate family’, ‘offer’, and ‘official list’. There are other common terms where the differences in definition may be due to differences in the two markets—see the definitions for ‘family company’, ‘family trust’, ‘takeover’. The Committee would appreciate advice clarifying the differences in the definitions between the Rules.

ASIC Market Integrity Rules (ASX Market) 2010

This instrument specifies market integrity rules in relation to the licensed market operated by Australian Securities Exchange Limited. The Committee’s consideration of this instrument has raised the following matters.

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Secondly, rule 2.1.4 specifies good fame and character requirements for people involved in the business of a market participant. Paragraph 2.1.4(2)(b)(i) states that a person may be assessed not to be of good fame and character if the person has been charged with or convicted of any offence. Notwithstanding the discretionary latitude granted by the word ‘may’, this paragraph nevertheless allows the fact that a person has been charged with an offence to count against their good fame and character, regardless of whether a conviction has followed from that charge. The Committee would appreciate your advice as to why this provision is worded in this way.

Thirdly, rules 2.4.13 to 2.4.15 deal with the renewal of accreditation of an accredited adviser. These rules include a requirement that ASIC must give written reasons if an application for renewal is rejected (subrule 2.4.15(2)). Rule 2.4.16 then provides that if ASIC has not renewed an accreditation by one business day after the renewal date the person ceases to hold the relevant accreditation. The intention behind this rule is not clear. It appears to allow ASIC to avoid processes for rejection of an application specified in rule 2.4.15, including the need to give reasons. The Committee would therefore appreciate your advice clarifying the operation of rule 2.4.16.

Finally, rules 4.1.9, 4.1.10, and 4.2.2 require that specified records and recordings be kept for certain periods of time. The required time periods differ, ranging from a minimum of 3 months (in the case of recordings of telephone conversations, under rule 4.1.10), to a minimum of 5 years (for a record of a client complaint, under rule 4.2.2), and seven years for records of an authorised person (rule 4.1.9). The Committee notes that rule 2.27 of the ASIC Market Integrity Rules (ASX 24 Market) 2010 also imposes a minimum 3 month requirement on keeping of telephone recordings. The reason for the different time periods is not clear, nor is the reason why, in two of these rules, the required time period is expressed as a minimum period. The Committee would appreciate further advice on the reason for the different time periods.

ASIC Market Integrity Rules (IMB Market) 2010

This instrument specifies market integrity rules in relation to the licensed market operated by IMB Limited. The Committee’s consideration of this instrument has raised the following concerns.

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Secondly, rule 1.1.5 requires that the market operator (IMB Ltd), market participants and other regulated entities must comply with these Rules. However the Rules only impose specific obligations, found in Chapter 2, on market participants. It is not clear what obligations are being imposed on the market operator or other regulated entities by these rules. The Committee would appreciate some further advice on this issue.

ASIC Market Integrity Rules (NSXA Market) 2010

This instrument specifies market integrity rules in relation to the licensed market operated by National Stock Exchange of Australia Limited. First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Information on consultation

Finally, section 17 of the Legislative Instruments Act 2003 directs a rule-maker to be satisfied that appropriate consultation, as is reasonably practicable, has been undertaken particularly where a proposed instrument is likely to have an effect on business. The definition of ‘explanatory statement’ in section 4 of the Act requires an explanatory statement to describe the nature of any consultation that has been carried out. The Explanatory Statements that accompanies the ASIC Market Integrity Rules (APX Market) 2010, ASIC Market Integrity Rules (SIM VSE Market) 2010, ASIC Market Integrity Rules (IMB Market) 2010, ASIC Market Integrity Rules (NSXA Market) 2010 state only that there was ‘targeted consultation’ on the market integrity rules. The Committee would appreciate further information as to who the targets of the consultation were, thus providing an explanation that better meets the requirements of the Act.

The Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Correspondence should therefore be forwarded to the Committee as soon as possible but before the date shown below to allow it time to consider your advice prior to the expiration of the 15th sitting day. In the event that a response is not received by the 15th sitting day, the Committee may as a precautionary measure give a notice of motion to disallow the instrument.

The Committee would therefore appreciate advice on the above matters before 19 November 2010. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

23 November 2010

Senator the Hon Ursula Stephens

Chair, Senate Standing Committee on

Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator Stephens

Thank you for your letter of 28 October 2010 concerning various Market Integrity Rules made by the Australian Securities and Investments Commission (ASIC) under subsection 798G(1) of the Corporations Act 2001.

ASIC took over the supervisory responsibility for Australia’s domestically licensed financial markets from 1 August 2010. As such, it has been necessary for ASIC to examine the market rules that existed prior to 1 August 2010 to determine those that would become Market Integrity Rules (and hence be administered by ASIC) and those that would stay with the relevant market operator. The division of rules between Market Integrity Rules and the market operator was agreed between ASIC and each market operator, and was the subject of consultation with industry.

As such, ASIC’s Market Integrity Rules for each of the ASX, ASX 24, APX, IMB, NSXA and SIM VSE markets are based on a subset of each of the relevant market operators’ rules in existence prior to the transfer of market supervision from each of those markets to ASIC.

The principle applied to the division of market rules was:

  • ASIC would make into Market Integrity Rules those rules that existed prior to 1 August 2010 that related to market integrity matters (e.g. those that related to participant conduct); and
  • market operators would retain in their rule books, those rules that related to operational and mechanical matters.

A key priority in effecting the transfer of supervision from market operators to ASIC was to ensure ongoing market certainty and continuity and, to the greatest extent possible, minimise disruption and transition costs to market participants. To achieve this, ASIC’s Market Integrity Rules largely maintain the form and substance of the regulatory regime embodied in the market rules that existed prior to the transfer of the supervisory responsibility.

