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Telecommunications Universal Service Management Agency Bill 2011

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2010-2011

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

HOUSE OF REPRESENTATIVES

                                                                                                                                 

 

 

 

 

 

 

 

 

 

 

TELECOMMUNICATIONS UNIVERSAL SERVICE MANAGEMENT AGENCY BILL 2011

 

 

 

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EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Broadband, Communications

and the Digital Economy, Senator the Hon. Stephen Conroy)



TELECOMMUNICATIONS UNIVERSAL SERVICE MANAGEMENT AGENCY BILL 2011

 

OUTLINE

 

The Telecommunications Universal Service Management Agency Bill 2011 (the Bill) forms part of a package of legislation to achieve continuity of key telecommunications safeguards in the transition to the National Broadband Network (NBN). The other Bills in the package are the Telecommunications Legislation Amendment (Universal Service Reform) Bill 2011 (the Universal Service Reform Bill) and the Telecommunications (Industry Levy Bill) 2011 (the Levy Bill).

 

The Bill:

·          provides for the establishment of the Telecommunications Universal Service Management Agency (TUSMA) as the statutory agency that will have the responsibility for the effective implementation and administration of service agreements or grants that deliver universal service and other public policy telecommunications outcomes;

·          sets out TUSMA’s corporate governance structure and reporting and accountability requirements;

·          provides for the Minister, subject to the scrutiny of Parliament, to set the standards, rules and minimum benchmarks for TUSMA’s contracts and grants; and

·          sets out arrangements for consolidating the two current Universal Service Obligation (USO) and National Relay Service (NRS) industry levy regimes into a single regime to contribute funding towards TUSMA’s costs.

 

The Universal Service Reform Bill introduces a framework under which, after an initial commencement period for the new regime, the Minister may permit USO regulatory obligations to be progressively lifted from Telstra subject to a number of preconditions being met in relation to Telstra’s contractual and regulatory compliance and performance. Legislative responsibility will be placed on TUSMA to ensure the service agreements or grants that it has in place effectively deliver public interest policy objectives. Lifting of the regulated USO is linked to the rollout of the NBN and the progressive structural separation of Telstra.

 

The Universal Service Reform Bill also includes a number of consequential amendments to phase out the USO and NRS levies and to ensure that the Australian Communications and Media Authority (ACMA) can effectively enforce the industry levy arrangements in the Bill.

 

The Levy Bill imposes a levy that will provide for relevant industry participants to contribute to the costs of TUSMA that are not met by dedicated Budget funding.

 



Policy objectives

 

Current arrangements

 

Currently, the main public interest telecommunications services regulated under telecommunications legislation are the USO (for standard telephone services and payphones) and emergency call services. Telecommunications legislation also provides for the Commonwealth to contract with the private sector for the provision of the NRS.

 

The legislative arrangements for the USO are set out in the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Consumer Protection Act) and legislative instruments made under that Act. The USO requires Telstra as the current primary universal service provider to ensure that standard telephone services and payphones are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business. Under the Consumer Protection Act, the telecommunications industry contributes funding towards the delivery of the USO through levy arrangements.

 

The Consumer Protection Act also sets out the policy objectives for the NRS, which is a service that provides voice equivalent services for people who are deaf or who have a hearing and/or speech impairment. NRS services are delivered under contract with the Commonwealth. Under current Commonwealth contract arrangements, the relay service is delivered by Australian Communication Exchange Limited, and an outreach service for the NRS is provided by WestWood Spice. Industry funds the cost of the NRS contracts through levy arrangements similar to the USO scheme.

 

The arrangements for emergency call services in Australia are covered by the Telecommunications Act 1997 (the Telecommunications Act) and the Consumer Protection Act, and legislative instruments made under those Acts. The telecommunications industry is required to provide access to the emergency call service for standard telephone services free of charge. Currently, the national providers of the emergency call service are Telstra and the NRS provider. The NRS element is funded through the NRS levy, but Telstra’s costs are not funded through levy arrangements.

 

Need for change

 

The USO regulatory arrangements were designed for a market where there was a vertically integrated operator of a national telecommunications network. The rollout of the NBN will result in a fundamental change to the structure of the Australian telecommunications market as Telstra’s near ubiquitous national copper fixed line network will be progressively decommissioned as NBN Co rolls out its next generation fibre network nationally.

 



The NBN will be operated on a wholesale-only and equivalent basis. In an environment where all retail service providers are able, via the NBN, to offer high quality voice and high-speed broadband services nationally, it is appropriate that the model for delivering universal service and other public policy telecommunications outcomes be reformed to facilitate the competitive supply of universal service and other public policy telecommunications outcomes. A regime that enables competitive supply arrangements will be of benefit to consumers and industry as it promotes more innovative, effective and efficient service delivery arrangements.

 

In this regard, the service delivery arrangements for the USO will transition to a model that is similar to the current arrangements for the provision of the NRS, in that the Government will contract with service providers for the supply of these important services.

 

Telstra’s role as the emergency call person also reflects its historical position as the vertically integrated owner of a national telecommunications network. The Government’s intention is that, while the supplier of the emergency call service will remain subject to direct regulation, the service will be delivered through contract with the Commonwealth and for the telecommunications industry to contribute to the costs of the emergency call service through levy arrangements. This will also enable the provision of the emergency call service to be opened up through a competitive process to alternative suppliers. While a competitive process will place a very high priority on reliable and robust service arrangements, it also provides a mechanism to ensure that the telecommunications services that the community expects continue to be delivered effectively and efficiently.

 

The Government’s NBN policy reflects the importance of high-speed broadband services to Australia’s economic and social future. However, the Government also recognises that, at least during the transition to the network, some customers who may be able to access a broadband fibre service may wish to retain a voice-only fixed-line service. Some of these customers may require updated connectors/adaptors or internal wiring so that they can continue to obtain a fixed-line voice-only service once their existing copper line is disconnected from the Telstra network and their new service is supplied over the NBN.

 

There will be a role for the Government in entering into contracts, or making grants to, carriage service providers or other persons to facilitate the transition of voice-only customers to the NBN. This could include arrangements to meet cabling installation costs to enable voice-only customers who are currently connected to the Telstra copper network to be connected to the NBN, or to provide information to voice-only customers on their service options and the processes involved in migrating to the NBN.

 

The Government has also indicated that research may be required into technological solutions to facilitate the continuity of carriage of services to support traffic lights and public alarms as Telstra’s copper customer access network is progressively decommissioned.

 



On 23 June 2011, following consultation with industry, the Government announced, that it had entered into initial service agreements with Telstra to ensure continuity of services during the transition to the NBN (the Telstra Agreement). Together with the existing NRS contracts outlined above, the Telstra Agreement will ensure:

  • that all Australians have reasonable access to a standard telephone service (the USO for voice telephony services);
  • that payphones are reasonably accessible to all Australians (the USO for payphones);
  • the ongoing delivery of the emergency call service by Telstra (calls to Triple Zero ‘000’ and ‘112’);
  • the ongoing delivery of the NRS;
  • that appropriate safety net arrangements are in place that will assist the migration of voice-only customers to a NBN fibre service as Telstra’s copper customer access network is progressively decommissioned; and
  • technological solutions will be developed as necessary to support continuity of other public interest services (i.e. public alarm systems and traffic lights).

 

As part of the reforms, a new statutory agency, TUSMA, will be established to manage the Telstra Agreement and other public interest telecommunications contracts and grants. The establishment of a statutory agency dedicated to the implementation and effective administration of telecommunications service agreements and grants will promote high quality and efficient contract and grant management to maximise the benefit for consumers and manage risks appropriately, within a transparent and accountable legislative framework.

 

As part of the transition to a single agency model for the administration of service agreements and grants for the delivery of universal service and other public policy telecommunications outcomes, the Bill provides for the consolidation of the two existing telecommunications levy arrangements and for the determination of a new single levy that takes into account the Government’s historic commitment to provide Budget funding towards the costs of TUSMA.

 

The consolidation of the USO and NRS levies, in concert with the recent decision by the Government to implement a $25 million eligible revenue threshold before carriers are required to contribute to levies, will significantly reduce red tape for the smaller market participants as well as for firms that are required to make a contribution towards the costs of the agreements administered by TUSMA.

 

Structure of the Bill

 

The Bill establishes TUSMA and sets out its key functions, including the policy objectives for the contracts or grants it will administer. It also sets out arrangements for collecting the industry levy and for determining market participants’ funding contributions.

 



The Bill has four main elements:

(a)     Part 2 covers the scope of contracts or grants that TUSMA will administer, including setting the policy objectives that those contracts or grants must achieve, providing for Ministerial contract standards, rules or minimum benchmarks, and transitional arrangements in relation to the existing agreement with Telstra and the NRS agreements;

(b)    Part 3 sets out the structure and governance arrangements of TUSMA;

(c)     Division 9 of Part 3, together with provisions in Part 2, set out TUSMA’s reporting obligations; and

(d)    Parts 5 and 6 set out TUSMA’s funding and the levy arrangements.

 

TUSMA contracts or grants

 

TUSMA’s main role will be, on behalf of the Commonwealth, to enter into, and administer, contracts or grants of financial assistance for the USO and other public interest services. It will not have regulatory powers.

 

Division 1 of Part 2 of the Bill sets out policy objectives for TUSMA contracts. These objectives are based on the current legislated objectives for the standard telephone service and payphone components of the USO, the NRS and the emergency call service, and also cover the provision of customer information programs, customer cabling installation programs and carriage service development programs to support the continuity of supply of carriage services during the transition to the NBN. The provisions for the transition of carriage services to the NBN align with the components of the Telstra Agreement that put in place a framework to assist with the migration of voice-only customers and of public interest services (traffic lights and public alarms) to the NBN. TUSMA will be required in performing its functions and exercising its powers under Part 2 to take all reasonable steps to ensure that the policy objectives are achieved.

 

There is provision for additional policy objectives to be set out in regulations where these objectives relate to the supply of telecommunications carriage services. This is intended to provide flexibility where there is a need for TUSMA contracts or grants to cover future public interest requirements. Any regulations to broaden the purpose and scope of TUSMA contracts will be subject to the public consultation and Parliamentary scrutiny requirements in the Legislative Instruments Act 2003 .

 

The Bill provides for the Minister, by legislative instrument, to make standards, rules or minimum benchmarks that will be deemed to be conditions of the universal service components of the agreement with Telstra and any future contracts and grants entered into by TUSMA. Service providers with whom TUSMA has a contract will be required, as a condition of contract, to comply with the standards, rules or performance benchmarks set by the Minister.

 



Existing USO safeguards made under the Consumer Protection Act already form part of the Government’s agreement with Telstra for the delivery of universal service and other public interest telecommunications services. It is the Government’s intention that, as USO regulatory obligations are progressively lifted from Telstra under the measures in the Universal Service Reform Bill, the existing USO safeguards will form the basis of contract standards in relation to the provision of standard telephone services and payphones. However, the Bill gives the Minister a broad power to make contract standards, rules or performance benchmarks, to enable the Government to set requirements in relation to all future TUSMA contracts or grants .

 

The Bill includes provisions requiring TUSMA to notify the Minister before it enters into a contract or grant, or varies an existing contract or grant , where that action is likely to result in an increase in funding contributions by the Commonwealth or industry. These provisions will allow the Minister to be informed, and to consider the merits of, any key changes proposed by TUSMA.

 

The Bill includes transitional provisions to ensure that TUSMA is responsible and accountable for managing the Telstra Agreement and the existing NRS agreements.

 

TUSMA’s structure and governance

 

The Bill provides that TUSMA will be established as a statutory agency under the Financial Management and Accountability Act 1997 (the FMA Act). The accompanying Universal Service Reform Bill makes provision for the Financial Management and Accountability Regulations 1997 to be amended to prescribe TUSMA as an agency subject to the FMA Act.

 

The principal functions of TUSMA will be conferred on the Chair and members of TUSMA, who will be appointed on a part-time basis. The Chair and members will be able to delegate responsibilities to the CEO and to the staff of TUSMA. The CEO will be the person responsible for the day to day administration of the agency under the FMA Act and the Public Service Act 1999 (the PS Act). TUSMA’s staff will also be appointed under the PS Act.

 

In appointing the TUSMA Chair and other members, the Minister will be required to be satisfied that appointees have substantial experience or knowledge and standing in one or more relevant fields (telecommunications industry operations, law, economics, business or financial management and public administration). Given the breadth of the expertise required and the significance of the agency’s role in delivering fundamental public policy outcomes, it is more appropriate for TUSMA’s key operational decisions to be made through collective decision-making.

 

The remuneration of the Chair and members, and of the CEO, will be determined by the Remuneration Tribunal. The CEO and members must also disclose to the Minister all interests that could conflict with the proper performance of their functions. The Bill sets out provisions covering termination of appointment and delegation for the CEO and members. Generally speaking, the arrangements for remuneration, disclosure, and delegation reflect the standard approach under Commonwealth legislation, such as set out in the Australian Communications and Media Authority Act 2005 .

