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Telstra (Transition to Full Private Ownership) Bill 2003 [No. 2]

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2002-2003-2004

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

TELSTRA (TRANSITION TO FULL PRIVATE OWNERSHIP) BILL 2003

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Communications, Information

Technology and the Arts, the Hon. Daryl Williams AM QC MP)

 

 



TELSTRA (TRANSITION TO FULL PRIVATE OWNERSHIP) BILL 2003

 

 

OUTLINE

 

 

The Telstra (Transition to Full Private Ownership) Bill 2003 (the Bill) amends the Telstra Corporation Act 1991 (the Telstra Corporation Act) to repeal the provisions that require the Commonwealth to retain 50.1 per cent of its equity in Telstra Corporation Limited (Telstra). 

 

The Bill gives the Commonwealth the flexibility to use a wide range of approaches to conduct the sell down of Telstra either through a single tranche, several tranches or other approaches such as placements.  The Minister for Finance and Administration will be able to make a determination setting out rules governing a Telstra sale scheme.   To ensure that any proposed access by Telstra to equity markets does not compromise the Commonwealth’s objective of divesting its entire equity in Telstra, the Minister for Finance and Administration will also be able to direct Telstra not to engage in any specified activities outside a Telstra sale scheme that may dilute the Commonwealth’s equity.

 

The Bill responds to recommendations of the Regional Telecommunications Inquiry Report of 2002 (the Estens Report) relating to:

 

·         the need for Telstra to maintain a local presence in regional, rural and remote parts of Australia; and



·         regular independent reviews into the adequacy of telecommunications in regional, rural and remote parts of Australia.

 

Item 1 of Schedule 1 to the Bill provides that any licence condition made by the Minister for Communications, Information Technology and the Arts requiring Telstra to maintain a local presence in regional, rural or remote parts of Australia may empower the Minister or the Australian Communications Authority (ACA) to make decisions of an administrative character.  Such a licence condition could, for example, require the Minister to approve a draft local presence plan setting out how Telstra will fulfil its obligations to maintain a local presence in regional, rural and remote parts of Australia.  It is envisaged that the licence condition will provide a high degree of certainty and reassurance for:

 

·         regional, rural and remote communities ¾ that an effective Telstra local presence will be maintained; and



·         Telstra ¾ that it will maintain the right to manage its regional operations autonomously and in its commercial interests.

 

Item 32 of Schedule 1 will insert a new Part 10 of the Telstra Corporation Act relating to regular independent reviews of regional telecommunications.  The reviews will be undertaken at least every 5 years by an independent expert committee appointed by the Minister for Communications, Information Technology and the Arts known as the Regional Telecommunications Independent Review Committee (RTIRC).  The committee will be required to report to the Minister on its findings and recommendations and this report will be required to be tabled in the Parliament.

 

Part 1 of Schedule 1 to the Bill also makes amendments to the Telstra Corporation Act 1991 that will allow the Commonwealth to sell its remaining equity interest in Telstra.

 

Part 2 of Schedule 1 to the Bill makes amendments to various Acts and regulations as a consequence of Telstra ceasing to be Commonwealth controlled.  Transitional amendments will preserve the rights of Telstra employees who have long service leave or maternity leave entitlements or certain retirement benefits under Commonwealth legislation, while they remain Telstra employees.

 

Transitional provisions will also:

 

·                     require Telstra to continue to deal with any requests under the Freedom of Information Act 1982 for access to a document in the possession of Telstra that have not been finally disposed of when Telstra ceases to be Commonwealth controlled and preserve the rights of persons making such requests under the Administrative Appeals Tribunal Act 1975 ;



·                     enable the Commonwealth Ombudsman to continue to investigate any complaints in relation to action taken by Telstra that have not been finally disposed of when Telstra ceases to be Commonwealth controlled;



·                     preserve the operation, in respect of events occurring prior to Telstra ceasing to be Commonwealth controlled, of the Crimes (Superannuation Benefits) Act 1989 and Director of Public Prosecutions Act 1983 ;



·                     ensure that from the cessation of Commonwealth control, Telstra’s liability in respect of injuries suffered by employees prior to 1 July 1989 continues under section 128A of the Safety, Rehabilitation and Compensation Act 1988 ;

 

·                     remove Telstra from the operation of the Occupational Health and Safety (Commonwealth Employment) Act 1991 from the cessation of Commonwealth control.

 

Part 2 of Schedule 1 to the Bill will also provide that Part 3 of the Telstra Corporation Act, which enables the Minister to give certain directions to Telstra in the public interest, will cease to apply when the Minister is satisfied that the Commonwealth’s equity has fallen below 50 per cent.

 

The current provisions of the Telstra Corporation Act that impose certain reporting obligations on Telstra will cease to apply when the Minister for Communications, Information Technology and the Arts is satisfied that the Commonwealth’s equity in Telstra has fallen to 15 per cent or less, known as the ‘85% sale day’ (Part 3 of Schedule 1 to the Bill).  This threshold is consistent with the level at which substantial interest considerations are triggered under the Foreign Acquisitions and Takeovers Act 1975 .  It has been chosen to help ensure that if a multiple tranche sale is necessary, the Commonwealth continues to be fully informed on Telstra’s actions and plans until the Commonwealth no longer holds a substantial interest in Telstra.

 

FINANCIAL IMPACT STATEMENT

 

Full financial costs and benefits from a future sale or sales of the Commonwealth’s remaining shareholding in Telstra are difficult to quantify at this stage. 

 

The total market value of the Commonwealth’s remaining shares in Telstra based on the share price on 29 January 2004 is about $31.6 billion.  The amount raised on a future sale or sales would be dependent on the sale processes, the structure of the offer and market circumstances at the time.

 

The costs of conducting a sale are expected to be consistent with previous Telstra share offers, that is in the range of 1.1% to 2% of sale proceeds.   The Department of Finance and Administration will manage the sale process.

 

The 2003-2004 Budget papers indicated that the forward estimates include the effect of the sale of the Commonwealth’s shareholding in Telstra, noting that the level of proceeds will depend, among other things, on the prevailing levels of world equity markets at the time of the sale.

 

Proceeds from sale of the Commonwealth's remaining shareholding in Telstra will be used to reduce net debt and may also be allocated to fund other Commonwealth liabilities.  While the Commonwealth will forgo future dividends from Telstra it will continue to benefit from taxation payments, including through taxation of eligible income received by the private shareholders.

 

NOTES ON CLAUSES

 

 

Clause 1 - Short title

 

Clause 1 provides that the Bill, when enacted, may be cited as the Telstra (Transition to Full Private Ownership) Act 2003 .

 

Clause 2 - Commencement

 

Clause 2 provides for various provisions of the Bill, when enacted, to commence on specified days or times.

 

Clauses 1 to 3 of the Bill will commence on Royal Assent (see item 1 the table under subclause 2(1)).  Schedule 1 to the Bill will also commence on Royal Assent (see item 2 in the table).  Schedule 1 will amend the Telstra Corporation Act:

 

·         to allow the Commonwealth, or a wholly-owned Commonwealth company, to sell the Commonwealth’s remaining equity interest in Telstra;



·         to enable the Minister for Communications, Information Technology and the Arts to make a licence condition requiring Telstra to maintain a local presence in regional, rural and remote parts of Australia; and



·         to provide for regular independent reviews of regional telecommunications.

 

The remaining provisions of the Bill will commence on specified days or times, as follows.

 

Designated day

 

Part 2 of Schedule 1 provides for the repeal of Part 3 of the Telstra Corporation Act, which enables the Minister to give certain directions to Telstra in the public interest.  It also makes consequential amendments to various Acts and regulations, and includes certain transitional arrangements.  It permits the Auditor-General to resign as auditor of Telstra and inserts a new Part 3A in the Telstra Corporation Act that contains transitional provisions relating to the sale by the Commonwealth, or a wholly-owned Commonwealth company, of the Commonwealth’s remaining equity interest in Telstra.  Some of those transitional provisions relate to Commonwealth Acts that cease to apply to Telstra when the Commonwealth ceases to hold a majority of the voting shares in Telstra. 

 

Accordingly, the day this occurs (the designated day) has been chosen as the day on which various Commonwealth Acts should cease to apply in relation to Telstra and transitional provisions should operate to preserve employee entitlements and benefits.

 

Item 3 in the table under subclause 2(1) provides for Part 2 of Schedule 1 to commence on the designated day.

 

The designated day is declared by the Minister under subclause 2(3) and is the day that, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.  The effect of the definition of ‘the Commonwealth’ in subclause 2(9) is that a reference to ‘the Commonwealth’ in subclause 2(3) will include ‘the hybrid-security issuer company’ which will be defined in section 3 of the Telstra Corporation Act to have the meaning given by section 8AJ of that Act as proposed to be amended by item 14 of Schedule 1 to the Bill (see item 3 of Schedule 1 to the Bill).  As part of the sale scheme arrangements, it is possible that the Commonwealth may transfer some of its shares in Telstra to a wholly-owned Commonwealth company (the hybrid-security issuer company) that would issue sale-scheme hybrid securities.  ‘Sale-scheme hybrid security’ is defined in item 16 of Schedule 1 to the Bill to mean an interest-bearing security, a share, or any other security that is issued on the basis that it will or may be redeemed in exchange for a share or shares in Telstra; or an option to buy a share or shares in Telstra. 

 

Hybrid securities are a broad classification for a group of securities that combine both debt and equity characteristics.  The additional characteristics, compared to ordinary equity, make these securities attractive to additional groups of investors.  Accessing all relevant investor groups will be an important consideration for the successful conduct of further sales of Telstra.  Typically a hybrid security will be capable of exchange into the underlying Telstra share or shares at a specified future date.

 

The Minister’s declaration of the ‘designated day’ under subclause 2(3) will have effect accordingly (subclause 2(4)).  A copy of the Minister’s declaration will be required to be published in the Commonwealth of Australia Gazette within 21 days after the designated day (subclause 2(5)).

 

85% sale day

 

Part 3 of Schedule 1 to the Bill will repeal Division 3 of Part 2 of the Telstra Corporation Act, which imposes reporting obligations on Telstra.  It will also repeal proposed section 8AYA, inserted by item 27 of Schedule 1 to the Bill, which enables the Minister for Finance and Administration to direct Telstra not to dilute the Commonwealth’s equity in Telstra.  The object of proposed section 8AYA is to ensure that any proposed access by Telstra to equity markets outside a Telstra sale scheme does not compromise the Commonwealth’s objective of divesting its entire equity in Telstra.