This was to ensure that the markets continued to largely operate as they operated prior to the transfer of supervisory responsibility. It also ensured that the Market Integrity Rules for each market continue to use similar terms - and work in concert - with the operating rules that were retained by the market operator for each respective market.

Following a suitable settling in period, ASIC will consider whether subsequent amendments to the Market Integrity Rules are warranted. This may include consideration of harmonising the individual Market Integrity Rule books for all markets. This is likely to take place in the longer term and will be done in the context of detailed discussion with industry to minimise the impact and costs to business.

A response to the Committee’s specific questions regarding each set of Market Integrity Rules is detailed in Appendix A.

Consultation

ASIC conducted two rounds of consultation in relation to developing the initial Market Integrity Rules for the four smaller markets (APX, SIM: VSE, IMB and NSXA). The first round comprised widespread public consultation regarding ASIC’s general policy approach, and included a draft set of rules for the ASX and SFE (now ASX 24) markets (which, although not directly relevant to the smaller markets, were indicative of ASIC’s proposed approach to these markets), The second round comprised targeted consultation with the market operators and relevant stakeholders for each of the smaller markets.

Round 1: Policy development - widespread public consultation

ASIC consulted on its policy approach to the creation of Market Integrity Rules as part of its February 2010 Consultation Paper 131 Proposed ASIC Market Integrity Rules: ASX and SFE [now ASX 24] Markets (CP 131). ASIC’s proposed policy approach and draft rules for the ASX and SFE markets were published on its website and public submissions were sought. Operators of the APX, SIM VSE, IMB, and NSXA markets were individually notified of the release of CP131 and encouraged to consider its contents in the context of their own markets.

ASIC received feedback from a range of bodies including industry bodies that represent stockbrokers across the wider markets (i.e. not just ASX and SFE). Generally, respondents to CP131 expressed support for ASIC’s approach of maintaining status quo by retaining the substance of existing rules and expressed comfort with the proposed division of responsibilities between the market operators and ASIC.

This feedback then informed ASIC’s approach to developing the rules for the APX, SIM VSE, IMB and NSXA Markets. ASIC adopted all of the same policies which had been in CP 131 when developing the APX, SIM VSE, IMB, and NSXA Market Integrity Rules.

Round 2: Specific question for each market - targeted industry consultation

ASIC also conducted additional consultation specifically with the APX, SIM VSE, IMB, NSXA markets and their relevant stakeholders. In this context:

  • ASIC provided draft versions of Market Integrity Rules to:

- each market operator in relation to its own draft Market Integrity Rules; and

- key industry associations: the Australian Financial Markets Association (AFMA) and the Stockbrokers Association of Australia (SAA).

  • ASIC held numerous meetings with representatives of all of the market operators and as the Market Integrity Rules were being developed, market operators were encouraged to comment on each version of the Market Integrity Rules, including the final version.
  • ASIC also provided draft Market Integrity Rules to every participant on each of the markets with the exception of every IMB participant. For IMB, where each customer of IMB is potentially a participant, nominee company participants were provided with draft Market Integrity Rules.

ASIC obtained confirmation from each market operator that they were comfortable with the relevant Market Integrity Rules for their market, prior to making the Market Integrity Rules.

ASIC has also published a Regulatory Guide, RG 215 Guidance on ASIC market integrity rules for APX, IMB, NSXA and SIM VSE markets, which gives guidance on how market participants can comply with their obligations under the APX, SIM VSE, IMB, and NSXA Market Integrity Rules.

I have been informed that ASIC has not received any feedback to date which would suggest that the transfer of supervision to ASIC and the accompanying creation of the ASIC Market Integrity Rules has been anything other than seamless.

I trust this information will be of assistance to you.

Yours sincerely

DAVID BRADBURY

Parliamentary Secretary to the Treasurer

APPENDIX A

1. ASIC Market Integrity Rules (APX Market) 2010: Matter 1

Matter raised

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of /these rules.

Subrule 1.2.1(4) notes that for the purposes of Part 1.2, ‘waiver’ means a waiver under rule 1.2.1. Rule 1.2.4, which is located in Part 1.2, permits ASIC to establish and maintain a register for recording details of ‘relief granted under Rule 1.2.1. It is not clear whether the term ‘relief has a meaning that is different from ‘waiver’. If not, it would assist clarity in application of the rules if rule 1.2.4 was amended to refer to ‘waiver’.

Response

The term ‘relief’ is intended to have the same meaning as ‘waiver’. This wording was adopted from the ASX market rules that existed prior to 1 August 2010 (see section 5 below) and ASIC consulted with APX on the draft of this rule. ASIC received no adverse comments in response to the use of ‘waiver’ and ‘relief’. ASIC considered a consistent waiver policy and terminology adopted from the ASX market rules would achieve the objective of minimising disruption to existing market understanding and practice.

2. ASIC Market Integrity Rules (APX Market) 2010: Matter 2

Matter raised

Secondly, rule 1.4.3 includes a definition of the term ‘prohibited conduct ‘. Paragraphs (b)(iii) and (iv) refer, respectively, to short selling and cornering. These terms are not defined in the Rules. It may be that these terms are thought to be well understood in the finance community but given their status as prohibited conduct, it would assist the application of the Rules if there was greater specification of the conduct that is being referred to (for example, does short selling include covered and naked short sales?).