 

TUSMA will be able to form advisory committees to assist it in carrying out its functions.

 

Oversight and accountability framework

 

Division 9 of Part 3 of the Bill sets out TUSMA’s planning and reporting obligations. The provisions in this Division are supplemented by the contract and grant reporting and performance monitoring powers set out in proposed Divisions 3 and 4 of Part 2 of this Bill. Together with the existing reporting requirements for statutory agencies under the FMA Act, the provisions in the Bill establish a rigorous oversight and accountability framework that reflects the importance for consumers of effective arrangements being in place for the delivery of public interest telecommunications services, and also the importance for industry and Government to have confidence from appropriate accountability and transparency arrangements that funding is being used efficiently, effectively and appropriately.

 

The ability for the Minister to set contract standards, rules or performance benchmarks (see above), provides a flexible mechanism by which safeguards can be built into TUSMA contracts and modified as appropriate. As noted above, Ministerial determinations can be used to cover specific standards, rules or benchmarks that currently apply to regulated USO services, but the provisions have been drafted more broadly to enable the Minister to determine standards, rules or benchmarks in relation to all future TUSMA contracts and grants.

 

Division 3 of Part 2 of the Bill provides for TUSMA to maintain registers of public interest telecommunications contracts and grants. These registers will need to include details identifying the party with whom TUSMA has a contract, or to whom it has made a grant, the duration of the agreement, the total amount paid or to be paid by the Commonwealth and the actions to be undertaken under the contract or grant. The registers must be publicly available on TUSMA’s website. These proposed registers enable Parliament, industry and consumers alike to remain informed of TUSMA’s activities.

 

Division 4 of Part 2 of the Bill requires TUSMA to report, each financial year, to the Minister on all significant matters relating to the performance of contractors and grant recipients. The reports must cover any notifications of breaches, the action taken in response to such breaches, and the outcomes of that action. The report must be included in TUSMA’s annual report tabled each year in Parliament. This provision will provide additional assurance for the public that public interest telecommunications services are continuing to be delivered in accordance with contract or grant arrangements.

 

Division 9 of Part 3 of the Bill requires TUSMA to prepare and provide to the Minister a corporate plan every three years and also to prepare an annual report on its operations for tabling in Parliament. The corporate plan must include details of TUSMA’s objectives, as well as the strategies and policies to achieve those objectives. If there are changes to the plan, or matters that might significantly affect the achievement of the objectives set out in the plan, TUSMA must inform the Minister.

 

The annual report must include details of each amount paid by the Commonwealth under a contract, and the amount of each grant, during the relevant financial year. It must also cover details of any action taken by the Chair and members of TUSMA in response to a Ministerial direction.

 

The Bill also enables the Minister to require TUSMA to provide reports or information to the Minister on specified matters relating to the performance of TUSMA’s functions.

 

The Bill provides for a review before 1 January 2018 of the Act, any legislative instruments made under the Act, as well as any provisions of the Telecommunications Act that relate to the Bill. The review would need to consider (but would not be limited to) the extent to which the policy objectives have been achieved, whether there should be any changes to the functions of TUSMA, and whether there should be any changes to arrangements for the provision of standard telephone services, payphones, emergency call services and the NRS. The review must make provision for public consultation and the report of the review must be tabled in both Houses of the Parliament.

 

TUSMA funding and industry levy

 

On 23 June 2011, the Government announced that it would contribute Budget funding to the costs of universal service outcomes. The Government will commit base funding of $50 million over the two financial years 2012 - 13 and 2013 - 14, and $100 million per annum after that. It will also supplement, during the financial years 2012 - 13 and 2013 - 14, its funding contribution to make up for any shortfall arising from the industry’s levy contributions. Taking into account Government funding, TUSMA’s residual funding requirements will be met through a consolidated industry levy scheme which, from 1 July 2012, will replace the current USO and NRS levies and cover future funding for TUSMA’s other responsibilities.

 

Under the Bill, the Minister will need to prepare a written estimate before 1 July each year of the amount that is likely to be paid by TUSMA, during the next financial year, under contracts and by way of grants. The Minister must also determine an overall industry levy target amount having regard to the Government’s funding for TUSMA, and estimate TUSMA’s administrative costs for the financial year ahead.

 

The agreement with Telstra includes annual payments of $230 million for the delivery of the STS, $40 million for payphones, and up to $20 million for the emergency call service. There could also be further payments for voice-only migration or the development of technological solutions for the migration of public interest services; current estimates are that these could amount to up to $25 million per annum. Currently, there are two NRS contracts, with a total annual expenditure of about $17 million (GST inclusive). Consequently, on an annual basis TUSMA’s liabilities are likely to be around $340 million during the financial years 2012 - 13 and 2013 - 14, reducing to $330 million per annum thereafter.

 

For the first two financial years of the new levy arrangements, transitional mechanisms are proposed to cover the time lags involved in assessing levy liability and collecting levy. The first eligible revenue period under the Bill will be based on the 2011 - 12 eligible revenue period determined under the Consumer Protection Act. Furthermore, during the first two eligible levy periods the levy amount will be calculated based on an overall levy cap amount, to be determined, by legislative instrument, by the Minister. This scheme is modelled on the current requirement, under the Consumer Protection Act, for the Minister to determine the USO subsidy amount each year and is intended to transition levy participants to the new arrangements. The Bill provides for all participating persons to be subject to the same criteria for determining their levy amounts, but also enables the Minister (in the first two years only of TUSMA’s operation) to set-off a part or whole of the levy amount as against part or the whole of any money payable by the Commonwealth to that person.

 

The Government made a commitment, when it announced the TUSMA arrangements in June 2011, to review the levy arrangements and the need for any additional Budget funding, over and above the Government’s committed base funding, during the course of the first two financial years of TUSMA’s operation.

 

The accompanying Levy Bill imposes an obligation on industry members to pay the levy. The Bill covers arrangements for collecting the levy and determining liability.

 

The amount each telecommunications provider has to pay towards the levy will be based, as is currently the case for the USO and NRS levies, on its eligible revenue as assessed by the ACMA. The ACMA will remain responsible for collecting the levy and assessing the levy amount. As is currently the case, telecommunications carriers will be subject to the levy, and the Minister may, by legislative instrument, require carriage service providers to contribute. The Minister for Broadband, Communications and the Digital Economy recently set a revenue threshold of $25 million for contributions to the USO and NRS levies, and the Government’s policy is that this key red tape reform will continue under the new levy arrangements.

 

Levies will be paid into the Telecommunications Universal Service Special Account, which is established under Part 5 of the Bill. TUSMA must report on its expenditure from this Special Account in accordance with the FMA Act, the FMA Regulations and the Finance Minister’s Orders. The purposes of the Special Account include paying amounts payable by the Commonwealth under a contract, to make grants, to pay TUSMA’s administrative costs and to make distributions and refunds where applicable. In the event that there is a balance standing to the credit of the Special Account after all payments payable by TUSMA have been paid, TUSMA may distribute the balance to persons who are or were participating persons.

Financial Impact Statement

 

The Government will provide dedicated funding to TUSMA of $50 million per annum for the years 2012-13 and 2013-14, and then $100 million per annum thereafter.

 

The Government’s agreement to provide this additional funding recognises that the migration of traffic over time to the new fibre network has economic implications for the continuation of Telstra’s existing copper network and other infrastructure Telstra currently uses to supply USO services. The Government has therefore agreed to provide this additional funding to help support the maintenance and operation of the existing copper network and other USO infrastructure outside fibre coverage areas.

 

The proposed telecommunications industry levy will also have a financial impact on industry. The levy is designed to recover from service providers the total of TUSMA’s costs, expenses and other obligations that are not covered by Commonwealth funding. The total amount to be collected in any eligible levy period will depend on the total residual amounts to be collected. The current contracts for the NRS are about $17 million per annum and the agreement with Telstra provides for annual payments to Telstra of $290 million to cover the provision of standard telephone services, payphones and the emergency call service. Other amounts may be required to cover contracts or grants to support the transition of carriage services to the NBN. The Government has estimated that TUSMA’s total annual liabilities are likely to be in the region of $330-$340 million.

 

The relative contributions of participating persons will depend on each person’s share of total eligible revenue. The share provides the basis on which total costs are apportioned to each person. Thus a person earning 50 per cent of total eligible revenue would be liable to fund 50 per cent of the levy.

 

Regulatory Impact Statement

1.         Issues which give rise to the need for action

 

Background

 

Universal Service Obligation

The Universal Service Obligation (USO) is the obligation placed on universal service providers (currently just Telstra) to ensure that standard telephone services, payphones and prescribed carriage services are reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business.

 

Provision of the USO is funded by the telecommunications industry. Currently this includes all licensed telecommunications carriers. The Minister may expand the contributor base to include carriage service providers, however this has not occurred to date.

 

The USO subsidy amount (USO levy) is determined by the Minister based on advice from the Australian Communications and Media Authority (ACMA). These determinations may be made up to three years in advance. The USO levy is currently set at $145 million, comprising $131.2 million for the standard telephone service and $13.8 million for payphones (there have been no additional carriage services that have been prescribed).

 

To determine each carrier’s contribution to the USO levy, the ACMA uses the concept of ‘eligible revenue’. Eligible revenue is the formal expression of the telecommunications earnings of a carrier and its related parties. Carriers are required to lodge their eligible revenue returns (ERRs) to the ACMA for each year they hold a telecommunications carrier licence. The ACMA then assesses the ERRs and advises carriers of their eligible revenues for each financial year.

 

In June this year, the Minister set a $25 million threshold for contributions to the USO levy. This means that from the 2011 - 12 financial year onwards carriers must have earned at least $25 million in eligible revenue before they need to contribute to the USO levy.

 

The ACMA uses the eligible revenue to determine each carrier’s contributions to the USO subsidy. The contributions are based on the proportion of a carrier’s eligible revenue, compared with the total eligible revenue of all the carriers. Carriers are required to pay the USO levy to the ACMA on an annual basis.

 

Telstra as the regulated Primary Universal Service Provider was assessed by the ACMA as being entitled to a levy subsidy of $145 million for the 2009 - 10 claim year (under current legislated arrangements, Telstra must also contribute to the cost of the USO, but as it receives the USO subsidy it receives a credit for the amount it would otherwise have to pay).

 

Figure 1 : USO contributions ( FY2009 - 10 )



Contributor

USO payment

Percentage of eligible revenue

Telstra

$ 91.5m

63.1%

Optus

$ 28.9m

19.9%

Vodafone Hutchison Australia (VHA)

$ 14.1m

9.7%

Other

$ 10.5m

7.3%

TOTAL

$ 145m

100%

 

National Relay Service

The National Relay Service (NRS) allows people who are deaf or have a hearing or speech impairment to use the telephone. The NRS is a national telephone service available to everyone at no additional cost.

 

The NRS has two separate components:

  1. a call centre providing the Relay Service; and
  2. an Outreach Service.

 

The Relay Service is provided by Australian Communication Exchange, and the Outreach Service is provided by WestWood Spice both under contract to the Australian Government.

 

Provision of the NRS is funded by telecommunications carriers with eligible revenue of $10 million or greater. In June this year the Minister raised this threshold to $25 million. The amount that each participating carrier contributes to the levy is based on their share of eligible revenue, as shown in the eligible revenue assessment for the relevant financial year. Carriers are required to pay the NRS levy to the ACMA on a quarterly basis. During 2009 - 10, the ACMA collected about $15.5 million for the NRS levy on a GST exclusive basis (when GST is added, the total contract amounts were about $17.1 million).

 

Figure 2 : NRS contributions ( FY2009 - 10 )

 

Contributor

NRS payment

Percentage of eligible revenue

Telstra

$ 10.1m

65.2 %

Optus

$ 3.1m

20.0 %

VHA

$ 1.4m

9 .0 %

Other

$0.9m

5.8 %

TOTAL

$ 15.5m

100%

 

Figure 3 : Combined USO and NRS key contributors ( FY2009 - 10 )



Contributor

Combined USO and NRS

Overall percentage of eligible revenue

Telstra

$ 101. 6m

63. 3 %

Optus

$ 32.0m

19.9%

VHA

$ 15.5m

9.7%

Other

$ 11. 4m

7. 1 %

TOTAL

$ 160.5m

100%

 

Public Policy Reforms to support the National Broadband Network

On 20 June 2010, Telstra and NBN Co announced a non-binding Head of Financial Agreement to support the rollout of the NBN. This Agreement provides for:

·          the reuse of suitable Telstra infrastructure, including pits, ducts and backhaul fibre, by NBN Co as it starts to rollout its new network avoiding unnecessary infrastructure duplication, and

·          the progressive migration of customers from Telstra’s copper and pay-TV cable networks to the new wholesale-only fibre network to be built and operated by NBN Co.