 

It is proposed to repeal these provisions when the Minister for Communications, Information Technology and the Arts is satisfied that the Commonwealth’s equity has fallen to 15 per cent or less, known as the ‘85% sale day’ (see item 4 in the table under subclause 2(1)).  This threshold is consistent with the level at which substantial interest considerations are triggered under the Foreign Acquisitions and Takeovers Act 1975 .  It has been chosen to help ensure that if a multiple tranche sale is necessary, the Commonwealth continues to be fully informed on Telstra’s activities and plans until the Commonwealth no longer holds a substantial interest in Telstra.

 

The effect of the definition of ‘the Commonwealth’ in subclause 2(9) is that a reference to ‘the Commonwealth’ in subclause 2(6) will include ‘the hybrid-security issuer company’ which will be defined in section 3 of the Telstra Corporation Act to have the meaning given by section 8AJ of that Act as proposed to be amended by item 14 of Schedule 1 to the Bill (see item 3 of Schedule 1 to the Bill).  As part of the sale scheme arrangements, it is possible that the Commonwealth may transfer some of its shares in Telstra to a wholly-owned Commonwealth company (the hybrid-security issuer company) that would issue sale-scheme hybrid securities.  ‘Sale-scheme hybrid security’ is defined in item 16 of Schedule 1 to the Bill to mean an interest-bearing security, a share, or any other security that is issued on the basis that it will or may be redeemed in exchange for a share or shares in Telstra; or an option to buy a share or shares in Telstra. 

 

The Minister will be required to declare the 85% sale day by written instrument (subclause 2(6)).  The Minister’s declaration will have effect accordingly (subclause 2(7)).  A copy of the Minister’s declaration will be required to be published in the Commonwealth of Australia Gazette within 21 days after the 85% sale day (subclause 2(8)).

 

Clause 3 - Schedule(s)

 

Subclause 3(1) provides for the making of the amendments and repeals to the Acts and regulations specified in the Schedules in accordance with the items in the Schedules and for the other items in the Schedules to have effect according to their terms.

 

Subclause 3(2) ensures that the amendment of regulations in the Schedules does not prevent later amendments or repeal of those regulations by the Governor-General.



 

Schedule 1--Amendments

 

Part 1 -- Amendments commencing on Royal Assent

 

Telecommunications Act 1997

 

Item 1 - Insertion of section 66 of the Telecommunications Act

 

Under section 63 of the Telecommunications Act, the Minister for Communications, Information Technology and the Arts may, by written instrument, declare that Telstra’s carrier licence is subject to such conditions as are specified in the instrument.  A copy of any such instrument must be published in the Commonwealth of Australia Gazette and is a disallowable instrument for the purposes of the Acts Interpretation Act 1901 .   It is therefore required to be tabled in both Houses of Parliament and is subject to Parliamentary disallowance.

 

Item 1 of Schedule 1 to the Bill provides that any licence condition made by the Minister for Communications, Information Technology and the Arts under section 63 requiring Telstra to maintain a local presence in regional, rural or remote parts of Australia may empower the Minister or the Australian Communications Authority (ACA) to make decisions of an administrative character.  Such a licence condition could, for example, require the Minister to approve a draft local presence plan setting out how Telstra will fulfil its obligations to maintain a local presence in regional, rural and remote parts of Australia.  It is envisaged that the licence condition will provide a high degree of certainty and reassurance for:

 

·         regional, rural and remote communities ¾ that an effective Telstra local presence will be maintained; and



·         Telstra ¾ that it will maintain the right to manage its regional operations autonomously and in its commercial interests.

 

The local presence plan requirements are aimed at ensuring the continuation and further development of Telstra endeavours such as Telstra Country Wide ® (TCW) in regional, rural and remote Australia.  TCW is a business unit within Telstra, established as a result of a commercial decision by Telstra to gain a better understanding of the requirements of its regional customers, and to provide a better focus on the delivery of services in regional, rural and remote areas.  Inherent in the TCW concept is the devolution of a high degree of responsibility to managers in the regions for building business opportunities and servicing regional customers.

 

The reference to ‘Australia’ in proposed paragraph 66(1)(b) will not include the ‘adjacent areas’ of the States, the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands where the exploration of the continental shelf of Australia takes place or resources of the continental shelf are exploited eg. on an oil rig in the continental shelf (proposed subsection 66(3)).

 

The reference to ‘Australia’ in proposed paragraph 66(1)(b) will also not include the eligible Territories as defined in section 7 of the Telecommunications Act (proposed subsection 66(4)).  This means that any licence condition requiring Telstra to maintain a local presence in regional, rural and remote parts of Australia will not require Telstra to maintain a local presence in the Territory of Christmas Island, the Territory of Cocos (Keeling) Islands or on any other external Territory prescribed for the purposes of section 10 of the Telecommunications Act.  (No other external Territory has been prescribed for the purposes of section 10.)

 

Telstra Corporation Act 1991

 

Items 2 to 7 - Insertion of definitions of ‘ACCC’, ‘hybrid-security issuer company’, ‘RTIRC’, ‘RTIRC Chair’, ‘RTIRC member’ and ‘sale-scheme hybrid security’ in section 3 of the Telstra Corporation Act

 

Definition of ‘ACCC’

 

Item 2 inserts a definition of ‘ACCC’ in section 3 of the Telstra Corporation Act for the purposes of proposed section 86 of the Telstra Corporation Act (inserted by item 32 of Schedule 1 to the Bill) which provides that the ACCC may assist the proposed Regional Telecommunications Independent Review Committee (RTIRC) in the performance of its functions.

 

Definitions of ‘hybrid-security issuer company’ and ‘sale-scheme hybrid security’

 

Item 3 provides for the definition of ‘hybrid-security issuer company’ to be inserted in section 3 of the Telstra Corporation Act.  This term will have the meaning given by section 8AJ of that Act as proposed to be amended by item 14. 

 

As part of the sale scheme arrangements, it is possible that the Commonwealth may transfer some of its shares in Telstra to a wholly-owned Commonwealth company (the hybrid-security issuer company) that would issue sale-scheme hybrid securities.  ‘Sale-scheme hybrid security’ is defined in item 7 to have the meaning given by proposed section 8AJA of the Telstra Corporation Act (see the discussion at item 16 below). 

 

Definitions of ‘RTIRC’, ‘RTIRC Chair’ and ‘RTIRC member’

 

Items 4 to 6 insert definitions in section 3 of the Telstra Corporation Act for the purposes of proposed Part 10 of that Act (see item 32).  This new Part will provide for regular independent reviews of regional telecommunications by the Regional Telecommunications Independent Review Committee (RTIRC).

 

Item 8 - Amendment of section 8AA of the Telstra Corporation Act

 

Section 8AA of the Telstra Corporation Act contains a simplified outline of Part 2 of that Act which deals with Commonwealth ownership of Telstra.

 

Item 8 amends the simplified outline as a consequence of item 9 below to indicate that the Commonwealth will be able, after the Bill receives Royal Assent, to sell its remaining 50.1% equity interest in Telstra.

 

Item 9 - Repeal of Division 2 of Part 2 of the Telstra Corporation Act

 

Item 9 repeals Division 2 of Part 2 of the Telstra Corporation Act which deals with Commonwealth ownership of Telstra, with effect from the day on which the Bill receives Royal Assent.  This will enable the Commonwealth to sell its remaining 50.1% equity interest in Telstra from that day.  The timing of any sale or sales will, of course, depend on prevailing market conditions.

 

Items 10 to 15 - Amendment of section 8AJ of the Telstra Corporation Act

 

Subsection 8AJ(1) of the Telstra Corporation Act provides that the object of section 8AJ is to define certain sale-scheme related expressions.  Item 10 provides that one of the objects of section 8AJ will be to define ‘hybrid-security issuer company’ (see item 14).

 

Subsection 8AJ(2) of the Telstra Corporation Act defines the term ‘Telstra sale scheme’ for the purposes of the Act.

 

Item 11 amends subsection 8AJ(2) to make a technical amendment consequential on the repeal of Division 2 of Part 2 by item 9.  The amendment recognises that the object of a Telstra sale scheme may be to transfer the whole or a part of the Commonwealth’s equity in Telstra to other persons.

 

Item 12 repeals subsection 8AJ(3) consequential on the repeal of Division 2 of Part 2 by item 9 and replaces it with new subsections 8AJ(3) and (3A).  These new provisions will enable the Minister for Finance and Administration (see the definition of ‘Minister for Finance’ in section 3 of the Telstra Corporation Act) to make a written determination setting out rules that are to be complied with by a Telstra sale scheme.

 

The period over which the sale scheme provisions will operate is not clear at this time.  It may be necessary, depending on market conditions operating at the time of the sale, for additional rules governing a sale scheme to be established which operate with the force of law.  This item provides the legislative framework for such rules.  The formal sale period for a share offer takes place over a limited time, typically 6 to 7 weeks.  If the circumstances require the issue of a Ministerial determination, a high degree of certainty of operation is likely to be required.  This certainty would not be available if the determination were subject to disallowance for a period that could go beyond the completion of the share offer.

 

As a result of subsection 33(3) of the Acts Interpretation Act 1901 , the Minister’s determination will, however, be able to be varied or revoked at any time.

 

Item 13 makes a minor drafting amendment to paragraph 8AJ(4)(j) of the Telstra Corporation Act as a consequence of the proposed addition of new paragraphs 8AJ(4)(k), (l) and (m) by item 14.

 

Item 14 adds additional matters that a Telstra sale scheme may involve. 

 

A Telstra sale scheme may involve the Commonwealth issuing sale-scheme hybrid securities (proposed paragraph 8AJ(4)(k)). ‘Sale-scheme hybrid security’ is defined in item 7 to have the meaning given by proposed section 8AJA of the Telstra Corporation Act (see the discussion on item 16 below).

 

A Telstra sale scheme may also involve a wholly-owned Commonwealth company (the ‘hybrid-security issuer company’) issuing sale-scheme hybrid securities and the Commonwealth transferring some of its shares in Telstra to the hybrid-security issuer company (proposed paragraph 8AJ(4)(l)). 

 

As a result of item 15, the term ‘wholly-owned Commonwealth company’, as used in proposed paragraph 8AJ(4)(l) will be defined to have the same meaning as in the Commonwealth Authorities and Companies Act 1997 (CAC Act), ignoring any sale-scheme hybrid securities issued by the company concerned (to take account of the fact that the hybrid-security issuer company will be able to issue shares in itself that are redeemable in exchange for shares in Telstra).  Section 34 of the CAC Act provides that for the purposes of that Act ‘wholly-owned Commonwealth company’ means any Commonwealth company, other than a company any of the shares in which are beneficially owned by a person other than the Commonwealth.  A ‘Commonwealth company’ is a Corporations Act company in which the Commonwealth has a controlling interest.  However, it does not include a company in which the Commonwealth has a controlling interest through one or more interposed Commonwealth authorities or Commonwealth companies.