Response

As noted earlier, ASIC sought, wherever possible, to preserve definitions (including the absence of definitions) from the market rules that existed prior to 1 August 2010. This was to ensure that disruption and uncertainty were minimised in the transfer of market supervision to ASIC and to ensure consistency between the terms in use by the market operator in its rules on and after the commencement date, and the terms in use within the Market Integrity Rules. The definition of ‘prohibited conduct’ was included for that purpose. ASIC considers both ‘short selling’ and ‘cornering’ to be well understood by the market. ASIC also notes ‘corners’ are effectively described in Part 3.10 of the ASIC Market Integrity Rules (APX Market) and that both terms are defined in the current rules of the APX market operator.

By way of context, the APX market is currently dormant and has only one admitted participant. ASIC considers therefore that any prospect or consequence of confusion is limited. APX plans, in time, to resurrect its market and in doing so, ASIC will need to review its ASIC Market Integrity Rules (APX Market) and any proposed new market operator rules. ASIC will review this definition and associated terms in that context to address the concerns raised by the Committee.

3. ASIC Market Integrity Rules (SIM VSE Market) 2010: Matter 1

Matter raised

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Response

See comments in relation to item I.

4. ASIC Market Integrity Rules (S1M VSE Market) 2010: Matter 2

Matter raised

The second matter arises from a comparison of the definitions provided in these Rules with those provided in the ASIC Market Integrity Rules (APX Market) 2010. While the definitions must obviously reflect the different circumstances of these two markets, there are some common terms in both sets of Rules the definitions of which are drafted in different ways see the definitions for ‘bid’, ‘immediate family’, ‘offer’, and ‘official list ‘. There are other common terms where the differences in definition may be due to differences in the two markets - see the definitions for ‘family company’, ‘family trust’, ‘takeover’. The Committee would appreciate advice clarifying the differences in the definitions between the Rules.

Response

As outlined earlier, in order to minimise disruption to participants during the transfer of supervision, definitions which existed in the various market rules prior to 1 August 2010 were preserved in ASIC’s Market Integrity Rules. ASIC was also conscious to ensure that the Market Integrity Rules in no way conflicted with the operating rules which remained with each relevant the market operator - so as to ensure that the market continued to operate efficiently and effectively.

As a result, any differences in definitions are a reflection of the different definitions given to those terms under the market rules that existed prior to 1 August 2010 - which were then adopted into the Market Integrity Rules for APX and SIM VSE etc.

5. ASIC Market Integrity Rules (ASX Market) 2010: Matter 1

Matter raised

First. rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Response

This Market Integrity Rule was based, in form and substance, on the ASX Market Rule on waivers that existed prior to the handover of supervisory responsibility to ASIC on 1 August 2010. As noted, there is no distinction between ‘relief’ and ‘waiver’, but where ASIC intended the rule to operate in the same way as it did prior to I August 2010, it adopted a drafting policy of using the market rule language that already existed.

ASIC has noted that the ASX continues to have a waiver power in its rule book, and ASIC considered that the use of common terms, as much as possible, was desirable.

The ASX continues to use the terms ‘relief’ to refer to the granting of a waiver, see for example Rule 6032 which prescribes that (emphasis added):

ASX may specify a period or specific event during which any relief under Rule [6030] may apply, in which case such relief is limited to such period or event.

Rule 6030 prescribes (emphasis added):

ASX may relieve any person or class of person from the obligation to comply with a provision (other than an indemnity or disclaimer provision) of these Rules, either generally or in a particular case or category, and either unconditionally or subject to such conditions as ASX thinks fit. If any conditions on a waiver are imposed, all of the conditions must be complied with for the waiver to be effective. ASX may withdraw a waiver at any time. Any request by a Market Participant for a waiver under this Rule [6030] must be in writing.

6. ASIC Market Integrity Rules (ASX Market) 2010: Matter 2

Matter raised

Secondly, rule 2.1.4 specifies good fame and character requirements for people involved in the business of a market participant. Paragraph 2.1.4(2)(b )(i) states that a person may be assessed not to be of good fame and character if the person has been charged with or convicted of any offence. Notwithstanding the discretionary latitude granted by the word ‘may’, this paragraph nevertheless allows the fact that a person has been charged with an offence to count against their good fame and character, regardless of whether a conviction has followed from that charge. The Committee would appreciate your advice as to why this provision is worded in this way.

Response

For the reasons stated earlier, this rule was brought across without amendment from the ASX market rules that existed prior to the handover of supervisory responsibility to ASIC. This rule dates back to at least 2003, and for that reason is well understood by market participants. Further, and in conformity with ASIC’s general objective of certainty, it was concerned to ensure that existing processes would be preserved.

7. ASIC Market Integrity Rules (ASX Market) 2010: Matter 3

Matter raised

Thirdly, rules 2.4.13 to 2.4.15 deal with the renewal of accreditation of an accredited adviser. These rules include a requirement that ASIC must give written reasons if an application for renewal is rejected (subrule 2.4.15(2)). Rule 2.4.16 then provides that if ASIC has not renewed an accreditation by one business day after the renewal date the person ceases to hold the relevant accreditation. The intention behind this rule is not clear. It appears to allow ASIC to avoid processes for rejection of an application specified in rule 2.4.15, including the need to give reasons. The Committee would therefore appreciate your advice clarifying the operation of rule 2.4.16.

Response

Rule 2.4.16 was made to address the possibility of a dispute arising about lodgement or receipt of a renewal application. Specifically, in cases where an application is, for whatever reason, not received, ASIC wanted to ensure accreditation did not continue. Accreditation is a critically important means of ensuring advisors are adequately skilled to deliver their services, and inadvertent continuation of accreditation would have a detrimental effect on market integrity.