 

In support of this Agreement, the Australian Government announced it would progress public policy reforms to support the transition to the NBN. [1]



The reforms include establishing a new entity, the Telecommunications Universal Service Management Agency (TUSMA), which will commence operations in July 2012 and will, over time, become the entity with the statutory responsibility for delivering the Government’s public policy objectives in the telecommunications sector, including:

·          ensuring all Australians have reasonable access to a standard telephone service (the Universal Service Obligation for voice telephony services)

·          ensuring that payphones are reasonably accessible to all Australians (the Universal Service Obligation for payphones)

·          emergency call handling (Triple Zero ‘000’ and ‘112’)

·          the National Relay Service

·          migration of voice-only customers to a fibre-based service as Telstra’s copper lines are disconnected, and

·          the development of technological solutions for continuity of public interest services (public alarm systems and traffic lights).

 

As part of this initiative the Australian Government announced its intention to contribute, for the first time, towards the cost of delivering the USO by providing funding to TUSMA of $50 million in FY2012 - 13 and FY2013 - 14, increasing to $100   million per annum thereafter. The Government also announced that the residual costs incurred by TUSMA would be met through a revised industry levy scheme which will replace the current USO and NRS levy schemes.

 

On 23 June 2011 the Government announced that it had signed an agreement with Telstra that will ensure basic universal telecommunication service outcomes during and after the roll out of the National Broadband Network. Under the new USO arrangements the total annual costs for TUSMA are estimated to be $340 million per annum for the first two financial years, reducing to $330 million thereafter.

 

Figure 4 : TUSMA’s expected liabilities



TUSMA liabilities

FY2012 - 13

FY2013 - 14

FY2014 - 15

USO voice

$230m

$230m

$230m

USO payphones

$40m

$40m

$40m

Emergency Call Handling

$20m

$20m

$20m

National Relay Service

~$17.1m

~$20m

~$20m

Voice- only migration

~$15m

~$15m

~$15m

Public interest services

~$10m

~$10m

$0

TUSMA administration costs

~$5m

~$5m

~$5m

Total

~$ 340m

~$ 340m

~$ 330m

 

Transition to the new USO arrangements

It is expected that TUSMA will commence operations by 1 July 2012 and from this date it will have responsibility for delivering, through contracts or grants, universal service outcomes, emergency calls, the NRS, migration of voice-only customers and the development of any necessary technological solutions for continuity of public interest services.

 

The legislated responsibility for providing standard telephone services to premises within NBN fibre coverage areas will remain with Telstra until the NBN fibre network has been rolled out in the relevant area. Once the NBN fibre network has been rolled out in an area, responsibility for ensuring the delivery of standard telephone services will fall to TUSMA. In areas outside of the NBN fibre footprint, Telstra will remain the regulated provider of standard telephone services for a period of two years after TUSMA commences operations. From approximately 1 July 2014, subject to consideration by the Minister, this responsibility will transfer to TUSMA. TUSMA will deliver the standard telephone service through service agreements with Telstra. Telstra will remain the regulated provider of payphone services for a period of two years after TUSMA commences operations. From approximately 1 July 2014 onwards, subject to consideration by the Minister, TUSMA will have responsibility for delivering payphone services. TUSMA will deliver these services through contractual means.

 

Issues

 

Funding TUSMA

The amount collected through the existing USO and NRS levies has stayed relatively stable at $160.5 million per annum for the past few years, with contributions from individual carriers determined on the basis of eligible revenue. Telstra contributes approximately $101.5 million and non-Telstra carriers contribute the remaining $60 million (see figure 3 above).

 

Under the new arrangements, the amount to be collected from industry will need to cover TUSMA’s costs (less the amount of Government funding contributions). TUSMA’s costs will comprise:

·          USO voice - An annual payment of $230 million to Telstra. This base amount is subject to variations (upwards and downwards) if Telstra’s costs are altered as a consequence of changes in the relevant Government policy. The term of the agreement is up to 20 years.

·          USO payphones - An annual payment of $40 million to Telstra. This base amount is subject to variations (upwards and downwards) if Telstra’s costs are altered as a consequence of changes in the relevant Government policy. The term of the agreement is up to 20 years.

·          Emergency Call Handling - An annual capped payment of up to $20 million to Telstra. The term of the agreement is up to 20 years. TUSMA will also pay Telstra’s costs for any major upgrades that are reasonably required to ensure the continued provision of emergency services.

·          National Relay Service - TUSMA will take over administration of the existing NRS contract which has a current annual payment level of about $17.1 million (including GST) until the end of the 2012 - 13 financial year. [2] There is also an additional estimated allowance to cover the possibility of the NRS providers having to undertake additional functions as a result of the NRS review (which is currently underway ).

·          Voice -only migration - This estimate of $15 million per annum is based on analysis of the number of voice-only customers likely to require migration assistance and the costs to provide this migration assistance (i.e. targeted customer assistance and funding to undertake basic rewiring tasks). Funding of these activities is only required until the end of the NBN rollout.

·          Public interest services - This estimate of $15 million per annum is based on analysis of the numbers and types of services that may need solutions developed. Under the contract with Telstra , funding is only available until 2015.

·          TUSMA administration costs - The expected annual operating costs of TUSMA. These costs are ongoing .



While the existing eligible revenue principles are an effective mechanism for collecting the current USO and NRS levies, this model may not be the most suitable and sustainable model under the new USO arrangements. The purpose of this Regulation Impact Statement is to explore the different funding options that could be implemented.

 

Expanding the Contributor Base

With the transition to the NBN and the likelihood that the majority of fixed line services in Australia will be delivered over this network over time, there will be many existing (and new) telecommunications providers that may not need to hold a carrier licence because they will not need to operate any network elements of their own to offer services. While there will always be providers offering services on the NBN that will continue to operate networks separate to the NBN (e.g. providers with their own backhaul networks and mobile, wireless and satellite providers), the number of carriers in Australia may reduce as providers begin offering services on the NBN.

 

If the contributor base is not broadened to include telecommunications service providers, it may encourage service providers to cease being carriers so that they are not subject to the USO levy, which would lead to an additional burden on remaining carriers and could discourage investment in future network construction.

2.         Objective

The Government’s objective is to ensure its public policy objectives in the telecommunications sector are delivered as efficiently and effectively as possible. TUSMA’s funding arrangements should also be as transparent, accountable and equitable as possible and able to be efficiently implemented and managed.

3.         Options (regulatory and/or non-regulatory) that may constitute viable means for achieving the desired objective(s)

The Government has decided to deliver its public policy objectives in the telecommunications sector through the establishment of TUSMA. Broadly, there are three mechanisms that could be used, separately or in combination, to fund TUSMA:

1.       Government funding

2.       Industry funding

3.       Broader based non-Government funding

 

As noted above, the Government has already announced that it will provide base funding to TUSMA of $50 million in FY2012 - 13 and FY2013 - 14, with supplementary funding during those two financial years, increasing to $100 million per annum thereafter, with TUSMA’s residual costs to be met through non-Government contributions (i.e. industry funding or consumer funding).

 

In order to determine the most effective model for funding, a number of different options for funding TUSMA’s residual costs have been considered:

 

  • Option A: Telecommunications Industry Levy only
  • Option B: Combined Telecommunications Industry Levy and additional direct Australian Government funding
  • Option C: Combined Telecommunications Industry Levy and increased Annual Numbering Charge

·          Option D: Broad-based levy

 

All these options involve contributions from industry or a broader base. As a result, there will need to be clear transparency mechanisms in place so that industry and the public can have a clear picture of the efficiency and effectiveness of TUSMA’s actions in expending funds.

Option A: Telecommunications Industry Levy only

Noting the Government’s base funding of $50 million during the first two financial years and $100 million each year thereafter, under this option telecommunications service providers (not just carriers) would contribute to TUSMA’s residual costs based on eligible revenue principles similar to existing arrangements for the USO and NRS levies. It is estimated that Telstra’s contribution would increase to $182 million in the first two years, and then fall to $144 million (currently $102 million). Likewise, it is estimated that non-Telstra contributions would increase to $108 million in the first two years, and then fall to $86 million (currently $60 million).

 

This option has previously been supported by the Government in its initial consideration of the new USO arrangements.

 

How is the amount collected by each contributor calculated?

To determine the required contribution from each contributor, the ACMA would continue to use the concept of ‘eligible revenue’.

 

The ACMA would use eligible revenue to determine each carrier’s contributions to the Telecommunications Industry Levy. The contributions are based on the proportion of a contributor’s eligible revenue, compared with the total eligible revenue of all contributors. Contributors would be required to pay the Telecommunications Industry Levy to the ACMA on an annual basis.

 

Who must contribute?

All telecommunications carriers and carriage service providers with eligible revenues of $25 million or more would be expected to contribute to the Telecommunications Industry Levy.

 

What impact is there on industry?

  • From a regulatory/compliance perspective there is a very limited impact on carriers because the collection mechanism is consistent with the existing USO and NRS levies. While there are likely to be some initial costs involved in transitioning to the new arrangements, these are expected to be offset by the benefits of only having to comply with a single levy mechanism instead of two levy arrangements.
  • By increasing the contributor base to include carriage service providers there will be new compliance costs for those providers who are not carriers as well. However, smaller providers will not be impacted because of the $25 million eligible revenue threshold. It is not expected that the compliance costs for the larger providers will be significant relative to their size and resources.
  • For example, in the ACMA’s 2008-09 eligible revenue assessment, there were a total of 194 carriers, including only 24 carriers with eligible revenue of greater than $25 million who would be required to contribute to the levy.
  • The actual increased costs to industry are significant. It is expected that in the short term the share of eligible revenues will remain consistent with the current levels, which would mean Telstra’s contribution towards the Telecommunications Industry Levy would be $182 million (an increase of $80 million compared to its current payments of $102 million under the USO and NRS levies) and the rest of industry contribution would be $108 million (an increase of $48 million compared to their current payments of $60 million under the USO and NRS levies).
  • This option treats all contributors on an equitable basis and does not impose an administrative burden on smaller telecommunications providers.

 

How is it adjusted?

  • The levy would be subject to annual (or less frequent) adjustment by the Minister.
  • The Minister would set the amount to be collected after consulting with TUSMA, which would provide advice based on its liabilities for the relevant period.

 

What are the benefits?

  • The benefit for industry is that the levy arrangements are consolidated into a single arrangement.

 

What issues may arise?

  • While implementation of this option will result in some changes to accounting and billing systems, it is not expected to raise significant issues as the approach is broadly consistent with current arrangements.

 

Option B: Combined Telecommunications Industry Levy and additional direct Australian Government funding

Under this option, TUSMA’s residual annual costs would be met through two separate funding sources:

  • a revised Telecommunications Industry Levy which has been broadened to require all telecommunications service providers (not just carriers) with eligible revenue of $25 million or greater to contribute based on eligible revenue principles; and
  • additional direct Australian Government funding during the financial years 2012 - 13 and 2013 - 14, with a review prior to 30 June 2014 to allow further consideration as to what are the most appropriate long-term arrangements.

 

Who must contribute?

  • All telecommunications carriers and service providers with eligible revenues of $25 million or more would be expected to contribute to the Telecommunications Industry Levy component.
  • The Australian Government, through direct funding from the Budget, during the 2012 - 13 and 2013 - 14 financial years.

 

How is the amount collected by each contributor calculated?

The Minister would set the amount to be collected by industry after consulting with TUSMA, which would provide advice based on its liabilities for the relevant period. It would be necessary to determine the relative contributions of the Telecommunications Industry Levy and direct Government funding to the total funding of TUSMA’s residual costs. ACMA would set the contribution amounts for each provider in accordance with eligible revenue principles. Government would supplement its funding in the first two financial years so that contributors to the industry levy, with the exception of Telstra, will not face an increase to their aggregate funding contribution .

 

What impact is there on industry?

  • The regulatory/compliance impact of the Telecommunications Industry Levy component is similar to Option A. There is very limited additional compliance burden on carriers because the collection mechanism is consistent with the existing USO and NRS levies. While there are likely to be some initial costs involved in transitioning to the new arrangements, these are expected to be offset by the benefits of only having to comply with a single levy mechanism instead of two levy arrangements.
  • By increasing the contributor base to include telecommunications service providers there will be new compliance costs for those providers who are not carriers as well. However, smaller providers will not be impacted because of the $25 million eligible revenue threshold. It is not expected that the compliance costs for the larger providers will be significant relative to their size and resources.
  • Under this approach, to facilitate a smooth transition to the new arrangements, the Government, in addition to its base funding of $50 million per annum for the financial years 2012 - 13 and 2013 - 14 and $100 million per annum thereafter, would supplement its funding so that contributors to the industry levy, with the exception of Telstra, will not face an increase to their aggregate funding contribution. The arrangements would be reviewed before 30 June 2014, but in the absence of a Government decision to continue supplementary funding after that date, the levy arrangements would default to Option A.