 

As the issue of hybrid securities is likely to involve a borrowing, a Telstra sale scheme may also involve the guarantee by the Commonwealth of the obligations of the hybrid-security issuer company to make payments of amounts in relation to sale-scheme hybrid securities (for example, payments of interest or dividends) (proposed paragraph 8AJ(4)(m)).

 

Item 16 - Insertion of proposed section 8AJA of the Telstra Corporation Act

 

Item 16 inserts proposed section 8AJA of the Telstra Corporation Act.  Proposed section 8AJA defines ‘sale-scheme hybrid security’ for the purposes of the Act, as proposed to be amended by the Bill (see, for example, proposed subsection 8AJ(4), proposed paragraphs 8AK(1)(ka) to (kd), proposed section 8AKA and proposed paragraph 8AL(2)(i)).

 

The ability to issue hybrid securities as part of a Telstra sale scheme will provide additional flexibility in the structuring of such a scheme.  Hybrid securities are a broad classification for a group of securities that combine both debt and equity characteristics.  The additional characteristics, compared to ordinary equity, make these securities attractive to additional groups of investors.  Accessing all relevant investor groups will be an important consideration for the successful conduct of further sales of Telstra.  Typically a hybrid security will be capable of exchange into the underlying Telstra share or shares at a specified future date.

 

For the purposes of the Telstra Corporation Act, a ‘sale-scheme hybrid security’ will be broadly defined to mean:

 

(a)                 an interest-bearing security that is issued on the basis that it will or may be redeemed in exchange for a share or shares in Telstra; or



(b)                a share (in the hybrid-security issuer company) that is issued on the basis that it will or may be redeemed in exchange for a share or shares in Telstra; or



(c)                 any other security that is issued on the basis that it will or may be redeemed in exchange for a share or shares in Telstra; or



(d)                an option to buy a share or shares in Telstra (proposed subsection 8AJA(1)).

 

The references to a security or share that ‘will be redeemed’ in exchange for a share or shares in Telstra are references to an issue of the security or share on the basis that redemption will be mandatory after a specified period.

 

The references to a security or share that ‘may be redeemed’ in exchange for a share or shares in Telstra are references to an issue of the security or share on the basis that redemption will be optional after a specified period.

 

An interest-bearing hybrid security that is redeemable in exchange for a share or shares in Telstra may, but need not, include a charge over property to secure repayment (proposed subsection 8AJA(2)), may be issued in Australia or overseas, and may be denominated in Australian or foreign currency (proposed subsection 8AJA(3)).

 

A share (in the hybrid-security issuer company) that is redeemable in exchange for a share or shares in Telstra may be issued in Australia or overseas and any rights or obligations in relation to the share may be denominated in Australian or foreign currency (proposed subsection 8AJA(4)).

 

Similarly, a non-interest bearing security that is redeemable in exchange for a share or shares in Telstra may be issued in Australia or overseas and may be denominated in Australian or foreign currency (proposed subsection 8AJA(5)).

 

An option to buy a share or shares in Telstra may be issued in Australia or overseas and the exercise price may be denominated in Australian or foreign currency (proposed subsection 8AJA(6)).

 

Item 17 - Amendment of subsection 8AK(1) of the Telstra Corporation Act

 

Section 8AK of the Telstra Corporation Act provides that stamp duty or other tax is not payable under a law of a State or Territory in respect of designated matters (ie. certain matters relating to entering into or carrying out a Telstra sale scheme).

 

Item 17 expands the list of designated matters in subsection 8AK(1), where the matter relates to the entering into or carrying out of a Telstra sale scheme, to include:

 

·         the issue of sale-scheme hybrid securities (see item 16);



·         the receipt of money by the Commonwealth, or its agent, in respect of the issue of sale-scheme hybrid securities;



·         the receipt of money by the hybrid-security issuer company (see item 14), or its agent, in respect of the issue of sale-scheme hybrid securities;



·         the redemption of sale-scheme hybrid securities;



·         the transfer by the hybrid-security issuer company of a share in Telstra held by the company; and



·         an agreement relating to such a transfer.

 

Item 18 - Insertion of proposed section 8AKA of the Telstra Corporation Act - Authorisation of borrowing ¾ issue of sale-scheme hybrid securities



Item 18 inserts proposed section 8AKA in the Telstra Corporation Act.  This provides that to the extent to which the issue of sale-scheme hybrid securities (see item 16) under a Telstra sale scheme involves a borrowing of money by the Commonwealth, the borrowing is authorised.

 

This will ensure that section 37 of the Financial Management and Accountability Act 1997 (FMA Act) is complied with.  Section 37 of the FMA Act provides that an agreement for the borrowing of money by the Commonwealth is of no effect unless the borrowing is authorised by an Act.  Proposed section 8AKA provides the required authorisation.



Items 19 to 21 - Amendment of subsection 8AL(2) of the Telstra Corporation Act

 

Subsection 8AL(1) of the Telstra Corporation Act provides an appropriation for the costs and expenses incurred by the Commonwealth in connection with carrying out a Telstra sale scheme.  Subsection 8AL(2) gives examples of the costs and expenses that are covered by subsection 8AL(1).

 

Item 21 adds further examples of the costs, expenses and obligations referred to in subsection 8AL(1).  These include:

 

·         calls on guarantees given by the Commonwealth (enabling the Commonwealth to guarantee borrowings by the hybrid-security issuer company); and



·         obligations to make payments of amounts in relation to sale-scheme hybrid securities issued by the Commonwealth (including, but not limited to, payments of interest).

 

Items 19 and 20 make amendments consequential on item 21.

 

Items 22 to 24 - Amendment of section 8AR of the Telstra Corporation Act

 

Items 22 to 24 update references to provisions in the Corporations Act 2001 in paragraphs 8AR(1)(b) and (c) of the Telstra Corporation Act and repeal subsections 8AR(2) and (3) as a consequence of the updated references.

 

Section 8AQ of the Telstra Corporation Act provides for Telstra to assist the Commonwealth in connection with a Telstra sale scheme.  Paragraph 8AR(1)(b) provides that the assistance mentioned in section 8AQ may take the form of giving of financial assistance (within the meaning of section 205 of the Corporations Act).  Section 205 has been repealed.  The repeal of section 205 was contemplated by subsection 8AR(2) which provides that if section 205 were repealed and replaced by a comparable provision, the reference in paragraph 8AR(1)(b) to section 205 was to be read as a reference to the replacement provision.  The relevant provisions dealing with financial assistance are now in Part 2J.3 of the Corporations Act.

 

Paragraph 8AR(1)(c) provides that the assistance mentioned in section 8AQ may take the form of the giving of a financial benefit to a related party (within the meaning of Part 3.2A of the Corporations Act).  Part 3.2A has been repealed.  The repeal of Part 3.2A was contemplated by subsection 8AR(3) which provides that if Part 3.2A were repealed and replaced by a comparable provision, the reference in paragraph 8AR(1)(c) to Part 3.2A was to be read as a reference to the replacement provision.  The relevant provisions dealing with the giving of financial benefits to related parties are now in Chapter 2E of the Corporations Act.

 

Items 25 and 26 - Amendment of section 8AV of the Telstra Corporation Act

 

Items 25 and 26 update a reference to a provision in the Corporations Act 2001 in subsection 8AV(5) of the Telstra Corporation Act and repeal subsection 8AV(6) as a consequence of the updated reference.

 

Section 8AV of the Act deals with certain reductions in Telstra’s share capital in connection with a Telstra sale scheme.  Subsection 8AV(5) includes a reference to section 195 of the Corporations Act.  Section 195 now deals with an unrelated subject matter (restrictions on voting by directors of public companies).  The relevant provisions of the Corporations Act on share capital reductions are now contained in Part 2J.1 of the Corporations Act.

 

Item 25 therefore replaces the reference to section 195 with a reference to Part 2J.1 of the Corporations Act and item 26 repeals subsection 8AV(6) (which contemplated the possible replacement of section 195 and is no longer required).

 

Item 27 - Insertion of sections 8AYA, 8AYB and 8AYC of the Telstra Corporation Act

 

Proposed section 8AYA - Minister for Finance may direct Telstra not to dilute the Commonwealth’s equity in Telstra

 

Item 27 inserts a new section 8AYA in the Telstra Corporation Act to give the Minister for Finance and Administration (see the definition of ‘Minister for Finance’ in section 3 of the Act) a reserve power to direct Telstra not to engage in any specified activities outside a Telstra sale scheme that may dilute the Commonwealth’s equity.    The reference to ‘the Commonwealth’ in proposed section 8AYA will include the hybrid-security issuer company (proposed subsection 8AYA(8)) to which the Commonwealth has transferred some of its shares in Telstra.  The purpose of this provision is to ensure that any proposed access by Telstra to equity markets does not compromise the Commonwealth’s objective of divesting its entire equity in Telstra.

 

Proposed subsection 8AYA(1) defines ‘equity-dilution conduct’ for the purposes of proposed section 8AYA.  This is conduct that will result, or is likely to result, in a dilution of the Commonwealth’s equity in Telstra and is not carried out under a Telstra sale scheme.

 

Proposed subsection 8AYA(2) provides that in determining whether conduct is equity-dilution conduct, regard must be had to the economic and commercial substance of the conduct.  This recognises that there may be certain fund raising activities that Telstra proposes to engage in that are desirable and do not compromise the Commonwealth’s objective of divesting its equity in Telstra.

 

Proposed subsection 8AYA(3) provides that proposed subsection (2) does not, by implication, limit proposed subsection (1).  This will allow regard to be had to other relevant matters in determining whether particular conduct is equity-dilution conduct as defined by proposed subsection (1).

 

Proposed subsection 8AYA(4) requires that Telstra notify the Minister for Finance and Administration of any proposed equity-dilution conduct at least 30 days before engaging in that conduct.  The notice will need to set out details of Telstra’s proposal to engage in that conduct and give Telstra’s reasons for the proposal.

 

Proposed subsection 8AYA(5), when read with subsection 46(2) of the Acts Interpretation Act 1901 allows the Minister for Finance and Administration to direct Telstra not to engaged in specified equity-dilution conduct or a specified class of equity-dilution conduct.

 

Proposed subsection 8AYA(6) provides that Telstra must comply with any direction under proposed subsection (5).

 

Proposed subsection 8AYA(7) provides that a breach of proposed section 8AYA will not be an offence.  However, a breach will be a ground for the Minister for Communications, Information Technology and the Arts obtaining an injunction in the Federal Court under Division 1 of Part 2B of the Telstra Corporation Act.

 

Proposed section 8AYA will be repealed when the Minister for Communications, Information Technology and the Arts is satisfied that the Commonwealth’s equity has fallen to 15 per cent or less, known as the ‘85% sale day’ (see item 4 in the table under subclause 2(1) and item 59 of Schedule 1 to the Bill).