ASIC has noted your concern that the rule could be used to circumvent the requirement to provide reasons, and has advised me that it has no intention of using the rule for this purpose. ASIC has also advised that it is not aware of any participant or other entity raising a concern during the months the rule has been in the public domain or during the consultation process.

8. ASIC Market Integrity Rules (ASX Market) 2010: Matter 4

Matter raised

Finally, rules 4.1.9, 4.1.10, and 4.2.2 require that specified records and recordings be kept for certain periods of time. The required time periods differ, ranging from a minimum of 3 months (in the case of recordings of telephone conversations, under rule 4.1.10), to a minimum of 5 years (for a record of a client complaint, under rule 4.2.2), and seven years for records of an authorised person (rule 4.1.9). The Committee notes that rule 2.27 of the ASIC Market Integrity Rules (ASX 24 Market) 2010 also imposes a minimum 3 month requirement on keeping of telephone recordings. The reason for the different time periods is not clear, nor is the reason why, in two of these rules, the required time period is expressed as a minimum period. The Committee would appreciate further advice on the reason for the different time periods.

Response

ASX and ASX 24 markets had varying times and obligations in the market rules that existed prior to 1 August 2010 and these time periods were imported into the relevant Market Integrity Rules to ensure minimal disruption and costs to business. Participants were familiar with these time frames (and typically structure their back-office arrangements to ensure compliance with them) and they have been preserved, wherever possible, to ensure that pre-existing procedures which participants had in place remained sufficient for compliance with the Market Integrity Rules.

A minimum period is specified in the rules to ensure that participants that adopt a policy of longer storage of information (for example where they are subject to another jurisdiction requirement for a longer period) will not be in breach of this rule.

9. ASIC Market Integrity Rules (IMB Market) 2010: Matter 1

Matter raised

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Response

See comments in relation to item I.

10. ASIC Market Integrity Rules (IMB Market) 2010: Matter 2

Matter•raised

Secondly, rule 1.1.5 requires that the market operator (IMB Ltd), market participants and other regulated entities must comply with these Rules. However the Rules only impose specific obligations, found in Chapter 2, on market participants. It is not clear what obligations are being imposed on the market operator or other regulated entities by these rules. The Committee would appreciate some further advice on this issue.

Response

Under the enabling legislation for the creation of the Market Integrity Rules (see section 798H of the Corporations Act), certain entities must comply with the Market Integrity Rules. The legislation prescribes that. these entities are:

(a) operators of licensed markets;

(b) participants in licensed markets;

(c) entities prescribed by the regulations for the purposes of this paragraph.

The Market Integrity Rules for each market contains an ‘introductory’ clause reflecting these statutory provisions, stating that the Market Integrity Rules for that market will apply to the entities ‘as specified in the rule’. Hence, where the rule does not specify that it applies to ‘an operator of a licensed market’ or ‘entity prescribed by the regulations’, then the rule does not apply to them.

In the context of IMB, no Market Integrity Rules are intended to apply to market operators or entities prescribed by the regulations - and this is reflected in the terms of the relevant rules. ASIC also considers that this approach ensures minimal disruption to the Market Integrity Rules framework (and as a result, to market users) if in fact the coverage of the rules changes in future (for example, if any entities were in fact prescribed by the regulations).

Further, this consequence is a result of the content of the market rules for the IMB Market that existed prior to 1 August 2010. Upon analysis, and in consultation with IMB, none of the pre-existing market rules were appropriate for inclusion for the market operator.

11. ASIC Market Integrity Rules (NSXA Market) 2010: Matter 1

Matter raised

First, rule 1.2.1 permits ASIC to provide an entity with a waiver from all or any of these rules. The Committee’s concern with this rule is the same as for the APX Market Rules above.

Response

See comments in relation to item 1.

 

25 November 2010

The Hon David Bradbury MP

Parliamentary Secretary to the Treasurer

Room R1.89

Parliament House

CANBERRA ACT 2600

Dear Parliamentary Secretary

Thank you for your letter of 23 November 2010 in which you provide information in response to the Committee’s concerns with various Market Integrity Rules made by the Australian Securities and Investments Commission (ASIC) under subsection 798G(1) of the Corporations Act 2001. Your comprehensive advice has addressed most of our concerns.

In your response you advise that the Rules reflect previously existing rules, and that they have not been altered at this stage because of the need to minimise disruption to market participants. The Committee notes that ‘following a suitable settling in period, ASIC will consider whether subsequent amendments to the Market Integrity Rules are warranted’ and this may include harmonisation of the various Rules. The Committee understands that its concerns will be taken into consideration during this review.

Notwithstanding your advice, the Committee remains concerned with rule 2.1.4 of the ASX Market Rules where a person charged with, but not yet convicted of, an offence may be assessed to be not of good fame and character. You advised that this provision dates back to 2003 and is well understood by market participants. Given the possible detrimental impact for a person that may arise out of such assessment, the Committee would appreciate rule 2.1.4 being reviewed outside of the review process described above.

As previously advised, the Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Changes to the Senate sitting pattern have brought the 15th sitting day forward to Friday 26 November 2010. As a precautionary measure, and in order to allow time for further discussion on this matter, the Committee has agreed to give a notice of motion to disallow the ASX Market Rules tomorrow.