 

How is it adjusted?

  • The levy would be subject to annual adjustment by the Minister.
  • The Minister would set the amount to be collected by the levy after consulting with TUSMA, which would provide advice based on its liabilities for the relevant period. In the first two financial years, the amount of additional direct Government funding would be set so that contributors to the industry levy, with the exception of Telstra, will not face an increase to their aggregate funding contribution .

 

What benefits are there?

  • This option consolidates the current USO and NRS levies. The funding arrangement is well-understood by industry and provides for an appropriate contribution to TUSMA’s operational costs in accordance with ‘ industry pays’ principles.
  • The option provides a smooth transition for industry to the new arrangements.
  • A review prior to 30 June 2014 allows for detailed analysis of the arrangements and of other funding options.

 

What issues may arise?

  • While implementation of this option will result in some changes to accounting and billing systems, it is not expected to raise significant issues as the approach is broadly consistent with current arrangements.

 

Option C: Combined Telecommunications Industry Levy and increased Annual Numbering Charge

Under this option, it is proposed TUSMA’s residual annual costs be met through two separate levy arrangements:

  • A revised Telecommunications Industry Levy which has been expanded to require all telecommunications service providers (not just carriers) to contribute based on eligible revenue principles; and
  • Increasing the Annual Numbering Charge and expanding the base to include geographic numbers.

 

Under this option carriers could contribute to the Telecommunication Industry Levy component at the current amount of the combined USO and NRS levies (approximately $160.5 million), with the residual $129.5 million funded through an increase to the Annual Numbering Charge and an extension of the Charge to cover geographic numbers.

·          The existing arrangements for the Annual Numbering Charge, currently collected from carriage service providers by the ACMA, would be retained.

  • The charge is currently set at $60 million per annum through the Budget and funds collected are paid into the Consolidated Revenue Fund.
  • The charge would be extended to include geographic (fixed line) numbers. As a base estimate, if each of the 90.9 million local service numbers attracted the current 10-digit number charge of $0.696 this would raise an additional $63.3 million.
  • This option would result in the Annual Numbering Charge having to be doubled to raise the additional $129.5 million in residual costs for the universal service reforms.

 

While this option may be relatively easy to implement, it would be limited to carriage service providers that hold telephone numbers, for example internet service providers would not be captured by the arrangements. The Annual Numbering Charge, as a tax whose revenues can be appropriated for any purpose, would provide less transparency to industry and end-users. The ACMA’s current review of numbering arrangements may result in changes to the Annual Numbering Charge.

 

What is it?

  • Under this option the Annual Numbering Charge, which is imposed on carriage service providers for the quantity of numbers held, would be increased to collect additional funds for the USO policy reforms. Arrangements would be made to enable the Annual Numbering Charge to extend to geographic (landline) numbers.

 

Who must contribute?

  • Carriage service providers that hold digital mobile, free phone (1800), local rate (1300), or premium rate (1900) telephone numbers currently contribute to the Annual Numbering Charge.
  • It is anticipated that the current arrangements would be maintained, but with the inclusion of geographic numbers. Internet service providers would not be included in this charge.

 

What impact is there on industry?

  • Given the Annual Numbering Charge would need to collect an additional $129.5 million, there is potentially a doubling of contributions from industry.
  • Providers with geographic (fixed line) numbers currently do not contribute to the charge but under this option they would.

 

How is it set?

  • The existing mechanism would be utilised for the charge. The Annual Numbering Charge is set through the Budget, with the 2011 target set at $60 million. The funds raised through the charge go to the Consolidated Revenue Fund, with the Government determining what the funds should be attributed to.

 

How is it collected?

  • The charges would be collected by the ACMA, consistent with the current arrangements and paid into the Consolidated Revenue Fund. The additional amount would then be appropriated to meet the residual USO costs, which would effectively increase the Budget contribution.
  • The charges would only be collected from providers of voice services.

 

How is it adjusted?

  • The target for the charge is set annually through the Budget. The target would be set after consulting with TUSMA, which would provide advice based on its liabilities for the relevant period.

 

What benefits are there?

  • This option would be relatively simple to implement as it utilises an existing funding mechanism, noting that legislative amendments would be needed to extend the Annual Numbering Charge to include geographic numbers.
  • Funding through the Annual Numbering Charge may provide more flexibility than a levy scheme as funding may be used for other purposes.

 

What issues may arise?

  • The Annual Numbering Charge is paid directly into consolidated revenue so there is potential for funds to be used for purposes other than those for which they were collected. Additionally, the scope of numbering is not as broad as a charge based on services in operation.
  • This arrangement would only apply to carriage service providers that hold numbers and would not apply to providers of internet services.
  • While the other options being considered target all of industry and/or all telecommunications customers, this option only targets users/providers of basic services (i.e. voice services). It is likely that the cost of basic telecommunications services would increase by more under this option than under the other options.
  • The number of phone numbers being allocated may reduce over time if users abandon fixed line voice services in favour of using mobile services for their voice needs. This could lead to the Annual Numbering Charging being unsustainable for funding TUSMA in the long term.

 

Option D: Broad-based levy

Under this option, TUSMA’s residual costs would be met through the introduction of a broader based levy. The OECD [3] has considered a number of options for funding the delivery of universal service, and has noted that, in addition to Government funding, one option could be to impose a direct levy on all consumers of communications services (for example, a fixed amount that appears directly on a customer’s bill).

 

In the United States of America, a universal service levy has been imposed on communications providers that is passed on to consumers. The levy is imposed as a charge on all long-distance calls.

 

Further work would be required to determine which approach would best meet the Australian circumstances. Under the first two approaches identified by the OECD, however, service providers would collect the levy from their customers. Each customer would contribute to the levy based on the number of services they receive.

 

A variation of this option could be a combined broad-based levy and Telecommunications Industry Levy, which would require telecommunications service providers to also contribute to TUSMA’s residual costs based on the revised eligible revenue principles. Effectively, this would result in a joint ‘industry-and-consumer pays’ funding model. The relative contributions of industry and consumers would need to be determined, along with the timeframe on which customers would be required to contribute (for example, on a yearly or monthly basis).

 

For the purpose of the broad-based levy, what is a service?

There would need to be a public consultation process to determine which services would be captured by the levy. The actual mechanism for collecting the levy would also be considered under this process, and would take into account such issues as what is the most appropriate mechanism to capture certain prepaid accounts. There are approximately 46 million services in Australia (taken from the ACMA 2009 - 10 Communications Report), which are composed of:

  • Fixed voice services: 10.6 million
  • Mobile services: 26 million
  • Broadband services (fixed and wireless): 9.5 million

 

Figure 5 : Estimated breakdown by provider of existing Services in Operation



Contributor

Fixed

Mobile

Total SIOs

% of SIOs

Voice

Broadband

Voice/handset

Broadband

Telstra

6,600,000

2,924,000

8,900,000

1,662,000

20,086,000

43.6%

Optus

1,600,000

980,000

7,679,000

994,000

11,253,000

24.4%

VHA

~

~

6,652,000

782,000

7,434,000

16.1%

Other

2,400,000

2,086,000

2,769,000

22,000

7,277,000

15.9%

TOTAL

10,600,000

5,990,000

26,000,000

3,460,000

46,050,000

100%



Note: This information is broadly based on figures taken from the ACMA’s 2009 - 10 Communications Report and the annual reports of Telstra, Optus and VHA.

 

Under a broad-based levy each end-user would contribute to the levy based on the number of services they acquire. For example, if the levy was set at $0.50 per month, an end-user with a home phone, a mobile phone and a home broadband connection would pay a levy for each service (i.e. a total of $1.50 per month), whereas an end-user with only a mobile phone would pay a levy for their single service (i.e. $0.50 per month).

 

Who could contribute?

  • All consumers with a fixed, mobile, wireless or satellite voice or broadband service. All telecommunications carriers and service providers would be required to collect the levy from each of their customers.
  • If the Telecommunications Industry Levy variation to the funding model is adopted, all telecommunications carriers and service providers with eligible revenues of $25 million or more would be required to contribute. This would reduce the amount of the levy to be collected from end-users, but the relative contributions of industry and consumers would need to be determined.

 

Imposing mandatory pass through of the levy

There are two options for collecting a broad-based levy: the Government could make it mandatory for all service providers to pass on the levy directly to customers, or it could make it discretionary for all service providers to pass on the levy directly to customers.

 

If the Government imposes mandatory pass through requirements on service providers then any levy would provide much greater clarity for consumers because the amount they contribute towards the costs of TUSMA would be clearly stated on each bill.

 

If the Government does not impose mandatory pass through requirements on service providers then it is possible that some service providers would choose to pass on the levy transparently to customers (i.e. add it as a line item on the bill) and others would choose to include the levy in their cost of providing a service (i.e. the levy is used as an input in determining the price of a service), which may lead to confusion among consumers.

 

What impact is there on industry?

  • By expanding the contributor base to include all telecommunications carriers and service providers there will be new compliance costs for those providers who are not carriers as well.
  • This option would be equitable to all contributors.
  • With the introduction of the levy all service providers would need to modify their accounting and billing systems to collect the levy. The cost to each service provider of changing their accounting and billing system is difficult to quantify because most systems are customised for the individual providers. However, it is expected that these costs would not be significant given that providers of standard telephone services are required under law to provide customers with itemised bills and all providers of telecommunications services (fixed and mobile telephone services, internet and other data services) are subject to the Telecommunications Consumer Protections Code, which includes a range of billing requirements, such as minimum standards for the content and presentation of bills, customer access to billing information, and verification and itemisation of billed charges.
  • If the Telecommunications Industry Levy variation to the funding model is adopted, service providers and carriers with revenues over $25 million will be affected. However, the financial impact will be lessened in comparison to Option A, as the industry levy will only be required to partly fund TUSMA’s residual costs.

 

How is it adjusted?

 

What benefits are there?

  • The broad-based levy option acts as a broad-based funding model that provides for growth in telecommunications and broadband activity to automatically generate necessary TUSMA funding. In addition, it would provide greater transparency for consumers.
  • Funding the residual amounts through a single levy may be more cost-effective than having a hybrid funding mechanism, as administrative and compliance costs would be reduced.

 

What issues may arise?

  • Introducing a levy is likely to impose transitional costs on industry to modify their accounting and billing systems, but these costs are not expected to be significant.
  • Carriers already pass on the costs of the USO and NRS levies to consumers. Consumers would see a small increase to bills if a broad-based levy were to be adopted, but if mandatory pass-through were required the increase would be transparent to consumers.
  • The ACMA would need to put in place formal structures for collecting the levy from all telecommunications service providers.
  • Including a Telecommunications Industry Levy in addition to a broad-based levy would not impose any additional regulatory burden on industry as it is currently subject to levy payment requirements for existing USO funding.
  • Further work would need to be undertaken to determine the level at which a levy should be set, to ensure that it did not recover more than TUSMA’s costs, and to determine the timeframe for payment.

4.         Other Options for Consideration

 

Increasing the USO Levy contributor base

The Telecommunications (Consumer Protection and Service Standards) Act 1999 allows the Minister to require telecommunications service providers that are not carriers to contribute, but to date this power has not been used.

 

With the transition to the NBN and the likelihood that the majority of fixed line services in Australia will be delivered over this network over time, there will be many existing (and new) telecommunications providers that may not need to hold a carrier licence because they will not need to operate any network elements of their own to offer services. While there will always be providers offering services on the NBN that will continue to operate networks separate to the NBN (e.g. providers with their own backhaul networks and mobile, wireless and satellite providers), the number of carriers in Australia may reduce as providers begin offering services on the NBN.

 

If the contributor base is not broadened to include telecommunications service providers, it may encourage service providers to cease being carriers so that they are not subject to the USO levy, which would lead to an additional burden on remaining carriers and could discourage investment in future network construction.

 

According to the ACMA 2008-09 eligible revenue assessment, there were a total of 194 carriers, of which 24 (or 12.4 per cent) had eligible revenue of $25 million or more. The Australian Bureau of Statistics (ABS) Internet Activity Survey for December 2010 identified 104 retail service providers with more than 1,000 active subscribers. [4] There is limited information available on the revenue of retail service providers that are not also carriers, however, if we assume that the revenues earned are comparable to carriers then there are likely to be approximately 13 providers that would have eligible revenue of $25 million or more and be required to contribute to the Telecommunications Industry Levy.

 

The cost to the new contributors of having to submit their annual ERRs to the ACMA is not expected to be significant. The process of submitting the ERR involves filling in a template with information that should be readily available to telecommunications providers (i.e. the amount of revenue they earned in the previous financial year). The main cost to retail service providers would be the cost of having their eligible revenue return audited before it is submitted.