 

Proposed section 8AYB - Telstra to give information to the Minister about the level of non-Commonwealth ownership of shares in Telstra

 

The purpose of proposed section 8AYB is to enable the Minister for Communications, Information Technology and the Arts to direct Telstra to give the Minister information about the level of private ownership of shares in Telstra as a result of a Telstra sale scheme (which may include the issue of sale-scheme hybrid securities by the hybrid-security issuer company - see items 7 and 14).

 

This will assist the Minister to determine:

 

·         the ‘designated day’ referred to in subclause 2(3) of the Bill (being the day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth or the hybrid-security issuer company) - this is the day on which Part 2 of Schedule 1 to the Bill commences; and



·         the ‘85% sale day’ referred to in subclause 2(6) of the Bill (being the day on which 85% of the voting shares in Telstra are or were acquired by persons other than the Commonwealth or the hybrid-security issuer company) - this is the day on which Part 3 of Schedule 1 to the Bill commences.



Proposed subsection 8AYB(2) provides that Telstra must comply with any direction under proposed subsection (1).

 

Proposed subsection 8AYB(3) provides that a breach of proposed section 8AYB will not be an offence.  However, a breach will be a ground for the Minister for Communications, Information Technology and the Arts obtaining an injunction in the Federal Court under Division 1 of Part 2B of the Telstra Corporation Act.

 

Proposed section 8AYC - Application of the Ombudsman Act 1976 to Telstra

 

The purpose of proposed section 8AYC is to ensure that Telstra would continue to be subject to the Ombudsman Act 1976 if the Commonwealth were to transfer some of its shares in Telstra to the hybrid-security issuer company (see item 14).  That is, the purpose is to ensure that any such transfer would not result in an unintended triggering of the ‘designated day’ referred to in subclause 2(3) of the Bill.

 

The Ombudsman Act allows the Ombudsman to investigate action taken by a Department or a ‘prescribed authority’.  Section 3 of the Ombudsman Act provides that a prescribed authority includes a Commonwealth-controlled company that is a prescribed authority by virtue of section 3A of that Act.  Section 3A provides that a Commonwealth-controlled company is a prescribed authority unless certain exclusions apply (none of which is relevant for present purposes). 

 

‘Commonwealth-controlled company’ is defined in section 3 of the Ombudsman Act to mean an incorporated company in which the Commonwealth ‘has an interest’ that enables the Commonwealth to control the composition of the board of directors, or the majority of votes that might be cast at a general meeting or a majority of the issued share capital of the company.  If the Commonwealth were to transfer some of its shares in Telstra to the hybrid-issuer security company, proposed section 8AYC will ensure that Telstra will continue to be a ‘Commonwealth controlled company’ for the purposes of the Ombudsman Act notwithstanding the transfer.

 

Item 28 - Amendment of subsection 8BUA(1) of the Telstra Corporation Act

 

Subsection 8BUA(1) of the Telstra Corporation Act requires Telstra to ensure that at least 2 of its directors have knowledge of, or experience in, the communications needs of regional areas of Australia.

 

Item 28 replaces the reference in subsection 8BUA(1) to ‘regional areas’ with a reference to ‘regional, rural or remote areas’ for consistency with the requirements in proposed Part 10 of the Telstra Corporation Act dealing with independent reviews of telecommunications services in regional, rural and remote parts of Australia.

 

Item 29 - Amendment of sections 8CI, 8CJ and 8CK of the Telstra Corporation Act

 

Item 29 makes minor technical amendments consequential on the proposed repeal of Division 2 of Part 2 by item 9 of Schedule 1 to the Bill.

 

Item 30 - Amendment of subsections 8CI(6) and 8CJ(6) of the Telstra Corporation Act

 

Item 30 makes minor technical amendments consequential on the repeal of Division 2 of Part 2 by item 9 of Schedule 1 to the Bill.

 

Item 31 - Amendment of section 8CL of the Telstra Corporation Act

 

Item 31 makes a minor technical amendment consequential on the repeal of Division 2 of Part 2 by item 9 of Schedule 1 to the Bill.

 

Item 32 - Insertion of new Part 10 - Independent reviews of regional telecommunications

 

Item 32 inserts proposed new Part 10 of the Telstra Corporation Act.

 

Part 10 ¾ Independent reviews of regional telecommunications

 

Division 1--Independent reviews of regional telecommunications

 

Proposed section 72 of the Telstra Corporation Act - Reviews of regional telecommunications to be conducted by the RTIRC

 

Proposed subsection 72(1) of the Telstra Corporation Act requires that the proposed Regional Telecommunications Independent Review Committee (RTIRC) will be required to review the adequacy of telecommunications services in regional, rural and remote parts of Australia.

 

The term ‘telecommunications services’ is defined in proposed subsection 72(6) to include carriage services (as defined by the Telecommunications Act 1997 ) and services provided by means of carriage services. 

 

A ‘carriage service’ is defined in the Telecommunications Act to mean a service for carrying communications by means of guided or unguided electromagnetic energy. 

The reference to communications by means of ‘guided electromagnetic energy’ includes communication by means of a wire, cable, waveguide or other physical medium used, or for use, as a continuous artificial guide for or in connection with the carrying of the communication.  The reference to communications by means of ‘unguided electromagnetic energy’ includes communications by means of radiocommunication.

 

The references to ‘Australia’ in proposed section 72 will include the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands but will not include any other external Territory ( Acts Interpretation Act 1901 , paragraph 17(a)).

 

Proposed subsection 72(2) provides that in determining the adequacy of such services, the RTIRC will be required to have regard to whether people in regional, rural and remote parts of Australia have equitable access to telecommunications that are significant to people in those parts of Australia and are currently available in one or more urban parts of Australia.  This will ensure that there is an independent assessment of the state of important telecommunications services, including the relative availability and affordability of such services and the demand for them.  The assessment would also be in the context of the strategies and programs set out in the Commonwealth Government’s proposed strategic plan for regional telecommunications (which would set out government objectives in relation to regional telecommunications, as well as strategies, programs and projects, regulatory arrangements, funding commitments and timeframes for achieving those objectives).

 

Proposed subsection 72(3) provides that the first review will be required to be completed within 5 years after the Bill receives Royal Assent.  Subsequent reviews will be required to be completed within 5 years after the completion of the previous review.  For this purpose, a review will be taken to be completed when the RTIRC gives the Minister its report of its review under proposed section 73.

 

The RTIRC will be required to ensure that in conducting its review there is provision for public consultation, including consultation with people in regional, rural and remote parts of Australia (proposed subsection 72(4)).  This will ensure that there is an opportunity for regional and rural consumers and communities to express their views on their telecommunications needs and priorities.

 

The RTIRC will also be required to ensure that in conducting its review the RTIRC has regard to any policies of the Commonwealth government notified to the RTIRC by the Minister for Communications, Information Technology and the Arts (proposed paragraph 72(5)(a)).  For example, the Minister may notify the RTIRC of the need, in conducting its review, to have regard to the existing legal obligations of carriers, including the obligation to comply with interception capability obligations under Parts 13 to 15 of the Telecommunications Act 1997 .

 

The RTIRC will also be able to have regard to other relevant matters (proposed paragraph 72(5)(b)). 

 

Proposed section 73 of the Telstra Corporation Act - Report of review

 

The RTIRC will be required to prepare a report of its review under proposed section 73 and give it to the Minister (proposed subsection 73(1)).

 

The Minister will be required to arrange for copies of the report to be tabled in each House of Parliament within 15 sitting days of that House after receiving the report (proposed subsection 73(2)).

 

The RTIRC’s report may set out recommendations to the Commonwealth Government (proposed subsection 73(3)).  This will ensure that independent advice is provided to the Commonwealth on whether action should be taken to improve equitable access to telecommunications services in regional, rural and remote areas of Australia. 

 

However, in formulating a recommendation that the Commonwealth should take particular action, the RTIRC will be required to assess the costs and benefits of that action (proposed subsection 73(4)).  This will ensure that the RTIRC undertakes a  cost/benefit analysis of any proposed government intervention in relation to improving access in particular areas before making a recommendation to the Commonwealth Government.

 

The RTIRC will also be able to take other matters into account in formulating a recommendation (proposed subsection 73(5)).

 

If the RTIRC’s report contains recommendations that the Commonwealth should take particular action then, as soon as practicable after receiving the report, the Minister will be required to arrange the preparation of a statement setting out the Commonwealth’s response to the recommendations (proposed paragraph 73(6)(a)).  It is intended that the statement would identify the most appropriate policy mechanisms to achieve the recommended outcomes, funding and timeframe.

 

In addition, if the RTIRC’s report contains recommendations that the Commonwealth should take particular action, the Minister will be required to arrange for copies of the statement setting out the Commonwealth’s response to the recommendations to be tabled in each House of Parliament (proposed paragraph 73(6)(b)).

 

This will ensure that the Commonwealth responds to recommendations contained in a report of the RTIRC and justifies its approach to regional, rural and remote communities.

 

Division 2--Regional Telecommunications Independent Review Committee (RTIRC)

 

Proposed section 74 of the Telstra Corporation Act - Establishment of the RTIRC

 

Proposed section 74 establishes the expert committee to be known as the Regional Telecommunications Independent Review Committee.

 

Proposed section 75 of the Telstra Corporation Act - Functions of the RTIRC

 

Proposed section 75 provides that the RTIRC will have the functions that are conferred on it by proposed Part 10 of the Telstra Corporation Act.

 

Proposed section 76 of the Telstra Corporation Act - Membership of the RTIRC

 

Proposed section 76 deals with the membership of the RTIRC.

 

The RTIRC will consist of a Chair and at least 2 other members (proposed subsection 76(1)).

 

The RTIRC Chair and members will be required to have knowledge of, or experience in matters affecting regional, rural and remote parts of Australia or telecommunications (proposed subsection 76(2)). 

 

The RTIRC Chair and a majority of other RTIRC members will be required to be independent from Telstra and the Commonwealth (proposed subsections 76(3) and (4)).

 

Proposed section 77 of the Telstra Corporation Act - Appointment of RTIRC members

 

The RTIRC members are to be appointed by the Minister for Communications, Information Technology and the Arts by written instrument (proposed subsection 77(1)).

 

An RTIRC member will hold office for a period of up to 5 years specified in the instrument of appointment (proposed subsection 77(2)).

 

An RTIRC member will hold office on a part-time basis (proposed subsection 77(3)).

 

Proposed section 78 of the Telstra Corporation Act - Acting appointments ¾ RTIRC Chair

 

The Minister for Communications, Information Technology and the Arts will be able to appoint an RTIRC member to act as the RTIRC Chair during a vacancy in the office of the Chair or during any period, or during all periods, when the Chair is absent from duty or from Australia or is, for any reason, unable to perform the duties of the office (proposed subsection 78(1)).