The Committee would appreciate advice on the above matter before 17 January 2011. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

 

17 January 2011

Senator the Hon Ursula Stephens

Chair

Senate Standing Committee on Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator Stephens

Thank you for your letter of 25 November 2010 concerning the ASIC Market Integrity Rules (ASX Market) 2010 (ASX Rules). I note your advice that the Senate Standing Committee on Regulations and Ordinances (the Committee) remains concerned with rule 2.1.4, namely that a person who has been charged with (but not yet convicted of) an offence may be assessed to be not of good fame and character. I also note that, as a precautionary measure, the Committee gave a notice of motion to disallow the ASX Rules on the last sitting day of Parliament in 2010.

ASIC is of the view that there are circumstances in which, in assessing whether a person is of good fame and character for the purposes of the rule, it would be appropriate to take into account pending criminal charges, particularly where those charges relate to offences involving serious market misconduct or fraud. ASIC notes that this is consistent with the approach taken by a number of its international counterparts in assessing whether persons are ‘fit and proper’ to be involved in the market.

Nevertheless ASIC has agreed to amend this rule in order to address the Committee’s concerns. ASIC is currently drafting an appropriate amending legislative instrument - ASIC Market Integrity Rules (ASX Market) Amendment 2011 (No.1) - for my approval under section 798G(3) of the Corporations Act 2001. I expect this amending instrument to be finalised, approved and registered on the Federal Register of Legislative Instruments to take effect by the end of January.

Given the uncertainty which may be generated in the market if the entire legislative instrument (that is the current ASX Rules) remains subject to a notice of motion to disa1low for an extended period, I seek your early consideration to remove the current notice of motion to disallow as soon as possible after Parliament resumes in February.

I trust this information will be of assistance to you.

Yours sincerely

DAVID BRADBURY

Parliamentary Secretary to the Treasurer

Australian Wine and Brandy Corporation (Annual General Meeting of the Industry) Amendment Regulations 2010 (No. 1), Select Legislative Instrument 2010 No. 218

28 October 2010

Senator the Hon Joe Ludwig

Minister for Agriculture, Fisheries and Forestry

Suite MG.64

Parliament House

CANBERRA ACT 2600

Dear Minister

The Committee’s function is to examine all legislative instruments subject to disallowance or disapproval by the Senate to ensure that they comply with broad principles of personal rights and parliamentary propriety. In accordance with that function, the Committee is writing to you in relation to the follow Regulations made under the Australian Wine and Brandy Corporation Act 1980.

Australian Wine and Brandy Corporation Amendment Regulations 2010 (No. 1)

Select Legislative Instrument 2010 No. 217

These Amending Regulations amend the principal Regulations to give effect to the Australia—European Community Agreement on Trade in Wine. The Committee’s consideration of these Regulations has raised the following matters.

First, new regulation 46 requires the Registrar of Trade Marks to notify the Geographical Indications Committee in writing of the receipt and terms of an application received under paragraph 40RE(1)(b) of the Australian Wine and Brandy Corporation Act 1980. Similarly, new regulation 61 requires the Registrar of Trade Marks to notify the Geographical Indications Committee of the receipt and terms of an objection. Neither of these regulations specifies a time period for the making of these notifications. The Committee suggests that these regulations be amended to make such a specification (for example, within 7 business days).

Secondly, new regulation 92 states that the Geographical Indications Committee, after considering submissions made to it ‘may make a final determination’. It is not clear whether the purpose of this regulation is to clarify that a determination made by the Committee may be final, or whether it gives the Committee a discretion about making a final determination. If the latter interpretation is correct, it is not clear why the Committee should not be required to make a final determination. The Committee would appreciate clarification of the intended operation of this regulation.

Australian Wine and Brandy Corporation (Annual General Meeting of the Industry) Amendment Regulations 2010 (No. 1)

Select Legislative Instrument 2010 No. 218

These Amending Regulations amend the principal Regulations to require prior notice to be given of all motions that are intended to be moved at an annual general meeting of the Australian Wine and Brandy Corporation. The Committee’s consideration of these Regulations has raised the following matters.

First, new regulation 6 deals with voting on and passing motions at an AGM of the Australian Wine and Brandy Corporation. As a prerequisite to voting on a motion, paragraph 6(1)(a) requires notice of the motion to have been given by the Corporation to each eligible producer in accordance with procedures set out in regulation 4 or 5. Subregulation 6(2) provides, however, that if an eligible producer is inadvertently not given notice, notice is taken to have been given to that producer. It is not clear whether the Corporation or the producer bears the onus of demonstrating that the failure to give notice was inadvertent. Nor is the meaning of the term ‘inadvertent’ clear for these purposes. The Committee would appreciate clarification on the intended operation of this regulation.

Secondly, new subregulation 7(7) authorises a proxy attending a meeting for an eligible producer to cast the number of votes that the eligible producer is entitled to cast. An eligible producer may cast one vote for every whole dollar of levy and charge that is imposed on that producer (see new subregulation 8(3)). It is not clear from the wording of subregulation 7(7) whether the proxy must cast all of the votes, or whether they may choose to cast only some of those votes. The Committee would also appreciate clarification on the intended operation of this regulation.

Information on consultation

Finally, section 17 of the Legislative Instruments Act 2003 directs a rule-maker to be satisfied that appropriate consultation, as is reasonably practicable, has been undertaken particularly where a proposed instrument is likely to have an effect on business. Section 18 of the Act provides that in some circumstances consultation may be unnecessary or inappropriate. The definition of ‘explanatory statement’ in section 4 of the Act requires an explanatory statement to describe the nature of any consultation that has been carried out or, if there has been no consultation, to explain why none was undertaken. The Explanatory Statement that accompanies both instruments makes no reference to consultation. The Committee therefore seeks your advice on whether consultation was undertaken and, if so, the nature of that consultation. The Committee also seeks an assurance that future explanatory statements will provide information on consultation as required by the Legislative Instruments Act.

The Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Correspondence should therefore be forwarded to the Committee as soon as possible but before the date shown below to allow it time to consider your advice prior to the expiration of the 15th sitting day. In the event that a response is not received by the 15th sitting day, the Committee may as a precautionary measure give a notice of motion to disallow the instrument.

The Committee would therefore appreciate advice on the above matters before 19 November 2010. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

 

18 November 2010

Senator the Hon. Ursula Stephens

Chair

Standing Committee on Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator Stephens

Thank you for your letter of 28 October 2010 about the Australian Wine and Brandy Corporation Amendment Regulations 2010 and the Australian Wine and Brandy Corporation (Annual General Meeting of the Industry) Amendment Regulations 2010.

Your letter drew attention to the concerns of the Standing Committee on Regulations and Ordinances that Regulations 46 and 61 of the Australian Wine and Brandy Corporation Amendment Regulations 2010 do not specify a time frame within which the Registrar of Trade Marks must notify the Geographical Indications Committee of certain matters relating to determining a geographical indication.

The regulations establish a process for determining foreign country geographical indications that mirrors the process for determining Australian geographical indications in the Australian Wine and Brandy Corporation Act 1980. The process is designed to be as close as possible to the process in the Act to ensure that Australia meets its obligations not to discriminate between countries. Sections 40RC and 40RD of the Act do not specify a time frame within which the Registrar of Trade Marks is to notify the Geographical Indications Committee of matters. To keep the Regulations as close as possible to the Act, I do not propose to amend the Regulations as suggested by the Committee.

The standing committee also raised concerns about the meaning of Regulation 92. As with Regulations 46 and 61, the language in Regulation 92 is designed to be close to the Act to avoid discriminating between countries. In this case the language is identical to Section 40W of the Act. Section 40W provides the Geographical Indications Committee with an option not to make a final determination. Regulation 92 gives the committee the same option. The committee has the option not to proceed to a final determination of a geographical indication if it receives evidence after publication of its interim determination that persuades it that a final determination is not warranted. For example, the committee may receive submissions that lead it to conclude that it is inappropriate to make a final determination about the proposed geographical indication.

With regard to the standing committee’s concerns about the Australian Wine and Brandy Corporation (Annual General Meeting of the Industry) Amendment Regulations 2010, I am advised that the requirements in Regulations 6 and 7(7) are not new and have been in the Regulations since they were made in 1999. These requirements are accepted by industry.

You also draw attention to the lack of information on consultation in the explanatory statement. I am advised that the Regulations were drafted in consultation with the Australian Wine and Brandy Corporation Legislation Review Committee, which includes a representative of the Winemakers’ Federation of Australia, legal officers from large wine companies and a number of independent industry lawyers. I apologise for the omission of this information in the explanatory statement and will ensure that information on consultation is included in future explanatory statements.

Thank you for raising this matter with me.

Yours sincerely

Joe Ludwig

Minister for Agriculture, Fisheries and Forestry

 

25 November 2010

Senator the Hon Joe Ludwig

Minister for Agriculture, Fisheries and Forestry

Suite MG.64

Parliament House

CANBERRA ACT 2600

Dear Minister

Thank you for your letter of 18 November 2010 responding to the Committee’s concerns with the Regulations made under the Australian Wine and Brandy Corporation Act 1980.

Your advice with regard to the Australian Wine and Brandy Corporation Amendment Regulations 2010 (No. 1), Select Legislative Instrument 2010 No. 217 has addressed our concerns.

The Committee would, however, appreciate further advice on the Wine and Brandy Corporation (Annual General Meeting of the Industry) Amendment Regulations 2010 (No. 1), Select Legislative Instrument 2010 No. 218. In your response on these Regulations you advised that the provisions with regard to the notification requirements are not new and are accepted by industry. While this may be the case, it fails to address the specific concerns raised in our letter of 28 October 2010. In that letter we sought advice on whether the Corporation or the producer bears the onus of demonstrating that the failure to give notice was inadvertent. The meaning of the term ‘inadvertent’ is also not clear for these purposes.

As previously advised, the Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Changes to the Senate sitting pattern have brought the 15th sitting day forward to Friday 26 November 2010. As a precautionary measure, and in order to allow time for further discussion on this matter, the Committee has agreed to give a notice of motion to disallow these Regulations tomorrow.

The Committee would appreciate advice on the above matter before 17 January 2011. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

 

20 January 2011

Senator the Hon. Ursula Stephens

Chair

Senate Standing Committee on Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator Stephens

Thank you for your letter of 25 November 2010 about the Standing Committee on Regulations and Ordinances’s concerns about regulations made under the Australian Wine and Brandy Corporation Act 1980 (now know as the Wine Australia Corporation Act 1980). I regret the delay in responding.

You requested further advice on whether a producer or the Australian Wine and Brandy Corporation (now known as the Wine Australia Corporation), bears responsibility for determining whether a failure to notify is inadvertent. I am advised that should a levy payer demonstrate that they did not receive notice of a motion then it would be for the corporation to prove that the lack of notice was inadvertent.

You also asked for clarification of the meaning of the term ‘inadvertent’. I understand that there is no special meaning attributed to this term in the regulations or enabling legislation. The term would therefore take its ordinary meaning—-that is, the corporation’s failure to notify would be inadvertent if it is unintentional, including through error or lack of attention.

I trust this information is of assistance. Thank you again for your letter.