5.         Impact assessment

 

This section discusses the advantages and disadvantages of the options identified above in terms of the objectives discussed in section 2 and their impact on stakeholders, including:

·          TUSMA (once established);

·          carriers;

·          carriage service providers ;

·          the ACMA; and

·          consumers.

 

The following criteria are considered in analysing the options outlined in section 3:

·         action required and likely compliance costs

·         ability of TUSMA to fulfil its functions

·         impact on industry

·         impact on consumers

·         competitive impacts

·         benefits

·         regulatory efficiency

 

The merits of each option against the identified criteria are presented in the table below:

·         Option A: Telecommunications Industry Levy only

·         Option B: Combined Telecommunications Industry Levy and additional direct Government funding

·         Option C: Combined Telecommunications Industry Levy and increased annual numbering charge

·         Option D: Broad-based non-Government levy only



Assessment criteria

Option A - Telecommunications Industry Levy only

Option B - Combined Telecommunications Industry Levy and additional direct Australian Government funding in the short term

Option C - Combined Telecommunications Industry Levy and increased Annual Numbering Charge

 

Option D - Broad-based Levy (with possible variation to include Telecommunications Industry Levy)

 

Action required and likely compliance costs

 

·        No additional compliance costs for current contributors to the USO and NRS levies (although actual costs for providers would increase in line with the higher levy).

·        Telecommunications service providers with eligible revenue of $25 million or greater would now be included in the Telecommunications Industry Levy scheme as eligible contributors (previously it was only carriers who contributed).

·        The existing regulatory approach to the USO levy would be adopted.

·        Telecommunications service providers with eligible revenue of $25 million or greater would now be included in the Telecommunications Industry Levy scheme as eligible contributors (previously it was only carriers who contributed).

·        Minimal administrative impact on the ACMA because existing levy processes are followed . Government would provide additional funding in the first two financial years to provide a smooth transition to new levy arrangements for non-Telstra providers.

·        Allocation of additional appropriation required through Budget process.

·        No additional compliance costs for current contributors to the USO and NRS levies for the Telecommunications Industry Levy component.

·        No additional compliance costs for providers who hold telephone numbers.

·        Telecommunications service providers would need to modify their accounting and billing systems to collect the levy. The cost is not expected to be significant, but the Government would need to work out the finer detail of the scheme.

·        If the variation is adopted, compliance costs on service providers are likely to be low because the regulatory arrangements would be modelled on current arrangements.

Ability of TUSMA to fulfil its functions

·        This option would provide sufficient funding to enable TUSMA to fulfil its functions.

·        This option would provide sufficient funding to enable TUSMA to fulfil its functions.

·        This option would provide sufficient funding to enable TUSMA to fulfil its functions in the short-term.

·        However, it is likely that the number of phone numbers being allocated could reduce over time if users abandon fixed line voice service in favour of using mobile services for their voice needs. This could lead to the Annual Numbering Charging being unsustainable for funding TUSMA in the long term.

·        This option would provide sufficient funding to enable TUSMA to fulfil its functions.

Impact on industry

·        In FY2012 - 13 and 2013 - 14, the new USO arrangements would collect approximately $290 million, which would be an approximately 80 per cent increase on the amount being collected under the current USO and NRS levies.

·        Carriers and CSPs with eligible revenue of less than $25 million would not have to contribute to the levy.

 

·        In FY2012 - 13 and 2013 - 14, the majority of the increase in the levy will be met by Telstra, because non-Telstra providers will not face an increase to their aggregate funding contribution (due to additional Budget funding). The overall amount of levy to be collected from Telstra will be controlled, however, as it cannot be higher than TUSMA’s costs (less Government funding for TUSMA).

·        Carriers and CSPs with eligible revenue of less than $25 million would not have to contribute to the levy.

·        Any impacts after 30 June 2014 would depend on the outcomes of a review.

·        Industry participants currently contributing to the Annual Numbering Charge may see a doubling of their contributions.

·        Industry participants do not have to provide any direct funding to the levy, but there may be some administrative burden if industry is required to collect the levy from consumers.

·        If variation adopted, there would be regulatory impacts on service providers equivalent to Option A, i.e. subject to Telecommunications Industry Levy. However, carriers and CSPs with eligible revenue of less than $25 million would not have to contribute to the levy.

 

 

Impact on consumers

·        It is likely that providers will pass on the levy directly to customers but it is unlikely that they will pass it on in a transparent manner

·        Due to expanding the contributor base to include telecommunications service providers there will be additional customers who may see their costs increased.

·        While the costs are increasing compared to the existing USO and NRS levies, the amount passed onto customers is not expected to be significant (i.e. ~$4/year extra, assuming an additional $130m needs to be raised and there are ~30million accounts)

·        It is likely that providers will pass on the Telecommunications Industry Levy to customers. Consumer bills would experience no or minimal increase because of the additional Government funding.

 

·        With the Annual Numbering Charge being extended to geographic numbers, CSPs are likely to pass this cost onto their customers.

·        This option is only targeted at users/providers of voice services whereas all of the other options are targeted at users/providers of all telecommunications services. This option is likely to lead to a higher cost for voice services than the other options.

·        Consumers will see a small increase to bills because their bills will include the broad-based levy. However, the increases to the bills will be totally transparent to consumers.

·        If variation adopted, impacts on consumers would be reduced because the Telecommunications Industry Levy would reduce the amount to be collected by the broad-based levy.

Competitive impacts

·        This option is equitable to all contributors.

·        While not all telecommunications service providers are required to pay the levy (due to the eligible revenue threshold), all providers of substantial scale will contribute to the levy.

·        This option is equitable to all contributors.

·        While not all telecommunications service providers are required to pay the levy (due to the eligible revenue threshold), all providers of substantial scale will contribute to the levy.

 

·        This option is equitable for all providers of traditional voice services.

·        However, it may place providers of traditional voice services at a disadvantage to providers who offer no voice services or internet based voice services.

·        This option is equitable to all contributors.

·        If variation is adopted, all providers of substantial scale would contribute to the levy.

 

Benefits

·        Relatively simple to implement as it utilises existing funding mechanism and carriers are familiar with the concept.

 

·        Relatively simple to implement as it utilises existing arrangements and carriers are familiar with the concept.

·        Additional direct Government funding provides a smooth transition for industry and certainty of outcomes for consumers.

·        A review allows detailed analysis of funding options to take place before 30 June 2014.

·        Relatively simple to implement as utilises existing funding mechanism and CSPs are comfortable with concept.

 

·        Provides greater transparency to customers on their contribution to the cost of providing universal service and public interest services.

·        If variation adopted, additional funding meets equity principles from spreading TUSMA residual operating costs across industry as well as consumers in accordance with ‘industry-and-consumer pays’ principles.

 

Regulatory efficiency

·        This option is based on existing regulatory arrangements, so it is efficient to implement.

·        Funding the residual amounts through a single levy may be more cost-effective than having a hybrid funding mechanism, as administrative and compliance costs would be reduced.

·        This option is based on the existing regulatory arrangements, so it is efficient to implement.

·        Utilises existing regulatory mechanism.

·        Funding the residual amounts through a single levy may be more cost-effective than having a hybrid funding mechanism, as administrative and compliance costs would be reduced.

·        The ACMA will need to put in place formal structures for collecting the levy from all telecommunications service providers.

·        Marginal negative impacts on regulatory efficiency as service providers are familiar with, and have internal processes aligned to, payment of the Telecommunications Industry Levy.

·        This option would need further work to implement, especially to work out the timeframe for collecting the levy and the actual amount to be levied to ensure that the levy does not recover more than TUSMA’s costs.



6.         Consultation

 

Previous consultation

In the October 2010 discussion paper on implementing the USO policy in the transition to the NBN, industry views were sought on other options for funding TUSMA, including alternatives to the consolidated levy. Although the majority of respondents argued against the need for payments to Telstra (and, thus, the need for a levy), the consultations did not provide constructive assistance in working through additional options, such as a levy on customer accounts, services or telephone numbers either to replace or supplement the existing arrangements.

 

A summary of the main responses to the 2010 discussion paper is set out below:

 

1.       Future funding arrangements for TUSMA:

  1. the preference is for Government funding of TUSMA, with the industry exempt from providing any additional funding to cover the functions of TUSMA.
  2. the costs associated with the voice services component of the USO should be entirely borne by Telstra, and that such costs will reduce significantly over time as the copper network is decommissioned.
  3. contributions towards the additional functions of TUSMA (Emergency Call Handling, voice migration and funding for public interest services) should not be recovered from industry.
  4. there is some support for broadening the base of contributors to the levy arrangements.

 

2.       Institutional arrangements for TUSMA:

  1. TUSMA needs to be structured in such a way that it is fully accountable to Government and its operations transparent to industry and consumers.
  2. TUSMA should operate in such a way that it delivers benefits to industry and be structured to avoid duplicating existing capabilities within Government.
  3. industry should have an advisory role in relation to the exercise of TUSMA’s functions.

 

  1. Some respondents suggested a review of the USO in light of changes to the structure of the industry, changes in consumer preferences, technological advances and the advent of the NBN (e.g. VHA suggested a review by the Productivity Commission).

 

  1. Reconsider the Government’s policy regarding the length of the agreement with Telstra for the maintenance of copper lines in non-fibre service areas.

 

Telstra consultation

As part of negotiations of the USO agreement the Government consulted with Telstra on options A, B and D and Telstra indicated that it could support these options.

7.         Conclusion

On balance it is recommended that Option B be preferred. Although it imposes an additional cost on industry, this cost is largely placed on Telstra . In the first two financial years, Government would provide base funding of at least $50 million, plus additional Budget funding so that contributors to the industry levy, with the exception of Telstra, will not face an increase to their aggregate funding contribution. Telstra itself is compensated by the addition of base Government funding and the greater certainty it will have of receiving funding that better reflects the costs of providing universal service and other public interest services. The overall cost impact on Telstra is also controlled as the levy will be set to cover TUSMA’s costs. The option provides a smooth transition for industry and also provides it with greater certainty of the obligations and funding requirements that will be placed upon it. Finally, holding a review before 30 June 2014 will allow the Government to consider all options in further detail.

 

Option A would place a greater funding burden on industry, and especially non-Telstra contributors, although again the overall impact is controlled and the option does also provide industry with certainty. However, it imposes a more abrupt transition to the new arrangements. Option C does not provide certainty that it can cover TUSMA’s costs on an ongoing basis. Option D does have the merit of being broadly-based, with only marginal impacts overall on consumers, but it would need further work to determine the impacts on industry and consumer behaviour, timeframes for collection and the actual amount of any levy.

8.         Implementation and review of the preferred option

 

Option B can be implemented with limited impacts on industry or consumers. The Telecommunications Industry Levy component of the contribution requires only the application of the new eligible revenue return principles to establish the $25 million eligible revenue threshold.

 

The Government has already announced its initial contribution to TUSMA’s operations of $50 million in FY2012 - 13 and FY2013 - 14, increasing to $100 million per annum thereafter. Accordingly, any further Budget funding under Option B will be provided through the Budget appropriation process.

 

Given that Option B will impose some higher costs on industry, a review of the adequacy and efficacy of funding arrangements will be undertaken before July 2014.

 



 

ABBREVIATIONS

 

The following abbreviations are used in this explanatory memorandum:

 

ACCC:                                    Australian Competition and Consumer Commission

 

ACMA:                                   Australian Communications and Media Authority

 

ACMA Act:                            Australian Communications and Media Authority Act 2005

 

AIA:                                        Acts Interpretation Act 1901

 

Bill:                                         Telecommunications Universal Service Management Agency Bill 2011

 

CCA:                                       Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974 )

 

Consumer Protection Act:      Telecommunications (Consumer Protection and Service Standards) Act 1999

 

FMA Act:                               Financial Management and Accountability Act 1997

 

FMA Regulations:                  Financial Management and Accountability Regulations 1997

 

Minister:                                  Minister for Broadband, Communications and the Digital Economy

 

NBN:                                      National Broadband Network

 

NBN Co:                                NBN Co Limited

 

NRS:                                      National Relay Service

 

Special Account:                     Telecommunications Universal Service Special Account

 

STS:                                        standard telephone service

 

Telecommunications Act:       Telecommunications Act 1997

 

Telstra:                                    Telstra Corporation Limited

 

TUSMA:                                 Telecommunications Universal Service Management Agency

 

USO:                                       universal service obligation

 



 

NOTES ON CLAUSES

TELECOMMUNICATIONS UNIVERSAL SERVICE MANAGEMENT AGENCY BILL 2011

Part 1-- Preliminary

Clause 1 - Short title

 

Clause 1 provides that the Bill, when enacted, may be cited as the Telecommunications Universal Service Management Agency Act 2011 .

 

Clause 2 - Commencement

 

Clause 2 provides for the commencement of the Bill. It is intended to ensure that the establishment of TUSMA does not commence until Telstra is legally committed to the structural separation of its copper network as that network is progressively decommissioned in fibre network areas through a structural separation undertaking that is in force. For this reason, the commencement of clauses 3 to 125 is tied to the acceptance by the ACCC of voluntary structural separation undertakings and related commitments given by Telstra.