 

A defect or irregularity in connection with a person’s appointment to act under proposed section 78 will not invalidate anything done by the person when purporting to act under the appointment.  Nor will certain other technicalities viz. the occasion for the appointment not having arisen, the appointment ceasing to have effect and the occasion for the person to act not having arisen or having ceased (proposed subsection 78(2)).

 

Section 33A of the Acts Interpretation Act 1901 contains further provisions dealing with acting appointments which are relevant to acting appointments made under proposed section 78.  The effect of these provisions is that:

 

(a)        an acting appointment may be expressed to have effect only in the circumstances specified in the instrument of appointment;

 

(b)        the appointer may determine the terms and conditions of the appointment, including remuneration and allowances and terminate the appointment at any time;

 

(c)        where the appointment is to act in a vacant office, the appointee must not continue to act in the office for more than 12 months;

 

(d)        where the appointee is acting in an office other than a vacant office and the office becomes vacant while the appointee is acting then, unless his or her instrument of appointment provides otherwise, the appointee may continue to act until the appointer otherwise directs, the vacancy is filled or a period of 12 months from the day the vacancy ends, whichever happens first;

 

(e)        the appointment ceases to have effect if the appointee resigns in writing delivered to the appointer;

 

(f)         while the appointee is acting in the office, he or she has and may exercise all the powers, and is to perform all the functions and duties, of the holder of the office and the Telstra Corporation Act and any other legislation will apply in relation to the appointee as if the appointee were the holder of the office.

 

Proposed section 79 of the Telstra Corporation Act - Procedures

 

Proposed section 79 deals with how the procedures of the RTIRC may be prescribed.

 

Regulations made under the Telstra Corporation Act will be able to prescribe the procedure to be followed at or in relation to meetings of the RTIRC, including matters relating to the convening of meetings, the required quorum at meetings, the member who is to preside in the absence of the Chair and how questions arising at meetings are to be decided (proposed subsection 79(1)).

 

Resolutions will be able to be passed without the need for a meeting if RTIRC members agree and determine the method by which members are to indicate agreement with resolutions.  If this occurs, a resolution proposed outside of a meeting will be deemed to have been passed at a meeting if a majority of RTIRC members agree with the resolution and all members were informed of the resolution, or reasonable efforts were made to inform all members of it (proposed subsections 79(2) and (3)).

 

Proposed section 80 of the Telstra Corporation Act - Disclosure of interests

 

An RTIRC member who has a material personal interest in a matter being considered by the RTIRC will be required to disclose the nature of the interest at an RTIRC meeting as soon as possible after the member becomes aware of the interest (proposed subsection 80(1)).

 

The member’s disclosure is to be recorded in the minutes of the meeting.  Unless the Minister or the RTIRC determines otherwise (in the absence of the member making the disclosure), the member making the disclosure of a matter will not be able to be present during any deliberation by the RTIRC about the matter or to take part in any decision of the RTIRC relating to that matter (proposed subsections 80(2) and (3)).

 

Proposed section 81 of the Telstra Corporation Act - Remuneration and allowances

 

An RTIRC member will be paid the remuneration determined by the Remuneration Tribunal.  If no determination of that remuneration is in operation, the member is to be paid such remuneration as is prescribed by regulations under the Telstra Corporation Act (proposed subsection 81(1)).

 

An RTIRC member is to be paid such allowances as are prescribed by regulations under the Telstra Corporation Act (proposed subsection 81(2)).

 

Proposed section 81 has effect subject to the Remuneration Tribunal Act 1973 which provides for the Remuneration Tribunal to conduct inquiries and make determinations on the remuneration of certain office holders (proposed subsection 81(3)).

 

Proposed section 82 of the Telstra Corporation Act - Leave of absence

 

The Minister will be able to grant leave of absence (eg. recreation leave) to the RTIRC Chair on such terms and conditions as to remuneration or otherwise as the Minister determines (proposed subsection 82(1)).

 

The RTIRC Chair will be able to grant leave of absence to an RTIRC member on such terms and conditions as to remuneration or otherwise as the Minister determines (proposed subsection 82(2)).

 

Proposed section 83 of the Telstra Corporation Act - Resignation

 

Proposed section 83 provides that an RTIRC member will be able to resign by way of a signed letter of resignation to the Minister.

 

Proposed section 84 of the Telstra Corporation Act - Termination of appointment

 

The Minister will be able to terminate the appointment of an RTIRC member for misbehaviour or physical or mental incapacity (proposed subsection 84(1)).

 

The Minister will also be able to terminate the appointment of an RTIRC member if:

 

(a)        the member becomes bankrupt, applies for relief from bankruptcy, enters into an arrangement with creditors regarding the payment of his or her debts or assigns all or part of his or her remuneration for the benefit of creditors; or

 

(b)        the member is absent, except on leave of absence granted in accordance with proposed section 82, for 3 consecutive RTIRC meetings; or

 

(c)        a member fails, without reasonable excuse, to comply with proposed section 80, which requires the disclosure of material personal interests at an RTIRC meeting (proposed subsection 84(2)).

 

Proposed section 85 of the Telstra Corporation Act - Other terms and conditions

 

Proposed section 85 provides that the Minister will be able to determine additional terms and conditions in relation to an RTIRC member.

 

Proposed section 86 of the Telstra Corporation Act - Assistance to RTIRC

 

The ACA, ACCC and/or the Department of Communications, Information Technology and the Arts will be able to assist the RTIRC in the performance of its functions (proposed subsection 86(1)).

 

The assistance would include, but not be limited to, the provision of advice or information (eg. information and advice available from the ACA under its regional data collection and monitoring role) and the making available of resources and facilities such as secretariat services and clerical assistance (proposed subsection 86(2)).

 

Proposed subsection 86(3) ensures that the ACA will be able to conduct an investigation under Part 26 of the Telecommunications Act or exercise its information-gathering powers under Part 27 of that Act in connection with providing assistance to the RTIRC under proposed subsection 86(1).

 

Part 2--Amendments commencing on the designated day

 

Archives Regulations

 

Item 33 - Repeal of regulation 2A of the Archives Regulations

 

Item 33 repeals regulation 2A of the Archives Regulations.  Regulation 2A refers to ‘AOTC’ (which refers to the Australian and Overseas Telecommunications Corporation, a predecessor to what is now Telstra Corporation Limited) and prescribes AOTC and its subsidiary companies to be Commonwealth authorities for the purposes of paragraph (c) of the definition of ‘authority of the Commonwealth’ in subsection 3(1) of the Archives Act 1983 .  Paragraph (c) provided that the definition of ‘authority of the Commonwealth’ in subsection 3(1) of the Archives Act included a ‘prescribed company or association over which the Commonwealth is in a position to exercise control’ and was amended by the Archives Amendment Act 1995 to define a Commonwealth-controlled company or a Commonwealth-controlled association to be an authority of the Commonwealth.

 

The effect of regulation 2A, by prescribing the AOTC to be a Commonwealth authority, is that the Archives Act applies to records of Telstra.  It is proposed to repeal regulation 2A because Telstra will no longer be a Commonwealth authority for the purposes of the Archives Act once it ceases to be controlled by the Commonwealth.  Regulation 2A will therefore be repealed with effect from the ‘designated day’. The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Freedom of Information Act 1982

 

Item 34 - Amendment of Division 1 of Part II of Schedule 2 to the FOI Act

 

Item 34 amends Division 1 of Part II of Schedule 2 to the Freedom of Information Act 1982 (FOI Act) to remove the entry in that Division relating to Telstra Corporation Limited.

 

Section 7 of the FOI Act exempts certain persons, bodies and Departments specified in Part II of Schedule 2 to the FOI Act from the operation of the FOI Act in relation to the documents referred in Schedule 2.  Division 1 of Part II of Schedule 2 specifies Telstra Corporation Limited to be exempt from the operation of the FOI Act ‘in relation to documents in respect of its commercial activities’.  Telstra is otherwise subject to the operation of the FOI Act because it is a ‘prescribed authority’ under Schedule 1 to the Freedom of Information (Miscellaneous Provisions) Regulations (see definition of ‘agency’ in section 4 of the FOI Act).

 

The reason for the proposed amendment is that Telstra will no longer be a Commonwealth authority once it ceases to be controlled by the Commonwealth.  The proposed amendment to the FOI Act will therefore commence from the ‘designated day’.  The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Freedom of Information (Miscellaneous Provisions) Regulations

 

Item 35 - Amendment of Schedule 1 to the FOI Regulations

 

Item 35 omits the reference to Telstra Corporation Limited in Schedule 1 to the Freedom of Information (Miscellaneous Provisions) Regulations (FOI Regulations).  Regulation 3 and Schedule 1 to the FOI Regulations specify the bodies that are prescribed authorities for the purposes of the definition of ‘agency’ in the Freedom of Information Act 1982 (FOI Act).  Subsection 4(1) of the FOI Act defines ‘agency’ to mean a Department, a prescribed authority or an eligible case manager.  Section 11 of the FOI Act provides that every person has a legally enforceable right to obtain access, in accordance with the FOI Act, to a document of an agency other than an exempt document.

 

It is proposed to omit the reference to Telstra Corporation Limited from Schedule 1 to the FOI Regulations because it would be inappropriate that Telstra continue to be a prescribed authority for the purposes of the FOI Act after it ceases to be a Commonwealth authority.  The proposed amendment will therefore commence from the ‘designated day’.  The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 36 - Repeal of Schedule 2 (table item 125A) to the FOI Regulations

 

Schedule 2 to the FOI Regulations specifies offices as principal offices for the purpose of the definition of ‘principal officer’ in paragraph (b)(i) of that definition in subsection 4(1) of the FOI Act (see regulation 4 of the FOI Regulations).  This provision provides that a ‘principal officer’ means, in relation to a prescribed authority, the person holding, or performing the duties of an office that is declared to be a principal office in respect of the authority by the regulations.  Table item 125A in Schedule 2 to the FOI Regulations specifies the office of Chief Executive Officer to be the principal office for Telstra Corporation Limited.

 

The proposed amendment will repeal table item 125A.  The proposed amendment is consequential to the proposed amendment in item 34 because that item will result in the FOI Act no longer applying to Telstra once it ceases to be a Commonwealth authority.  Once this occurs, there will also be no need for a principal office to be specified for Telstra for the purposes of the FOI Act.  As will be the case with the proposed amendment in item 34, the proposed amendment will commence from the ‘designated day’. The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 37 - Repeal of Schedule 3 (table item 12) to the FOI Regulations

 

Schedule 3 to the FOI Regulations specifies the Minister responsible for prescribed authorities under the FOI Act.  Subsection 4(1) of the FOI Act defines ‘responsible Minister’ in relation to a prescribed authority (other than in relation to a prescribed authority referred to in paragraph (c) of the definition of prescribed authority) to be the Minister declared by the regulations to be the responsible Minister in respect of that authority.