Yours sincerely

Joe Ludwig

Minister for Agriculture, Fisheries and Forestry

Electoral and Referendum Amendment Regulations 2010 (No. 3), Select Legislative Instrument 2010 No. 227

28 October 2010

The Hon Gary Gray AO MP

Special Minister of State

Suite M1.23

Parliament House

CANBERRA ACT 2600

Dear Minister

The Committee’s function is to examine all legislative instruments subject to disallowance or disapproval by the Senate to ensure that they comply with broad principles of personal rights and parliamentary propriety. In accordance with that function, the Committee is writing to you in relation to the Electoral and Referendum Amendment Regulations 2010 (No. 3), Select Legislative Instrument 2010 No. 227. This instrument amends the principal Regulations to provide for electronically assisted voting for blind or sight-impaired voters.

Regulations 48 and 49, which are introduced by these Regulations, specify procedures for telephone assisted voting. In each of these regulations, a call centre operator in the national call centre is required to verify the authenticity of a call placed by an officer (see paragraphs 48(2)(e) and 49(2)(e)). Neither of these regulations specifies the means by which the authenticity of a call is to be verified. The Committee would therefore appreciate your advice as to the manner in which an operator will determine that a call is authentic.

The Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Correspondence should therefore be forwarded to the Committee as soon as possible but before the date shown below to allow it time to consider your advice prior to the expiration of the 15th sitting day. In the event that a response is not received by the 15th sitting day, the Committee may as a precautionary measure give a notice of motion to disallow the instrument.

The Committee would therefore appreciate advice on the above matter before 19 November 2010. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

 

30 November 2010

Senator the Hon Ursula Stephens

Chair

Standing Committee on Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator

Thank you for your letter of 28 October 2010 regarding the Electoral and Referendum Amendment Regulations 2010 (No.3), Select Legislative Instrument 2010 No. 227, and telephone assisted voting for blind and low vision (BLV) voters.

The Australian Electoral Commission (AEC) Call Centre Procedures Manual for the 2010 Federal Election included the process to be followed by Call Centre Operators (CCO) for telephone assisted voting. All calls made by blind or sight-impaired voters to CCOs originated from one of 126 designated voting sites. These included all AEC divisional offices except one and selected BLV service provider sites in five states.

The AEC officer making the call on behalf of the BLV voter provided the CCO with details of a telephone number not publicly advertised, usually the phone number of the relevant Divisional Returning Officer, or mobile number from an out posted voting centre. These telephone numbers were provided to Call Centre staff in Perth and Coffs Harbour. The CCO then determined that the call was authentic by referring to the unpublished list of telephone numbers. If there was a match, the call continued with the CCO completing the details required on the BLV envelope by asking a series of questions to identify the State and Division of the BLV voter and the name of the electoral division or pre poll centre from which the AEC officer was calling. The name of the voter was never disclosed to call centre staff.

I trust this information clarifies this matter for the Committee and thank you again for bringing it to my attention.

Yours sincerely

GARY GRAY

Special Minister of State

Special Minister of State for the Public Service and Integrity

Producer Offset Amendment Rules 2010 (No. 1)

28 October 2010

The Hon Simon Crean MP

Minister for the Arts

Suite MG.47

Parliament House

CANBERRA ACT 2600

Dear Minister

The Committee’s function is to examine all legislative instruments subject to disallowance or disapproval by the Senate to ensure that they comply with broad principles of personal rights and parliamentary propriety. In accordance with that function, the Committee is writing to you in relation to the Producer Offset Amendment Rules 2010 (No. 1) made under section 376-265 of the Income Tax Assessment Act 1997.

This instrument amends the principal Rules to provide for the levying of fees on applications for provisional certificates. It is made under section 376-265 of the Income Tax Assessment Act 1997. Subsection (1) of that section states that the film authority (Screen Australia) may, by legislative instrument, make rules providing for the issue of provisional certificates in relation to the producer offset. Subsection (2) permits the film authority to make rules regarding how applications for such certificates are to be made. The Committee notes that the section does not expressly provide for the levying of fees in relation to such applications and would appreciate your advice as to the basis for the imposition of this fee.

The Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Correspondence should therefore be forwarded to the Committee as soon as possible but before the date shown below to allow it time to consider your advice prior to the expiration of the 15th sitting day. In the event that a response is not received by the 15th sitting day, the Committee may as a precautionary measure give a notice of motion to disallow the instrument.

The Committee would therefore appreciate advice on the above matter before 19 November 2010. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

 

17 November 2010

Senator the Hon Ursula Stephens

Standing Committee on Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator Stephens

Thank you for your letter of 28 October 2010 regarding the Standing Committee on Regulations and Ordinances’ examination of the Producer Offset Amendment Rules 2010 (No.1) (referred to below as the Amending Rules) made under the Income Tax Assessment Act 1997 (ITAA 97).

You have requested advice on the basis for the imposition of an application fee by Screen Australia for provisional certificate under the Government’s Producer Offset tax incentive.

The legal basis for the imposition of an application fee for a provisional certificate was clarified in advice received by Screen Australia from the Australian Government Solicitor. This advice confirmed that there is no legal impediment to the imposition of such a fee in circumstances where the Screen Australia Act 2008 expressly authorises the agency to charge fees for acts done in the performance of its functions, and the fee is charged as a means of cost recovery for the provision of a service (to the production industry).

Subsection 6(4) of the Screen Australia Act 2008 provides that Screen Australia may charge fees for things done in performing its duties.

The rationale for the decision to impose application fees for provisional certificates is to recover costs being incurred by Screen Australia for which it does not receive specific funding from the Government.