 

Clauses 1 and 2 of the Bill, and any other provisions not covered in the table provided at subclause 2(1), will commence on the day on which the Bill receives the Royal Assent.

 

Clauses 3 to 125 of the Bill will commence on a single day to be fixed by proclamation. That day must not occur before the latest of the following events:

·          when a structural separation undertaking given by Telstra comes into force;

·          if Telstra’s structural separation undertaking requires Telstra to give the ACCC a draft migration plan, when the ACCC approves that draft migration plan;

·          if the extended spectrum regime applies to Telstra, when an undertaking given by Telstra about hybrid fibre-coaxial networks comes into force (unless the Minister has exempted Telstra from that undertaking); and

·          if the extended spectrum regime applies to Telstra, when an undertaking given by Telstra about subscription television broadcasting licences comes into force (unless the Minister has exempted Telstra from that undertaking).

 

If there is no proclamation within six months after the latest of the events listed above, clauses 3 to 125 of the Bill will commence on the day after the end of that six month period.

 

Clause 3 - Simplified Outline

 

Clause 3 contains a simplified outline of the Bill to assist readers.

 

Clause 4 - Definitions

 

Clause 4 sets out definitions of key terms used in the Bill. In many cases, the definitions in clause 4 refer to terms contained in the Telecommunications Act or the Consumer Protection Act. It is not intended that the TUSMA legislative scheme will affect the way that key components of Australia’s telecommunications legislative framework are defined.

 

Consequently, where the Bill refers to terms such as carrier , carriage service , carriage service provider , customer cabling , emergency call service , line , national broadband network , payphone and standard telephone service , the meaning of those terms will be the same as the applicable definitions in the Telecommunications Act and the Consumer Protection Act.

 

To ensure consistency with existing telecommunications legislation, the definition of Australia has the same meaning that it has under the Telecommunications Act, that is, the term will include the Territories of Christmas Island and the Cocos (Keeling) Islands as well as any other external Territory prescribed under section 10 of that Act.

 

The definition of National Relay Service is consistent with the description of that term in subsection 95(1) of the Consumer Protection Act. This definition does not prescribe a particular technological solution through which the service is provided. The definition leaves open the possibility that as technology advances, new features may be added to the NRS to better provide access to a standard telephone service.

 

Clause 5 - Vacancy in the office of a TUSMA member

 

Clause 5 provides that for the purposes of a reference in the Bill to a vacancy in the office of a member of TUSMA there are taken to be four offices of members in addition to the Chair. This enables the number of offices which are vacant to be determined at any one time, despite the fluctuations in the number of members who may be appointed. Clause 37 of the Bill provides for at least four members and up to six members. For example, if there were two persons, other than the Chair, appointed as members of TUSMA, clause 5 would deem there to be two vacancies in the membership. Consequently, the Minister would be able to appoint two acting members in accordance with subclause 40(2).

 

Clause 5 also provides that, for the purposes of a reference in the AIA to a vacancy in the membership of a body, there are taken to be four offices of members in addition to the Chair.

 

Clause 6 - Standard telephone service

 

This clause replicates section 8BA of the Consumer Protection Act.

 

Subclause 6(1) provides that a reference to a STS includes the meaning that is provided for under section 6 of the Consumer Protection Act that has any characteristics that have been specified by the Minister under a subclause 6(2) instrument.

 

Subclause 6(2) replicates subsection 8BA(2) of the Consumer Protection Act. It enables the Minister, by legislative instrument, to determine specified characteristics for the purposes of subclause 6(1). This mechanism could be used, for example, to set specific voice quality requirements as part of the STS.

 



 

Clause 7 - Supply of standard telephone services

 

Clause 7 defines what is included in a reference in this Bill to the supply of a standard telephone service. This provision replicates section 9E of the Consumer Protection Act. Clause 7 ensures that a reference to the supply of a STS includes, at a minimum, a telephone that does not have switching functions and the equivalent customer equipment for a person with a disability in order to comply with the Disability Discrimination Act 1992 .

 

Subclause 7(1) provides that a reference in the Bill to the supply of a standard telephone service includes a reference to the supply of:

·       if the regulations prescribe customer equipment - that customer equipment or customer equipment supplied instead of that first-mentioned customer equipment in order to comply with the Disability Discrimination Act 1992 ; and

·       if the regulations do not prescribe customer equipment - a telephone handset that does not have switching functions or such other customer equipment supplied instead of such a handset in order to comply with the Disability Discrimination Act 1992 ; and

·       other goods and services of a kind specified in the regulations,

 

where the equipment, goods or services, as the case may be, are for use in connection with the standard telephone service.

 

Subclause 7(2) provides that a reference in the Bill to the supply of a standard telephone service includes a reference to the supply, to a person with a disability, of customer equipment and other goods and services of a kind specified in the regulations where the equipment, goods or services, as the case may be, are for use in connection with the standard telephone service. The term ‘disability’ is taken to have the same meaning as in the Disability Discrimination Act 1992 .

 

Subclause 7(3) provides that the term ‘supply’ in relation to customer equipment or other goods, includes supply by way of hire.

 

The provisions in clause 7 give the Government flexibility in relation to the types of customer equipment and other goods and services that may be required under a TUSMA contract or grant which covers the supply of a STS. For instance, this may include: upgrades in the types of customer equipment, such as a telephone handset that has switching functions; specifying other goods, such as service manuals; or specifying other services, such as customer help lines.

 

It is important to note the prerequisite in clause 7 that the supply of the customer equipment must be for use in connection with the standard telephone service. Equipment and other goods and services not for use in connection with the standard telephone service cannot be prescribed in the regulations under this provision.

 

Clause 8 - Crown to be bound

 

Subclause 8(1) provides that the Bill binds the Crown in each of its capacities.

 

Subclause 8(2) provides that the Crown is not liable to a pecuniary penalty or to be prosecuted for an offence. This protection does not apply to an authority of the Crown (subclause 8(3)).

 

Clause 9 - Extension to external territories

 

Clause 9 provides that this Bill extends to the Territories of Christmas Island and Cocos (Keeling) Islands and any other external Territories prescribed by regulations made for the purposes of paragraph 10(c) of the Telecommunications Act. This extension is consistent with paragraph 7(c) of the Consumer Protection Act.

 

Clause 10 - Continuity of partnerships

Clause 10 provides that for the purpose of this Bill, a change in the composition of a partnership does not affect the continuity of the partnership. This means, for example, that if one partner leaves a partnership, any obligations or rights of the remaining partners are not affected.

Part 2-- Public interest telecommunications services

 

Division 1--Policy objectives

 

Clause 11 - Policy objectives

 

Clause 11 sets out the policy objectives of Part 2 of the Bill, which essentially define the limits of TUSMA’s contract and grant-related functions as conferred under the Bill. Under clause 13 of the Bill, TUSMA may only carry out its core function of entering into contracts, or making a grant of financial assistance, if that contract or grant is for a purpose relating to the achievement of one or more of the policy objectives set out in paragraphs (a) to (f) of this clause.

 

STS and Payphones

 

The policy objectives in paragraphs 11(a) and (b) set out the fundamental principles that standard telephone services and payphones be reasonably accessible to all people in Australia on an equitable basis, wherever they reside or carry on business, and that standard telephone services be supplied to people in Australia on request and payphones be supplied, installed and maintained in Australia. The meanings of ‘standard telephone service’ and ‘payphones’ are contained in, respectively, sections 6 and 9C of the Consumer Protection Act.

 

These two objectives are the same as the broad objectives of the USO currently established in section 9 of the Consumer Protection Act. Upon the removal of the STS universal service obligation in ‘designated STS areas’ (following the making of a declaration under proposed section 8H of that Act), and/or following the Minister declaring that there are satisfactory alternative contractual arrangements relating to payphones under proposed section 8K of that Act, it is intended that the policy objectives in paragraphs (a) and (b) of this clause ensure that the contracts and grants under clause 13 do not alter in substance the scope of the USO currently imposed on the universal service provider. The removal of legislated obligations with respect to the provision of STS and payphones services (e.g. the shift from obligations being directly imposed on a service provider to a model whereby service providers provide services under contracts/grants) is not intended to diminish the safeguard that the USO has so far provided with respect to these important telecommunications services.

 

Subparagraph 11(a)(ii) requires that the supply of a STS be ‘on request’, as it is not considered appropriate for a contractor to supply standard telephone services to a customer that does not want those services. This policy objective replicates subsection 9(2) of the Consumer Protection Act.

 

Emergency call service

 

Under paragraph 11(c), it is a policy objective that the end-users of standard telephone services in Australia are to have access, free of charge, to an emergency call service. The wording of this policy objective is essentially the same as the emergency call service objective that the ACMA must currently have regard to under subsection 147(2) of the Consumer Protection Act, as it is intended that there will be no change to the nature of the emergency call service obligation.

 

Telstra is currently the regulated Emergency Call Person (ECP) as set out in the Telecommunications (Emergency Call Persons) Determination 1999 . The service is further regulated by provisions in the Telecommunications Act and the Consumer Protection Act and the Telecommunications (Emergency Call Service) Determination 2009 (the ECS Determination). Under the ECS Determination, carriers and carriage service providers are required to give end-users access to the emergency call service operated by the ECP and provide this service free of charge. Telstra as the ECP must not charge an emergency service organisation, directly or indirectly, for receiving and handling calls to an emergency service number, transferring such calls to an emergency service organisation, and giving information in relation to an emergency service organisation. Given this regulated framework, contracts or grants entered into by TUSMA under clause 13 are expected to relate primarily to supporting activities required to be undertaken by the ECP,

 

Pursuant to the Government’s agreement with Telstra announced on 23 June 2011 (which under clause 24 will be taken to have been entered into by TUSMA under clause 13), Telstra will continue to be the ECP. Consequently, Telstra will be funded to continue to operate and maintain the technology platforms and systems required to receive calls to the emergency call numbers 000 and 112, and to transfer calls to the relevant State or Territory emergency service organisation. Under the agreement with Telstra, however, the provision of emergency call handling services will be put to tender within five years. In the event that no tenders are submitted, or none of the tenders that are submitted are acceptable to TUSMA, Telstra will remain the ECP.

 

Any emergency call service provider that is a contractor or grant recipient under the Bill, whether that provider is Telstra or not, will continue to be subject to the emergency call regulatory obligations set out in Part 8 of the Consumer Protection Act.

 

National Relay Service

 

It is a policy objective under paragraph 11(d) that the NRS be reasonably accessible to all persons in Australia who are deaf, or who have a hearing and/or speech impairment, wherever they reside or carry on business. This policy objective is also currently contained in section 95 of the Consumer Protection Act with respect to NRS contracts entered into under that section.

 

Since 1 July 1998, the NRS has , under Part 3 of the Consumer Protection Act , been provided by a person under a contract with the Commonwealth that includes an NRS Service Plan outlining how the services are to be provided. The current relay service contract is managed by Australian Communication Exchange Limited, with WestWood Spice managing the outreach services for the NRS. From 1 July 2012, the Commonwealth will not be able to enter into a NRS contract under the Consumer Protection Act (see proposed subsection 95(1A) of that Act). Instead, TUSMA will, on behalf of the Commonwealth, be responsible for entering into a NRS contract or grant agreement, with any existing NRS contracts entered into under the Consumer Protection Act being taken to have been entered into by TUSMA pursuant to clause 25.

 

The NRS policy objective is intended to ensure that, despite the changed arrangements regarding the authorisation and management of NRS contracts, there is no change to the nature of the obligation to provide a NRS.

 

Programs and measures to facilitate the transition to the national broadband network

 

The policy objective in paragraph 11(e) enables TUSMA to enter into contracts or make grants under clause 13 so that there are arrangements as are necessary to support the continuity of supply of carriage services during the transition to the NBN, including customer information, cabling installation and carriage service development programs.

 

This objective enables TUSMA to provide assistance related to the migration of public interest services currently reliant on the existing copper-based network to the NBN, thereby providing a safety net for the continued operation of these services. Such support could include arrangements to meet cabling installation costs that will enable voice-only customers to be connected to the NBN, or the provision of information to voice-only customers regarding their service options and the processes involved in migrating to the NBN. The policy objective would also allow for research into technological solutions to facilitate the carriage of services to support, for example, traffic lights and public alarms over alternative networks.

 

To ensure that there is flexibility in allowing for the continued operation of other carriage services, the regulations may specify other measures to support the continuity of supply of carriage services during the transition to the NBN.