 

Table item 12 in Schedule 3 to the FOI Regulations specifies the Minister for Communications, Information Technology and the Arts (the effect of the Acts Interpretation (Substituted References - Section 19B) Amendment Order 1997 made by the Governor-General on 29 October 1997 is that the reference to the ‘Minister for Communications and the Arts’ is read as the ‘Minister for Communications, Information Technology and the Arts’) to be the responsible Minister in respect of Telstra Corporation Limited.

 

The proposed amendment will repeal table item 12.  The proposed amendment is consequential to the proposed amendment in item 34 because that item will result in the FOI Act no longer applying to Telstra once it ceases to be a Commonwealth authority.  Once this occurs, there will also be no need for a responsible Minister to be specified for Telstra for the purposes of the FOI Act.  As will be the case with the proposed amendment in item 34, the proposed amendment will commence from the ‘designated day’. The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 38 - Transitional ¾ requests under the Freedom of Information Act 1982

 

Item 38 is a transitional provision that deals with FOI requests made to Telstra but which have not been disposed of before the commencement of the item.  Item 38 also deals with requests for review by the AAT of a decision Telstra had made under the FOI Act in relation to a particular document but which had not been disposed of before the commencement of item 38.

 

As a result of the proposed amendments in items 34 to 37, on the ‘designated day’ (ie the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth)  the FOI Act and the FOI Regulations will no longer apply to Telstra because Telstra will not be an ‘agency’ for the purposes of the FOI Act.  The provision in item 38 will deal with the situation where an FOI request made to Telstra before the commencement of item 38 (i.e. the designated day) has not been finally disposed of immediately before that day.  In such a situation, the FOI Act and the FOI Regulations will continue to apply to that request as if the proposed amendments in items 34 to 37 had not been made.  For example, if on the designated day Telstra had not yet made a decision under the FOI Act in respect of a request for access to a document that was made before the designated day, the FOI Act will continue to apply to that request so that Telstra will be required to make a decision within the time limit specified under the FOI Act.  The ability of a FOI requestor to seek internal review of that decision will remain unaffected.  Equally, if an internal review decision had been made prior to the designated day and the designated day occurs during the period in which the FOI requestor may seek AAT review of the internal review decision, the transitional provision in subitem 38(1) will allow the FOI requestor to apply to the AAT under the Administrative Appeals Tribunal Act 1975 (AAT Act) for review of the internal review decision.

 

If a FOI requestor has made an application for AAT review of a decision of Telstra made under the FOI Act before the designated day or had requested a statement of reasons under the AAT Act, item 38 also ensures that the AAT Act will continue to apply to such an application or a request as if the amendments in items 34 to 37 (to the FOI Act and the FOI Regulations) had not occurred.

 

Long Service Leave (Commonwealth Employees) Regulations 1957

 

Item 39 - Repeal of item 4 of Schedule 1A to the Regulations

 

Item 39 repeals item 4 in Schedule 1A to the Long Service Leave (Commonwealth Employees) Regulations which declares the Australian and Overseas Telecommunications Corporation Limited (now Telstra Corporation Limited) to be a body corporate for the purposes of paragraph 4(6)(c) of the Long Service Leave (Commonwealth Employees) Act 1976 .  Paragraph 4(6)(c) of that Act provides that a reference in the Act to a person who is employed by, remunerated by, in the service of, on loan to or appointed or engaged by the Commonwealth includes a reference to a person who is employed by, remunerated by, in the service of, on loan to or appointed or engaged by a company that is declared by the regulations to be a body corporate to which this paragraph applies.

 

The purpose of the proposed amendment is to ensure that from the designated day Telstra employees will not continue to accrue benefits under the Long Service Leave (Commonwealth Employees) Act 1976 .

 

Item 52 of Schedule 1 to the Bill inserts a new Division 1 of Part 3A in the Telstra Corporation Act which includes savings provisions for Telstra employee long service leave entitlements accrued up to the designated day.

 

Maternity Leave (Commonwealth Employees) Regulations

 

Item 40 - Repeal of item 2 of Schedule 2A to the Regulations

 

Item 40 repeals item 2 in Schedule 2A to the Maternity Leave (Commonwealth Employees) Regulations which declares the Australian and Overseas Telecommunications Corporation Limited (now Telstra Corporation Limited) to be a prescribed authority for the purposes of the Maternity Leave (Commonwealth Employees) Act 1973 .  Section 5 of that Act provides that the Act applies to persons employed by a prescribed authority.

 

The purpose of the proposed amendment is to ensure that employees of Telstra do not, from the designated day, continue to be eligible for maternity leave under the Maternity Leave (Commonwealth Employees) Act 1973

 

Item 52 of Schedule 1 to the Bill inserts a new Division 4 of Part 3A in the Telstra Corporation Act which includes savings provisions for maternity leave entitlements of Telstra employees accrued up to the designated day, including benefits for those employees entitled to begin their maternity leave within the 12 months following the designated day.

 

Occupational Health and Safety (Commonwealth Employment) Act 1991

 

Item 41 - Amendment of the Schedule to the Act

 

Item 41 omits a reference to Telstra from the Schedule to the Occupational Health and Safety (Commonwealth Employment) Act 1991 , so that Telstra is not, from the designated day, deemed to be a Government Business Enterprise for the purposes of that Act.  After the designated day, a Telstra body will also not be a Commonwealth authority for the purposes of the Act.

 

Item 52 of Schedule 1 to the Bill inserts new sections 9R and 9S in the Telstra Corporation Act, which are related transitional provisions.

 

Ombudsman Regulations 1977

 

Item 42 - Amendment of Schedule 2 (table item 15) to the Ombudsman Regulations

 

Item 42 omits a reference to Telstra in Schedule 2 to the Ombudsman Regulations.  Schedule 2 of the Ombudsman regulations specifies the authorities that are prescribed authorities for the purposes of the Ombudsman Act 1976 .  The Ombudsman Act allows the Ombudsman to investigate action taken by a Department or a prescribed authority.  Section 3 of the Ombudsman Act provides that a prescribed authority includes a body corporate prescribed by the regulations to be a prescribed authority.

 

It is proposed to omit the reference to Telstra from Schedule 2 to the Ombudsman Regulations because Telstra will cease to be a Commonwealth authority on the ‘designated day’.  The proposed amendment will therefore commence from the ‘designated day’. The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 43 - Amendment of Schedule 4 (table item 17) to the Ombudsman Regulations

 

Item 43 omits a reference to Telstra in Schedule 4 to the Ombudsman Regulations.  Schedule 4 to the Ombudsman Regulations specifies principal officers in respect of prescribed authorities for the purposes of the Ombudsman Act 1976 .  Section 3 of the Act provides that the principal officer of a prescribed authority includes an officer prescribed by the regulations as such.

 

It is proposed to omit the reference to the Chief Executive Officer of Telstra from Schedule 4 to the Ombudsman Regulations because Telstra will cease to be a Commonwealth authority from the ‘designated day’.  The proposed amendment will therefore commence from the ‘designated day’.  The designated day is declared by the Minister under subclause 2(3) and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 44 - Transitional ¾ complaints and investigations under the Ombudsman Act 1976

 

Item 44 is a transitional provision that will ensure that complaints made to the Ombudsman, and investigations commenced by the Ombudsman, before the commencement of the designated day, in relation to action by Telstra will continue to be dealt with under the Ombudsman Act and the Ombudsman Regulations as if the amendments in items 42 and 43 had not occurred.

 

It should also be noted that item 27 inserts proposed section 8AYC of the Telstra Corporation Act to ensure that Telstra would continue to be subject to the Ombudsman Act 1976 if the Commonwealth were to transfer some of its shares in Telstra to the hybrid-security issuer company (see item 14).  That is, the purpose is to ensure that any such transfer would not result in an unintended triggering of the ‘designated day’ referred to in subclause 2(3) of the Bill.

 
Telstra Corporation Act 1991

 

Items 45 to 50 - Amendments of section 3 of the Telstra Corporation Act

 

Items 45 to 50 insert some new definitions in section 3 of the Telstra Corporation Act that are consequential to the addition of proposed Part 3A in that Act (see item 52 in Schedule 1).

 

Item 45 inserts a definition of the term ‘designated day’ for the purposes of the new Part 3A in section 3.  Clause 2 of the Bill provides a mechanism for the Minister to declare a designated day for Telstra.

 

Item 46 inserts a definition of the term ‘employee’ in section 3 because new Part 3A contains various employee benefit savings provisions.

 

Item 47 inserts a definition of the term ‘Long Service Leave Act’ in section 3 because new Part 3A contains employee benefit savings provisions relating to long service leave.

 

Item 48 inserts a definition of the term ‘Maternity Leave Act’ in section 3 because new Part 3A contains employee benefit savings provisions relating to maternity leave.

 

Item 49 inserts a definition of the term ‘SRC Act’ in section 3 consequential on the inclusion of a transitional provision relating to safety, rehabilitation and compensation by item 52 in Schedule 1 to the Bill (see proposed section 9H of the Telstra Corporation Act) and provisions dealing with the refund of licence fees under existing and former provisions of the Safety, Rehabilitation and Compensation Act 1988 in respect of the administration of the Occupational Health and Safety (Commonwealth Employment) Act 1991 (see proposed sections 9R and 9S of the Telstra Corporation Act).

 

Item 50 inserts a definition of the term ‘Telstra body’ in section 3.  ‘Telstra body’ is defined to mean Telstra or a Telstra subsidiary.  For the purposes of the employee benefit savings provisions, a reference to a Telstra body means a body corporate that was a Telstra body immediately before the designated day.  This will ensure the effectiveness of the savings provisions if a Telstra subsidiary subsequently ceases to be owned by Telstra after the designated day.

 

Item 51 - Repeal of Part 3 of the Telstra Corporation Act

 

Part 3 of the Telstra Corporation Act gives the Minister the power to give Telstra such directions as appear to the Minister to be necessary in the public interest.

 

Item 51 provides for the repeal of that Part with effect from the designated day. It would be inappropriate to retain such a power in a situation where the Commonwealth no longer holds a majority equity interest in Telstra.

