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Radio Licence Fees Amendment Bill 1991



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House: House of Representatives Portfolio: Transport and Communications Purpose To decrease radio licence fees and replace the current establishment and AM/FM conversion fee with an FM access fee.

Background The Radio Licence Fees Act 1964 (the Principal Act) requires commercial radio licensees to pay the Commonwealth a licence fee calculated on the basis of their annual gross earnings from broadcasting of advertisements and other material. Licence fees increase in a progressive manner as gross earnings increase. Licence fees are payable on each anniversary of the date on which a licence commenced. `Gross earnings' is defined by subsection 4(1) of the Principal Act to be:

(a) in a case to which paragraph (b) does not apply - the gross earnings of the licensee during that period from the broadcasting, pursuant to the licence, of advertisements or other material; or

(b) in the case of a remote licence to which sub- section 81(6) of the Broadcasting Act 1942 applies - the aggregate amount of the gross earning during that period from the broadcasting of material pursuant to the licence of advertisements or other material of all the persons who, at any time during that period, are co- owners of the licence.

Section 7 of the Principal Act provides that where the Minister is of the opinion that an amount earned by a person other the licensee would, if that person were part of the licensee, form part of the gross earnings of the licensee and the relationship which exists between the licensee and the other person, such as common shareholding, is of such a kind that the amount should be treated as part of the licensee's gross earnings, then the Minister may direct that the amount be treated as part of the licensee's gross earnings.

Section 6B of the Principal Act deals with the fee for conversion to FM. Basically, section 6B of the Principal Act applies to existing, non- metropolitan AM licences where the Minister has called for applications for new licences in substantially the same service area. The fee payable is 50% of the amount contained in the notice requesting applications for the new station. This amount depends on a number of factors including: if there is only one licence whose service area is substantially the same as the proposed licence, the fee is an amount equal to the gross earnings of that licence during the fee period; where there are two or more licences covering substantially the same are, the fee is the average of their earning; where there is no other licence which has substantially the same service are as that of the proposed licence, but there is an overlap of at least 70%, the fee is calculated on the gross earnings of the overlapping licence multiplied by the fraction calculated on the overlap and the service populations; and in other cases, the fee is calculated on the service area population multiplied by $15, or such higher amount as is prescribed.

It is estimated in the Explanatory Memorandum to this Bill that the amendments proposed by this Bill will reduce Commonwealth revenue from commercial radio licence fees by $8 million in 1991- 92 and $8.5 million in 1992- 93.

Main Provisions Clause 6, which will have effect from 1 January 1992, will amend subsection 6(2A) of the Principal Act to reduce radio licence fees. The proposed reduced licence fees will be: (a) where gross earnings are less than $5 million - 0.25% of gross earnings; (b) for gross earnings between $5 million and $6 million - 1.75% of gross earnings; (c) for gross earnings between $6 million and $7 million - 2.2% of gross earnings; (d) for gross earnings between $7 million and $10 million - 2.65% of gross of gross earnings; and (e) for gross earnings over $10 million - 3.1% of gross earnings. Note: These figures are based on the percentages given by the Minister on the introduction of a similar Bill, the Radio Licence Fees Amendment Bill 1987, on the 28 October 1987.

Under subsection 6(2) of the Principal Act, licence fees are payable on each anniversary of the date on which a radio licence commenced. A new subsection 6(2) will be inserted into the Principal Act by clause 7, which will have effect from 31 December 1992, that will make the licence fee payable on the 31 December of each year.

A new section 6B will be substituted, and a new section 6BA inserted, into the Principal Act by clause 10. The effect of proposed section 6B will be that an FM access fee will be payable to the Commonwealth in respect of: the grant of a non- metropolitan FM commercial radio licence; the grant of a non- metropolitan supplementary radio licence; or conversion to FM of a non- metropolitan licence. Proposed section 6BA sets out the proposed method of calculating the FM access fee. The amount of fee will be determined by the Australian Broadcasting Tribunal (ABT) and will depend on a number of factors including: the number of existing area licences; the average gross earnings of area licences; and the likely grant by the ABT of any area licences.

Bills Digest Service 10 December 1991 Parliamentary Research Service

For further information, if required, contact the Law and Government Group on 06 2772430.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1991.

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Published by the Department of the Parliamentary Library, 1991.