 

Other measures

 

Paragraph 11(f) allows for the regulations to specify other policy objectives, providing that those objectives relate to the supply of carriage services. As noted earlier, the core function of TUSMA to enter into contracts or to make grants of financial assistance is limited to such contracts or grants that relate to achieving any or all of a policy objective. This regulation-making power in paragraph 11(f) recognises that, in the future, the Government may decide to confer additional responsibilities on TUSMA that are not captured by the policy objectives in paragraphs (a) to (e). The rollout of the NBN will be a dynamic process that may require TUSMA to enter into contracts or to grant financial assistance, for example, to provide information to carriage service customers about any changes to the operation of their carriage service, or to preserve the public’s reasonable access to public interest telecommunications services in a way that is not otherwise dealt with in this clause 11.

 

The Government is mindful that any increase in TUSMA’s overall responsibilities may result in an increase to a participating person’s levy contributions. Consequently, any additional policy objectives will be restricted to those ‘relating to the supply of carriage services’, thereby limiting the scope of new policy objectives. Furthermore, requiring any additional policy objectives to be prescribed in regulations will ensure that such objectives will be subject to consultation, parliamentary scrutiny and possible disallowance in accordance with standard requirements under the Legislative Instruments Act 2003 .

 

Clause 12 - Achievement of policy objectives

 

This clause requires TUSMA, in performing its functions and exercising its powers, to take all reasonable steps to ensure that the policy objectives listed in clause 11 are achieved. The obligation imposed on TUSMA in this clause seeks to ensure, that in phasing out and replacing the USO from the Consumer Protection Act, the same or similar objects will be required to be achieved under contractual arrangements provided for in this Bill. TUSMA is required to take ‘all reasonable steps’ to ensure the policy objectives are achieved in recognition that the actions of other parties contribute to achieving these objectives. For example, the Minister has a role in determining service standards and performance benchmarks, which also contribute to achieving the objectives.

 

Division 2--Contracts and grants

 

Subdivision A -- General

 

Clause 13 - Contracts and grants

 

It is a core function of TUSMA that it manages the delivery of standard telephone services, payphones, emergency call handling services, and the transition of current copper-based services to the NBN through contracts and grants. Subclause 13(1) enables TUSMA to achieve this function by providing it with the power to enter into a contract or make a grant of financial assistance for the achievement or one or more of the policy objectives set out in clause 11. Under clauses 22 to 26, specified existing contracts with Telstra and other providers for the provision of such services will be taken to have been entered into under clause 13.

 

Subclause 13(2) clarifies that if a person enters into a contract with a person under subclause 13(1), the person is a ‘contractor’ for the purposes of the Bill. Where a grant of financial assistance is to a person under that subclause, that person will be a ‘grant recipient’.

The terms ‘contract’ and ‘grant recipient’ for the purposes of the Bill have their ordinary meaning. An agreement entered into by TUSMA that is a contractual agreement at common law will not be excluded because it is not specifically described by one or more of the parties as a ‘contract for services’. Likewise, where an agreement grants financial assistance to a person, it does not have to identify itself specifically as a ‘grant agreement’ for it to fall under clause 13.

 

Clause 14 - Terms and conditions of grants

 

Subclauses 14(1) and (2) require that grants entered into by TUSMA under clause 13 be set out in writing between the Commonwealth and the grant recipient, and that the terms and conditions on which that financial assistance is to be provided be set out in that written agreement. Any such agreement would be entered into by TUSMA on behalf of the Commonwealth (subclause 14(3)).

 

The requirement to set out the terms and conditions of grants of financial assistance as written agreements will not apply with respect to the condition that the grant recipient comply with a Ministerial determination made under clause 15.

 

Clause 15 - Condition about compliance with Ministerial determination

 

Subclause 15(2) provides the Minister with the power to make, by legislative instrument, determinations that set out standards, rules and minimum benchmarks to apply in relation to contracts or grants entered into under clause 13 of the Bill, except as so far as the contract (or a part of a contract) falls within the definition of ‘designated transitional contracts’ - see clause 16. Under subclause 15(1), it will be a condition of those contracts or grants that the contractor or grant recipient, as the case may be, complies with all Ministerial determinations so far as the determination applies to those contracts or grants. Subclause 15(11) also imposes an obligation on TUSMA to take all reasonable steps to ensure that a contractor or grant recipient complies with a Ministerial determination in so far as the determination applies by, for example, varying an existing contract to include a term requiring compliance with the determination.

 

The power set out in clause 15 is framed broadly to require contractors and grant recipients to have to comply with standards, rules or benchmarks made under this provision. The Government’s intention is that, for example, legislative instruments made under the Consumer Protection Act relating to payphones and the requirements and circumstances under which the USO does not apply, would be reproduced as contract standards, rules or benchmarks under clause 15. In the absence of such a power, for example, following the removal of the payphones USO obligation from Telstra (after the making of a declaration under proposed section 8K of the Consumer Protection Act), Telstra would not be required to meet standards and benchmarks, in relation to its USO payphones, if they have not been detailed in the clause 13 contract.

 

The main differences between the regulatory approach currently provided for in the Consumer Protection Act and the TUSMA arrangements are that with the TUSMA arrangements, Ministerial determinations will be enforceable through contract law, and not through regulatory enforcement action by the ACMA, and that variations to the contractors’ service responsibilities may give rise to changes in the payment made by TUSMA.

 

Under subclause 15(3), a Ministerial determination may apply generally or be of limited application as provided for in the determination. However, that does not limit the effect of subsection 33(3) of the AIA, which provides that where a power to make an instrument is, like a determination under subclause 15(2), conferred with respect to specified matters, that power includes the power with respect to only some of the matters set out in relation to that power. Consequently, a Ministerial determination does not need to set out all the standards, rules and benchmarks potentially applying to contractors or grant recipients, and may deal specifically with, for example, the matter of payphones performance standards only.

 

Examples of the type of determinations that may be made under subclause 15(2) are set out below. However, these examples are intended to be illustrative, and should not be taken to be an exhaustive list of the type of determinations that may be made or otherwise limit subclause 15(2).

 

For example, Ministerial determinations that may be made under subclause 15(2) include:

·          performance standards or minimum performance benchmarks in relation to:

o    the supply of standard telephone services, payphones, the emergency call service or the NRS (other than for designated transitional contracts); or

o    the characteristics of such services; or

·          rules concerning the requirements for customer equipment used for supplying a standard telephone service; or

·          rules about the location or removal of payphones, including rules concerning public consultation and complaint resolution processes; or

·          rules in relation to the standard telephone service concerning interim and alternative services and priority services;

·          rules in relation to the preparation and publication of:

o    service plans;

o    policy statements; or

o    standard marketing plans; or

·          rules in relation to the provision of information or documents to TUSMA, including the making of copies of documents, where the information or documents is relevant to a contract or grant under clause 13; or

·          rules in relation to the keeping and retention of records relevant to a contract or grant under clause 13.

 

The requirement to comply with Ministerial determinations made under subclause 15(2) will not limit the terms and conditions of a contract entered into under clause 13 or an agreement to provide a grant of financial assistance under clause 14.

 

Exceptions to compliance with Ministerial determinations

 

Where there is an inconsistency between a Ministerial determination and an existing term or condition in a contract or grant agreement, the existing term or condition will have no effect to the extent of that inconsistency (subclause 15(6)). Subclauses 15(7) to 15(10) set out exceptions to this rule.

 

First, a determination will have no effect to the extent that it overrides a term or condition of a contract entered into under clause 13 or set out in a grant agreement under clause 14 that gives the contractor or grant recipient the right to adjust the amount payable under that agreement as a result of a change in the services, facilities or customer equipment to be supplied pursuant to the contract or grant. This exception is intended to clarify that the power to make standards, rules or minimum benchmarks does not include the power to take away any negotiated right for payment in relation to a change in the scope of the contract or grant; this will include whether the same services are required to be supplied at a different standard as well as where new services are required. If such a clause is included in a contract or grant, it is a contractual matter between the parties whether or not the Commonwealth may have to pay for any increase to the change to the scope of the services to be provided under the contract or agreement. (Subclauses 15(7) and 15(9)).

 

Second, a determination will have no effect to the extent that it specifies either the price of any services, facilities or customer or equipment to be supplied under a contract or grant entered into under clause 13, or the method of ascertaining such a price. This exception clarifies that the power to make a Ministerial determination made under subclause 15(2) is not intended to be exercised as a power to set price controls with respect to TUSMA contracts or grant agreements, or to override existing negotiated service prices previously agreed to by TUSMA, on behalf of the Commonwealth, with respect to contracts or grants entered into under clause 13. It is a contractual matter between TUSMA and each prospective contractor or grant recipient to agree on the price for services, facilities or customer equipment.

 

Clause 16 - Exemption of designated transitional contracts from Ministerial determination

 

This clause exempts ‘designated transitional contracts’ from any determination made by the Minister under subclause 15(2).

 

‘Designated transitional contracts’ are defined in paragraphs 24(d), 25(d) and 26(d) respectively. In short, they are the whole or part of the following transitional contracts:

·          in relation to the provision of the NRS, a relay service contract with Australian Communication Exchange Limited, and an outreach service contract with WestWood Spice;

·          those parts only of the agreement between the Commonwealth and Telstra, announced on 23 June 2011 (Telstra Agreement), that relate to achievement of the policy objective in paragraph 11(c), regarding the emergency call service and the policy objective in paragraph 11(e), regarding specified programs necessary to support the continuity of the supply of carriage services during the transition to the NBN.

 

In respect of the two NRS-related ‘designated transitional contracts’, it was considered appropriate to exempt these contracts from future Ministerial determinations given these are long standing contracts, the scope of services for these contracts has previously been agreed between the Commonwealth and contract providers, and it is not anticipated that these services will substantially change prior to the expiry of the contracts in mid 2013.

 

In relation to the Commonwealth’s agreement with Telstra for the supply of an emergency call service, the Telecommunications Act, the Consumer Protection Act, and legislative instruments made under those Acts currently set out the responsibilities and obligations of Telstra regarding the provision of that service, and it was not considered necessary for the time being for Ministerial determinations under clause 15 to apply to that agreement.

 

In respect to the scope and obligations in the Telstra Agreement regarding the specified programs concerning the transition to the NBN, it was considered more effective for the details in respect of these matters to be resolved contractually between the parties rather than through Ministerial determination.

 

Clause 17 - TUSMA has powers etc. of the Commonwealth

 

Consistent with TUSMA’s proposed legal status as a statutory agency subject to the FMA Act, subclause 17(1) confirms that TUSMA, on behalf of the Commonwealth, has all the rights, responsibilities, duties and power of the Commonwealth relating to the Commonwealth’s capacity as a party to a contract or the grantor of a grant under clause 13.

 

An amount payable by the Commonwealth under a clause 13 contract or grant is to be paid by TUSMA on behalf of the Commonwealth. An amount payable to the Commonwealth under a clause 13 contract or by way of a repayment of the whole or part of a clause 13 grant is to be paid to TUSMA on behalf of the Commonwealth. Paragraph 17(2)(e) makes clear that TUSMA may commence any action or proceeding on behalf of the Commonwealth in relation to a matter that concerns a clause 13 contract or grant, for example, an action to seek repayment of money paid to a grant recipient.

 

Clause 18 - Conferral of powers on TUSMA

 

Clause 18 confirms that TUSMA, on behalf of the Commonwealth, may exercise any power conferred on it by a contract or grant agreement entered into under clause 13 or clause 14.

 

Clause 19 - TUSMA to notify the Minister about entering into contracts or making grants

Clause 20 - TUSMA to notify Minister about variations of contracts

Clause 21 - TUSMA to notify Minister about variations of grants

 

Clauses 19 to 21 together enable the Minister to be informed at an early stage about any proposed contractual or grant arrangements to be entered into by TUSMA, or variations of such contracts and grants, that are likely to increase the amounts payable by the Commonwealth for clause 13 contracts or grants. TUSMA must notify the Minister of any proposal before it informs the public or a prospective contractor or grant recipient. In this context, it is intended that a proposal would include any information or document that could give rise to a contract, agreement or arrangement with an external party (such as a request for quote, issue of a request for tender, issue of grant guidelines, or a call for applications under a grant arrangement). The notice to the Minister from TUSMA must detail the likely impact, if any, on the amount of levy that may be paid by participating persons for the particular eligible levy period.

 

Entering into contracts or grant agreements

 

Under clause 19, TUSMA must provide the Minister with a written statement about any proposed contract or grant, that is likely to increase the amount that may be debited from the Special Account, before the contract has been entered into or grant made, and before either the public or the prospective contract or grant recipient have been informed by TUSMA about the proposal. That written statement must include:

·          details about the proposal;

·          a statement whether the proposal is consistent with TUSMA’s corporate plan under clause 74; and

·          the likely impact of the proposal on TUSMA’s financial position and the amount of levy payable by participating persons for the relevant eligible levy period.