 

The public interest in telecommunications is protected through the comprehensive community and regulatory safeguards set out in the Telecommunications Act 1997 , the Telecommunications (Consumer Protection and Service Standards) Act 1999 , the Telstra Corporation Act 1991 and Parts XIB and XIC of the Trade Practices Act 1974 .  Section 581 of the Telecommunications Act gives the Australian Communications Authority a broad power of direction over carriers and carriage service providers in relation to the performance of its telecommunications functions and powers.  Section 159 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 also empowers the Minister to direct Telstra to comply with that Act.  An additional power of Ministerial direction over Telstra in the Telstra Corporation Act is unnecessary and furthermore conflicts with the rights of other shareholders in the company.

 

Item 52 - Insertion of new Part 3A - Transitional provisions relating to the sale by the Commonwealth of its remaining equity interest in Telstra

 

Item 52 inserts a new Part 3A in the Telstra Corporation Act dealing with transitional provisions relating to the sale of the remaining Commonwealth equity interest in Telstra.

 

The transitional provisions continue or modify certain obligations of Telstra and its subsidiaries.  They also provide for the continuation of certain employee benefits arising from pre-sale service that otherwise would be foregone due to the sale.  The saving provisions also recognise post-sale service of specific categories of employees as public employment for the purposes of qualifying for certain deferred pension benefits.

 

Many of the transitional and savings provisions operate in relation to the ‘designated day’.  Clause 2 to the Bill provides a mechanism for public notification of the day on which the Commonwealth ceases to have a controlling interest in Telstra.  The ‘designated day’ is the day declared by the Minister for Communications, Information Technology and the Arts by written instrument under subclause 2(3).

 

Part 3A--Transitional provisions relating to the sale by the Commonwealth of its remaining equity interest in Telstra

 

Division 1--Long service leave

 

Employees of Telstra currently accrue long service leave entitlements under the Long Service Leave (Commonwealth Employees) Act 1976 (the ‘LSL(CE) Act’).

 

However, for most employees, pre-sale service of less than 10 years will not normally qualify for any long service leave entitlement under the LSL(CE) Act.  To ensure equity, these provisions provide that when those employees either complete 10 years service with Telstra or cease to be employees in circumstances under which the LSL(CE) Act entitlements would have applied had a majority of voting shares in Telstra not been sold, long service leave benefits at the LSL(CE) Act standard are provided in respect of service before the designated day.

 

As a result of these provisions, a Telstra employee with 9 years service as at the designated day could be granted long service leave of 9/10ths of 3 months once the employee has served a further one year with a Telstra body (making a combined service period of 10 years).  The employee’s long service leave entitlements relating to service after the designated day will accrue and be credited in accordance with the long service leave regime in place after the designated day.  The Division also saves entitlements accrued under the LSL(CE) Act before the designated day (generally by those employees with at least 10 years service before the designated day).

 

Proposed section 9A of the Telstra Corporation Act - Interpretation

 

Proposed section 9A provides for the definition of terms used in this Division. 

 

Proposed subsection 9A(1) provides that unless the contrary intention appears, expressions used in Division 1 of proposed Part 3A will have the same meaning as in the LSL(CE) Act.

 

The ‘combined service period’ of an employee is defined in proposed subsection 9A(2) as the total of the employee’s service for the purposes of the LSL(CE) Act before the designated day and the employee’s service with a Telstra body after the designated day.

 

Proposed section 9B of the Telstra Corporation Act - Long service leave for employees with less than 10 years service

 

This provision applies to a person who was an employee of Telstra immediately before the designated day and whose period of service at the designated day was less than 10 years.  If the employee continues to be employed by a Telstra body (as defined in item 50 of Schedule 1 to the Bill) until his or her combined service period is at least 10 years, a Telstra body may grant the employee long service leave.

 

Proposed subsection 9B(5) provides for granting of long service leave at retirement or retrenchment as long as the employee has a combined service period of at least one year.  Leave granted under this subsection is to be taken so as to expire immediately before the employee retires or is retrenched (proposed subsection 9B(7)).

 

Proposed subsection 9B(6) allows for a Telstra body to grant long service leave on half pay.

 

Proposed subsection 9B(8) provides for the application of a modified version of section 20 of the LSL(CE) Act to calculate the rate of salary to be used in working out the full salary of an employee for the purposes of this provision.

 

In each case the period of long service leave is calculated by reference to the period of service as at the designated day (proposed section 9E).

 

Proposed section 9C of the Telstra Corporation Act - Payments in lieu of long service leave for employees with less than 10 years service

 

Proposed section 9C provides that a Telstra body (as defined in item 50 of Schedule 1 to the Bill) must, in certain circumstances, pay an amount to an employee in lieu of the employee taking long service leave (proposed subsection 9C(1)).  For proposed section 9C to apply, an employee must have been an employee of Telstra immediately before the designated day and not have accrued a period of service under the LSL(CE) Act of 10 or more years at that time (proposed subsection 9C(2)).

 

Proposed section 9C applies to persons who cease to be employees of Telstra after the designated day, but not to those who cease to be employees because they die (proposed subsection 9C(3)).  If a person ceases to be an employee and has at that time a combined service period of at least 10 years, the employing Telstra body must pay the person an amount in lieu of long service leave (proposed subsection 9C(4)) unless he or she has requested the Telstra body otherwise (proposed subsections 9C(7) and (8)).  This includes a person who voluntarily leaves employment prior to reaching the minimum retirement age.

 

If a person does not have a combined service period of 10 years or more, but does have a combined service period of at least one year then unless the person has requested the relevant Telstra body otherwise (proposed subsections 9C(7) and (8)) he or she is entitled to be paid an amount in lieu of long service leave if the reason that he or she ceases to be an employee is:

 

·       that he or she has reached minimum retirement age or because of retrenchment (proposed subsection 9C(5)); or

 

·       because of ill health (proposed subsection 9C(6)).

 

The amount that an employee is paid in lieu is equivalent to his or her full salary in respect of his or her long service leave credit under proposed subsection 9E(2). 

 

Proposed subsection 9C(9) provides for the application of a modified version of section 21 of the LSL(CE) Act to calculate the rate of salary to be used in working out the full salary of an employee for the purposes of this provision.

 

Proposed section 9D of the Telstra Corporation Act - Payments on the death of an employee

 

Proposed section 9D requires payment to a deceased employee’s dependant (or dependants) of the amount that would have been payable to the employee under proposed section 9C on the day of the employee’s death, as if the employee had at that time stopped being an employee having reached the minimum retirement age.  This provision applies if immediately before the designated day the employee had less than 10 years service and at the time of death had a combined service period of at least one year and one or more dependants.

 

Proposed section 9E of the Telstra Corporation Act - Employee’s long service leave credit for the purposes of sections 9B and 9C

 

Proposed section 9E defines the long service leave credit of a Telstra employee as being equal to the employee’s long service leave credit under the LSL(CE) Act as at the designated day.  In cases falling under proposed section 9C, the long service leave credit is reduced by any amount of leave already taken under proposed section 9B.

 

Proposed section 9F of the Telstra Corporation Act - Division not to affect an employee’s post-sale long service leave rights

 

Proposed section 9F is included to avoid doubt and declares that the provisions of the Division do not affect an employee’s post-sale long service leave rights (as defined in proposed subsection 9A(2)). 

 

Long service leave associated with service after the designated day with Telstra will be a matter for Telstra and its employees to agree in the context of relevant State and Territory legislation.

 

Proposed section 9G of the Telstra Corporation Act - Saving - Long Service Leave Act

 

Proposed section 9G ensures that accrued long service leave credits (ie for those employees with 10 or more years of service on the designated day) arising from previous service with Telstra under the LSL(CE) Act are retained post-sale and are able to be dealt with by Telstra as if it were an approving authority under that Act.

 

Division 2--Operation of the Safety, Rehabilitation and

Compensation Act 1988 (‘SRC Act’)

 

Proposed section 9H of the Telstra Corporation Act - Operation of section 128A of the SRC Act

 

Proposed section 9H provides that Telstra will continue to be liable, on or after the designated day, as a prescribed Commonwealth authority for the purposes of section 128A of the SRC Act.  Telstra will therefore continue to be liable to pay an amount in respect of an injury, loss or damage suffered by one of its employees prior to 1 July 1989.

 

Division 3--Retirement benefits

 

Proposed section 9J of the Telstra Corporation Act - Deferred benefits under the Defence Force Retirement and Death Benefits Act 1973

 

Proposed section 9J relates to the Defence Force Retirement and Death Benefits Act 1973 (the ‘DFRDB Act’).  Current employees of a Telstra body (defined in item 50 of Schedule 1 to the Bill) who were formerly members of the Defence Force and who have elected to take deferred benefits under the DFRDB Act are required to complete an aggregate of 20 years (in most circumstances) in the Defence Force or in subsequent public employment to enable benefits to be paid.

 

In the absence of a specific provision, an employee who has not served the required period prior to the Commonwealth ceasing to have a controlling interest in a Telstra body would lose his or her entitlement to the benefits available under the DFRDB Act.

 

Proposed section 9J is intended to enable former members of the Defence Force who:

 

·       are employed by a Telstra body immediately before the designated day;

 

·       had deferred their benefits under the DFRDB Act; and

 

·       were accruing service in public employment with that body;

 

to count employment with the Telstra body as public employment even after the designated day.

 

Subject to relevant eligibility criteria, these employees would be entitled to their deferred benefits if they remain with the Telstra body (or in other public employment) until the qualifying period (usually 20 years) is completed.

 

Proposed section 9K of the Telstra Corporation Act - Period of eligible employment for the purposes of Division 3 of Part IX of the Defence Force Retirement and Death Benefits Act 1973

 

Proposed section 9K provides that any period of employment with a Telstra body which would have been eligible employment for the purposes of Division 3 of Part IX of the DFRDB Act (which allows for the preservation of rights of contributing members who cease to be members of the Defence Force), prior to the designated day will continue to be regarded as eligible employment for the purposes of the person qualifying for deferred benefits.

 

Proposed section 9L of the Telstra Corporation Act - Application of the Superannuation Act 1976

 

Proposed section 9L provides that if an employee of a Telstra body (as defined in item 50 of Schedule 1) was an eligible employee for the purposes of the Superannuation Act 1976 immediately before the designated day, the employee is taken to have ceased to be an eligible employee for the purposes of that Act on the designated day.  Employees of a Telstra body will no longer be entitled to contribute to the Commonwealth Superannuation Scheme (CSS) established under that Act.

 

From the designated day, employees of Telstra who are members of the CSS will have various options in relation to their superannuation benefits which are provided for in the Superannuation Act 1976 and regulations made under that Act.

 

Division 4--Other transitional and saving provisions

 

Proposed section 9M of the Telstra Corporation Act - Telstra employees not on maternity leave immediately before the designated day

 

Certain Telstra employees are currently entitled to benefits provided under the Maternity Leave (Commonwealth Employees) Act 1973 (the ‘ML(CE) Act’) including maternity leave of up to 12 months, of which 12 weeks may be on full pay and the remainder without pay.