Since the introduction of the Producer Offset, it has become routine practice for productions using the Offset as part of their financing structure to seek provisional certification by Screen Australia, acting as the ‘film authority’ for the purposes of the Offset. A final Producer Offset certificate will only be issued after completion of an eligible production and payment of the Offset occurs through the income tax system following lodgement of the producer’s tax return for the relevant income year.

This means that producers must cashflow the amount of the project’s anticipated tax rebate during production, often through third party finance. It is a standard requirement of financiers and investors that such projects seek provisional certification.

The assessment of an application for a provisional Producer Offset certificate involves a review of often complex rights and financing documentation for compliance with the relevant requirements of the ITAA 97. Screen Australia staff liaise closely with applicants in the course of this review.

During the 2009-10 financial year, Screen Australia received and determined 136 applications for a provisional Producer Offset certificate. The demands on Screen Australia’s resources associated with the processing and determination of provisional certificate applications are considerable. These demands must be managed in conjunction with the efficient processing and determination of applications for final Producer Offset certification. During the 2009-10 financial year, Screen Australia also received and determined 128 applications for a final Producer Offset certificate.

Screen Australia’s regulatory functions as the ‘film authority’ are in addition to its production, development and marketing support activities and its regulatory functions as the competent authority under Australia’s International Co-production Program.

Screen Australia has not received any specific appropriation to fund the performance of its functions as Australia’s film authority for administering the Producer Offset. Screen Australia has therefore determined that the costs of the provisional certification process could be defrayed, in part, by the introduction of fees on applications for a provisional Producer Offset certificate.

To ensure that the fee operates in an equitable manner, the fees payable under the Amending Rules are calculated on a sliding scale by reference to total film expenditure. The level of fees introduced under the Amending Rules will not be sufficient to achieve actual cost recovery (having regard to actual relevant operational expenditure, historical application volumes and projected future volumes). However, the fees will be of assistance in providing a modest contribution to salary and associated costs directly referable to the processing and determining of provisional Producer Offset certificates.

Further background is available in the Explanatory Statement accompanying the Amending Rules.

During the course of preparing the Amending Rules, Screen Australia undertook formal consultation with the Attorney-General’s Department (Office of Legislative Drafting and Publishing). Screen Australia also liaised with the Office for the Arts (formerly the Department of the Environment, Water, Heritage and the Arts) and the Australian Taxation Office during this period.

I trust this information is of assistance to the Committee’s examination.

Yours sincerely

SIMON CREAN

Minister for Regional Australia, Regional Development and Local Government

Minister for the Arts

 

25 November 2010

The Hon Simon Crean MP

Minister for the Arts

Suite MG.47

Parliament House

CANBERRA ACT 2600

Dear Minister

Thank you for your response of 17 November 2010 in which you provide advice in response to the Committee’s concerns with the Producer Offset Amendment Rules 2010 (No. 1) made under section 376-265 of the Income Tax Assessment Act 1997.

Your explanation as to why the fees are being imposed is helpful. However, the Committee’s concern is that section 376-265 does not expressly give Screen Australia authority to charge fees. In your response you advise that this authority is supplied instead by subsection 6(4) of the Screen Australia Act 2008, the legal basis of which was clarified in advice from the Australian Government Solicitor. The Committee would appreciate receiving a copy of the advice to assist it with its consideration of this matter.

In the meantime, while there may be an argument that the authority to charge fees can be read into section 376-265, it would avoid any doubt if the instrument expressly referred to subsection 6(4) of the Screen Australia Act.

As previously advised, the Committee operates within the disallowance timeframe established by the Legislative Instruments Act 2003 and works toward completing consideration of a legislative instrument before the expiry of the 15th sitting day after it has been tabled in the Senate. Changes to the Senate sitting pattern have brought the 15th sitting day forward to Friday 26 November 2010. As a precautionary measure, and in order to allow time for further discussion on this matter, the Committee has agreed to give a notice of motion to disallow these Rules tomorrow.

The Committee would appreciate advice on the above matter before 17 January 2011. Correspondence should be directed to the Chair, Senate Standing Committee on Regulations and Ordinances, Room S1.111, Parliament House, Canberra.

Yours sincerely

Senator the Hon Ursula Stephens

Chair

 

12 January 2011

Senator the Han Ursula Stephens

Standing Committee on Regulations and Ordinances

Parliament House

CANBERRA ACT 2600

Dear Senator Stephens

Thank you for your letter of 25 November 2010 regarding the further consideration by the Standing Committee on Regulations and Ordinances (the Committee) of the Producer Offset Amendment Rules 2010 (No.1) (the Instrument) made by Screen Australia under section 376 265 of the Income Tax Assessment Act 1997. I note that the Committee has lodged a notice of motion to disallow the Instrument, pending satisfaction of the two matters raised in your letter. By this letter, I am providing further information to address those matters.

You indicated that the Committee seeks a copy of the advice of the Australian Government Solicitor (AGS) upon which Screen Australia has relied. Please find enclosed a copy of the portion of the AGS advice which addresses the question of the legal basis for the imposition of fees.

You also indicated that it may be preferable for the Instrument to specifically refer to the statutory power upon which Screen Australia is relying (subsection 6(4) of the Screen Australia Act 2008). Screen Australia has advised that, in conjunction with the Office of Legislative Drafting and Publishing in the Attorney-General’s Department, it will amend Rule 8A of the Producer Offset Rules 2007 in early 2011. This further instrument will specifically refer to the head of power in subsection 6(4) of lJ1e Screen Australia Act 2008.

Yours sincerely

SIMON CREAN

Minister for Regional Australia, Regional Development and Local Government Minister for the Arts