 

Proposed section 9M will preserve the entitlements of women employed by Telstra on the designated day to apply for, and be granted leave under, the ML(CE) Act provided that the woman would have been entitled to begin such leave within 12 months of the designated day.

 

Proposed section 9N of the Telstra Corporation Act - Telstra employees on maternity leave on the designated day

 

Proposed section 9N preserves the existing rights of those employees who are on maternity leave on the designated day.

 

Proposed section 9P of the Telstra Corporation Act - Saving - Crimes (Superannuation Benefits) Act 1989

 

The Crimes (Superannuation Benefits) Act 1989 will cease to apply to acts or omissions of employees of a Telstra body (as defined in item 50 of Schedule 1 to the Bill) that would or might constitute corruption offences, where those acts or omissions occur on or after the designated day.

 

The term ‘corruption offence’ is defined in section 3 of the Crimes (Superannuation Benefits) Act and this definition will apply for the purposes of proposed section 9P of the Telstra Corporation Act (see proposed subsection 9P(6)).  A corruption offence is an offence by a person who was an employee at the time when it was committed, being an offence:

 

(a)                 whose commission involved an abuse by the person of his or her office as such an employee; or



(b)                that, having regard to the powers and duties of such an employee, was committed for a purpose that involved corruption; or



(c)                 that was committed for the purpose of perverting, or attempting to pervert, the course of justice.

 

Proposed subsection 9P(1) allows the Act to continue to apply in relation to a corruption offence committed by an employee of a Telstra body before the designated day.

 

Proposed subsection 9P(2) prevents a superannuation order made by a Court under the Act from affecting employer superannuation contributions made by a Telstra body on or after the designated day.

 

Proposed subsection 9P(3) provides that a superannuation scheme to which a Telstra body contributes as an employer on or after the designated day is not a superannuation scheme for the purposes of the Act in relation to a corruption offence committed after the designated day, and employer contributions to that scheme may not therefore be the subject of a superannuation order.

 

Proposed subsection 9P(4) provides that where a superannuation order may be made affecting an employee’s entitlements under the Commonwealth Superannuation Scheme and employer contributions in relation to that person’s membership of the Scheme have been paid but no corresponding benefits have been paid to the person, then the superannuation order can only order that an amount be paid to the Commonwealth.

 

Proposed subsection 9P(5) provides that where an employee has received a superannuation payment from the Consolidated Revenue Fund then the relevant superannuation order is that the employer contributions and interest component are to be repaid to the Commonwealth. 

 

Proposed section 9Q of the Telstra Corporation Act - Saving - Director of Public Prosecutions Act 1983

 

Proposed section 9Q ensures that the Director of Public Prosecutions Act 1983 continues to apply to acts or omissions that occurred prior to the designated day and that civil remedies in relation to those matters can continue to be pursued.  This provision is required because the Director of Public Prosecutions Act will no longer apply to a Telstra body as a ‘Commonwealth authority’ from the designated day.

 

Proposed section 9R of the Telstra Corporation Act - Refund of part of fee paid under section 104A of the Safety, Rehabilitation and Compensation Act 1988

 

Item 41 of Schedule 1 to the Bill omits a reference to Telstra from the Schedule to the Occupational Health and Safety (Commonwealth Employment) Act 1991 (the ‘OH&S Act’), so that Telstra is not, from the designated day, deemed to be a Government Business Enterprise for the purposes of that Act.  After the designated day, a Telstra body will also not be a Commonwealth authority for the purposes of the Act.

 

Proposed section 9R provides for a refund by Comcare to Telstra if the designated day falls part way through a financial year and Telstra has paid a licence fee under section 104A of the Safety, Rehabilitation and Compensation Act 1988 (referred to as the SRC Act - see item 49 of Schedule 1) in respect of the administration of the OH&S Act.

 

For the financial year commencing on 1 July 2003, the fee associated with the administration of the OH&S Act in relation to Telstra will be charged under section 104A of the Safety, Rehabilitation and Compensation Act 1988 .  On 6 June 2003 Telstra was granted a new licence by the Safety, Rehabilitation and Compensation Commission under Part VIII of that Act effective from 1 July 2003.  The licence fee payable under section 104A represents an amount estimated by the Commission and Comcare in carrying out their respective functions under the OH&S Act during a financial year.

 

Proposed section 9S - Refund of fee paid under former section 108Q of the Safety, Rehabilitation and Compensation Act 1988

 

Item 41 of Schedule 1 to the Bill omits a reference to Telstra from the Schedule to the Occupational Health and Safety (Commonwealth Employment) Act 1991 (the ‘OH&S Act’), so that Telstra is not, from the designated day, deemed to be a Government Business Enterprise for the purposes of that Act.  After the designated day, a Telstra body will also not be a Commonwealth authority for the purposes of the Act.

 

Proposed section 9S provides for a refund by to be paid to a Telstra body (namely Network Design and Construction Limited) out of the Consolidated Revenue Fund if the designated day falls part way through a financial year and the Telstra body has paid a licence fee under former section 108Q of the Safety, Rehabilitation and Compensation Act 1988 (referred to as the SRC Act - see proposed item 49 of Schedule 1) in respect of the administration of the OH&S Act.

 

Former section 108Q, as continued in force by item 50 of Schedule 2 to the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 , allows the Safety, Rehabilitation and Compensation Commission to charge a fee relating to the Commission’s costs in monitoring the licensee’s compliance with the OH&S Act and Comcare’s costs in relation to assistance, services and resources provided to the Commission’s performance or exercise of its functions under the OH&S Act in relation to the licensee.

 

On 6 June 2003 the Safety, Rehabilitation and Compensation Commission extended the licence of Network Design and Construction Limited, effective from 1 July 2003, under former Part VIIB of the Safety, Rehabilitation and Compensation Act for a period of 18 months.

 

Item 53 - Amendment of section 36 of the Telstra Corporation Act

 

Section 36 of the Telstra Corporation Act requires the Auditor-General to be the auditor of Telstra.

 

Proposed subsection 36(1) will enable the Auditor-General to resign as Telstra’s auditor by written notice given to Telstra at any time on or after the designated day.  The designated day is declared by the Minister under clause 2 of the Bill and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Proposed subsection 36(2) provides for the repeal of existing subsections 36(3), 36(3A) and (4) at the earlier of:

 

·       the time when the Auditor-General resigns;



·       the end of the first annual general meeting of Telstra held after the designated day.

 

Subsection 36(3) provides that the Auditor-General is taken to have been appointed under section 327 of the Corporations Act 2001 to be auditor of Telstra from its formation.  Subsection 36(3A) allows for an additional auditor to be appointed provided that the appointment complies with subsection 327(7) of the Corporations Act (which requires the person appointed to have consented to the appointment) and the Telstra Board has consulted with the Auditor-General.  Subsection 36(4) provides that sections 328 (Nomination of auditors) and 329 (Removal and Resignation of Auditors) of the Corporations Act do not apply in relation to the Auditor-General’s appointment as auditor of Telstra. 

 

Proposed subsection 36(2A) provides that even if subsections 36(3), (3A) and (4) remain in effect until the end of the first annual general meeting of Telstra held after the designated day, a replacement auditor may be appointed at the meeting, in accordance with the Corporations Act as if a vacancy in the office of auditor had arisen at the start of the meeting.

 

Part 3--Amendments commencing on the 85% sale day

 

Telstra Corporation Act 1991

 

Part 3 of Schedule 1 to the Bill will repeal Division 3 of Part 2 of the Telstra Corporation Act, which imposes reporting obligations on Telstra.  It will also repeal proposed section 8AYA, inserted by item 27 of Schedule 1 to the Bill, which enables the Minister for Finance and Administration to direct Telstra not to dilute the Commonwealth’s equity in Telstra.  The object of proposed section 8AYA is to ensure that any proposed access by Telstra to equity markets outside a Telstra sale scheme does not compromise the Commonwealth’s objective of divesting its entire equity in Telstra.

 

It is proposed to repeal these provisions when the Minister for Communications, Information Technology and the Arts is satisfied that the Commonwealth’s equity has fallen to 15 per cent or less, known as the ‘85% sale day’ (see item 4 in the table under subclause 2(1)).  This threshold is consistent with the level at which substantial interest considerations are triggered under the Foreign Acquisitions and Takeovers Act 1975 .  It has been chosen to help ensure that if a multiple tranche sale is necessary, the Commonwealth continues to be fully informed on Telstra’s activities and plans until the Commonwealth ceases to hold a substantial interest in Telstra.

 

The Minister will be required to declare the 85% sale day by written instrument (subclause 2(6)).  The Minister’s declaration will have effect accordingly (subclause 2(7)).  A copy of the Minister’s declaration will be required to be published in the Commonwealth of Australia Gazette within 21 days after the designated day (subclause 2(8)).

 

Item 54 - Amendment of section 8AA of the Telstra Corporation Act

 

Item 54 makes a minor amendment to the simplified outline of Part 2 of the Telstra Corporation Act consequential on the amendment made by item 55.

 

Item 55 - Repeal of Division 3 of Part 2 of the Telstra Corporation Act

 

Division 3 of Part 2 of the Telstra Corporation Act sets out special reporting requirements for Telstra, including the giving of financial statements, notification of significant events, keeping Ministers informed and requirements for corporate plans.

 

It is inappropriate to continue to have special reporting requirements that favour the Commonwealth in a situation where the Commonwealth’s equity interest in Telstra has fallen to 15% or less.

 

Accordingly, item 55 provides for the repeal of Division 3 of Part 2 with effect from the 85% sale day.

 

Items 56 to 58 - Amendment of subsection 8AW(1), paragraph 8AX(1)(a) and subsection 8AY(1) of the Telstra Corporation Act

 

Items 56 to 58 make minor technical amendments to subsection 8AW(1), paragraph 8AX(1)(a) and subsection 8AY(1) of the Telstra Corporation Act consequential on the repeal of Division 3 of Part 2 by item 55.

 

Item 59 - Repeal of section 8AYA of the Telstra Corporation Act

 

Item 59 repeals proposed section 8AYA with effect from the 85% sale day.  Proposed section 8AYA, inserted by item 27 of Schedule 1 to the Bill, enables the Minister for Finance and Administration to direct Telstra not to dilute the Commonwealth’s equity in Telstra.  The object of proposed section 8AYA is to ensure that any proposed access by Telstra to equity markets outside a Telstra sale scheme does not compromise the Commonwealth’s objective of divesting its entire equity in Telstra.

 

It is unnecessary for section 8AYA to continue to operate in a situation where the Commonwealth’s equity interest in Telstra has fallen to 15% or less.  Accordingly, item 59 provides for the repeal of proposed section 8AYA with effect from the 85% sale day.