 

Varying contracts or grants

 

Clauses 20 and 21 provide that if a proposed agreement to vary an existing contract or grant of financial assistance will either:

·          materially change the services, facilities or customer equipment to be supplied by the contractor or grant recipient pursuant to that contract or grant; or

·          increase the amount that may be debited from the Special Account,

 

TUSMA must provide the Minister with a written statement about that ‘variation agreement’ before it is entered into. Like the written statements under clause 19, that statement should set out details of the proposal, whether the variation agreement is consistent with the corporate plan, and the likely impact of the proposed variation on the levy payable by participating persons in relation to the particular eligible levy period.

 

Subdivision B--Transitional

 

Clause 22 - Transitional--standard telephone services

Clause 23 - Transitional--payphones

Clause 24 - Transitional--emergency call service

Clause 25 - Transitional--National Relay Service

Clause 26 - Transitional--continuity of supply of carriage services during the transition to the national broadband network

 

Clauses 22 to 26 set out the transitional arrangements applying to contracts that have been entered into by the Commonwealth with Telstra and other companies prior to the commencement of the Bill. In the case of each contract, these clauses provide that, so long as that contract is in force, it will be deemed to have been entered into by TUSMA, on behalf of the Commonwealth, under clause 13 of the Bill provided that it has been entered into for a purpose relating to the achievement of one or more of the policy objectives set out in clause 11.

 

It is intended that these transitional provisions will apply in particular to:

·          a Telecommunications Universal Service Management Agency Agreement between the Commonwealth and Telstra, announced on 23 June 2011, for the provision of standard telephone services, payphones, an emergency call service, and to support the transition of copper-based services to the NBN Co fibre network (clauses 22, 23, 24 and 26);

·          in relation to the provision of the NRS:

o    a relay service contract with Australian Communication Exchange Limited; and

o    an outreach service contract with WestWood Spice (clause 25); and

·          any contracts entered into with any persons before commencement of the Bill relating to the achievement of the policy objective that there are to be such customer information, customer cabling installation and carriage service development programs that are necessary to support the continuity of the supply of carriage services during the transition to the NBN (clause 26).

 

The purposes of these transitional provisions are threefold. First, they enable TUSMA to manage the contracts and exercise any of its functions and powers in relation to the contracts. Second, since the transitional contracts will be deemed to be clause 13 contracts this will mean that it will be a condition of these contracts that the contractor must comply with any relevant Ministerial determinations made under clause 15. Third, since each of these contracts are substantive agreements relating to the delivery of public interest telecommunication services, the provisions ensure that the transparency and accountability requirements under the Bill, for example, the requirement to disclose key details of the contracts on a public register and the requirement for TUSMA to monitor and report to the Minister on the performance of contractors, will apply to these transitioned contracts.

 

Contracts taken to have been entered into by TUSMA under clauses 24 to 26 are defined in those clauses as ‘designated transitional contracts’, and will consequently be exempt from a Ministerial determination made under clause 15. However, a designated transitional contract will only have this status so far as it relates to an emergency call service, the NRS and/or other transitional objectives referred to in clauses 24 to 26. The Telstra agreement described above, for instance, will not be a designated transitional contract so far as the contract relates to the supply of standard telephone services or to the supply, installation and maintenance of payphones.

 

Division 3--Registers

 

Clause 27 - Register of Public Interest Telecommunications Contracts

 

Clause 27 requires TUSMA to maintain a Register of Public Interest Telecommunications Contracts (the Contracts Register) that identifies, describes and summarises each contract entered into clause 13 that is in force. The Contracts Register is intended to ensure transparency and accountability by providing the public with information on the key aspects of the clause 13 contracts entered into by TUSMA.

 

The Contracts Register must be made publicly available on a website maintained by TUSMA. Under subclause 27(1), the Contracts Register must identify each contractor, specify the duration of the contract, describe the services, facilities or customer equipment to be supplied under the contract and summarise any actions to be undertaken by the contractor. The total amount to be paid to the contractor or an estimate of that amount or the method of calculating the amount to be paid must also be included on the Contracts Register.

 

To assist readers, subclause 27(4) confirms that the Contracts Register is not a legislative instrument, as it is administrative in character, and therefore does not fall within the meaning of section 5 of the Legislative Instruments Act 2003 .

 

Clause 28 - Register of Public Interest Telecommunications Grants

 

Clause 28 requires TUSMA to maintain a Register of Public Interest Telecommunications Grants (the Grants Register). Like the Contracts Register under clause 27, the Grants Register must be published on a website maintained by TUSMA. The Grants Register must identify each grant recipient, summarise the terms and conditions of the grant that require action to be undertaken by the grant recipient, describe the services, facilities or customer equipment to be provided pursuant to the grant, and either specify the amount to be paid to the grant recipient or the method for working out such an amount.

 

To assist readers, subclause 28(4) confirms that the Grants Register, like the Contracts Register, is not a legislative instrument, as it is administrative in character, and therefore does not fall within the meaning of section 5 of the Legislative Instruments Act 2003 .

 

Division 4--Monitoring of performance

 

Clause 29 - Monitoring of performance

 

To enhance transparency and accountability with respect to TUSMA contract and grant arrangements, and in recognition of the public interest nature of the services and arrangements covered by TUSMA’s functions, subclause 29(1) requires that TUSMA monitor and report on all significant matters relating to the performance of contractors and grant recipients each financial year. The report prepared by TUSMA under clause 29 must then be included in its annual report prepared under clause 75.

 

Subclause 29(2) requires that the report set out details of the following matters:

·          the adequacy of each contractor or grant recipient’s compliance with the terms and conditions of a clause 13 contract or grant (as the case may be);

·          any notice of breach by a contractor or grant recipient with the terms and conditions of a clause 13 contract or grant (as the case may be);

·          any remedial action taken by TUSMA during that year in response to such a breach; and

·          the result of any such remedial action.

 

The requirement to include the above matters in the report does not limit TUSMA from including other significant matters relating to the performance of contractors and grant recipients in the report.

 

Division 5--Miscellaneous

 

Clause 30 - Executive power of the Commonwealth

 

Clause 30 clarifies that Commonwealth functions relating to telecommunications may continue to be performed outside the Bill (for example, by someone other than the Minister or TUSMA or the CEO), by providing that Part 2 of the Bill does not, by implication, limit the executive power of the Commonwealth.

 

Part 3-- Telecommunications Universal Service Management Agency

 

The provisions in Part 3 of the Bill are predominantly based on standard provisions in Commonwealth legislation dealing with the establishment, functions and powers of statutory agencies and the terms and conditions for members and staff of agencies with collective decision-making bodies.

 

Division 1 - TUSMA’s establishment, functions, powers and liabilities

 

Clause 31 - Establishment of the Telecommunications Universal Service Management Agency

 

This clause provides that the Telecommunications Universal Service Management Agency is established.

 

The proposed name for TUSMA reflects the role of the entity in managing the delivery of contracted services, rather than being a service provider in its own right or a regulatory authority such as the ACMA. The name of the entity includes ‘agency’ to reflect that it is established as a statutory agency subject to the FMA Act, rather than as a statutory corporation or a Commonwealth company.

 

Clause 32 - Functions of TUSMA

 

This clause sets out the functions of TUSMA. It provides that TUSMA is to have the functions that are conferred on it by this Bill, regulations or any other law of the Commonwealth. In addition, TUSMA has the function to do anything incidental to or conducive to the performance of any of its other functions referred to above.

 

Under the provisions of the Bill, TUSMA’s conferred functions are essentially to enter into, and administer, contracts or grants for the purpose of achieving the policy objectives set out in clause 11.

 

Clause 33 - Powers of TUSMA

 

Clause 33 sets out the powers of TUSMA.

 

Subclause 33(1) provides that TUSMA has power to do all things necessary or convenient to be done for or in connection with the performance of its functions.

 

Subclause 33(2) provides that the powers of TUSMA include, but are not limited to, the power to enter into contracts. The note beneath this provision brings to the attention of the reader that the CEO may also enter into contracts on behalf of the Commonwealth. This power is in addition to the power of TUSMA to enter into clause 13 contracts. Clause 13 contracts may only be for a purpose relating to the achievement of a policy objective. Subclause 33(2) will enable TUSMA to enter into other contracts relating to the administration of TUSMA, for example, contracts relating to the supply of equipment or office leases. Any contract entered into by TUSMA is to be entered into on behalf of the Commonwealth (subclause 33(3)).

 

Subclause 33(4) provides that any real or personal property held by TUSMA is held for and on behalf of the Commonwealth. Similarly, any money received by TUSMA is received for and on behalf of the Commonwealth (subclause 33(5)). Subclause 33(7) makes clear that a right to sue is not taken to be personal property for the purposes of subclause 33(4).

 

Subclause 33(6) provides that TUSMA cannot hold real or personal property, or money, on trust for a person other than the Commonwealth.

 

The provisions in clause 33 are consistent with the intention that TUSMA will operate as a statutory agency under the FMA Act.

 

Clause 34 - TUSMA’s liabilities are Commonwealth liabilities

 

Subclause 34(1) provides that any financial liabilities of TUSMA are taken to be liabilities of the Commonwealth. This is consistent with the intention that TUSMA will be a prescribed agency under the FMA Act.

 

Subclause 34(2) defines ‘financial liability’ to mean a liability to pay a person an amount, where the amount, or the method for working out the amount, has been determined.

 

Clause 35 - TUSMA has privileges and immunities of the Crown

 

Clause 35 provides that TUSMA has the privileges and immunities of the Crown in right of the Commonwealth. Again, this is consistent with the intention that TUSMA will be a statutory agency under the FMA Act.

 

Division 2 - Constitution and membership of TUSMA etc.

 

Subdivision A - Constitution of TUSMA

 

Clause 36 - Constitution of TUSMA

 

Subclause 36(1) provides that TUSMA is a body corporate, with perpetual succession (that is, a change in membership does not affect the existence of TUSMA) and it must have a seal. TUSMA may acquire, hold and dispose of real and personal property and may sue and be sued in its own corporate name.

 

Subclause 36(2) provides that the seal of TUSMA is to be kept in such custody as TUSMA directs and must not be used except as authorised by TUSMA.

 

Subclause 36(3) provides that all courts, judges and persons acting judicially will be required to take judicial notice of the imprint of the seal of TUSMA appearing on a document and must presume that the document was duly sealed.

 

Clause 36 is a standard clause in Commonwealth legislation dealing with the establishment of a statutory agency.

 

Subdivision B - TUSMA members

 

Clause 37 - Membership of TUSMA

 

Clause 37 sets the parameters for the membership of TUSMA. It provides that TUSMA will consist of a Chair, with no fewer than four, and no more than six, other members. The number of members is set at a level that will ensure that a range of expertise is available to better equip TUSMA in the exercise of its powers and performance of its functions.

 

Clause 38 - Appointment of TUSMA members

 

Subclause 38(1) provides that each TUSMA member is to be appointed by the Minister by written instrument.

 

Subclause 38(2) sets out the matters of which the Minister must be satisfied in order for a person to be eligible for appointment as a TUSMA member. Those matters include that the person have substantial experience or knowledge and significant standing in at least one of five fields, namely: the operation of a sector of the telecommunications industry; economics; business or financial management; law; or public administration. The five fields identified will ensure that an appropriate breadth of skills and expertise is available when the members are required to make decisions in relation to the implementation and administration of TUSMA’s contracts or grants.

 

Subclause 38(3) requires that the Minister must ensure (to the extent that it is reasonably practicable to do so) that TUSMA members collectively possess an appropriate balance of experience and knowledge in each of the fields covered by subclause (2). This means that when considering the appointment of a TUSMA member, the Minister would have regard to the experience, knowledge and standing in the five identified fields of the other members already appointed as TUSMA members, and of any other persons concurrently being considered for appointment as TUSMA members, to ensure an appropriate balance is achieved.

 

Subclause 38(4) makes it clear that a person will not be eligible for appointment as a TUSMA member if the person is a director of, or is concerned in, or takes part in, the management of a carrier or carriage service provider. This requirement makes it less likely that conflict might arise in the proper performance of a member’s duties.

 

TUSMA members are to hold office on a part-time basis. Subclause 38(6) provides the CEO is not able to be a member. This is consistent with the intention that the CEO will be responsible for the day-to-day administration of the agency, whereas TUSMA members will make decisions in relation to contracts or grants entered into, or to be entered into by TUSMA.

 

Clause 39 - Period of appointment for TUSMA members

 

A TUSMA member will under clause 39 hold office for the period specified in the instrument of appointment, which must not exceed five years. A person appointed as a TUSMA member by the Minister is only eligible for one reappointment.

 

The limitation on reappointment is to ensure that TUSMA benefits from the input of fresh knowledge and experience that new members can bring to a collective decision-making body, given the rapidly changing and highly specialised telecommunications industry.

 

Clause 40 - Acting TUSMA members

 

Clause 40 is a standard clause in Commonwealth legislation dealing with the functions of statutory agencies subject to the FMA Act.

 

Subclause 40(1) empowers the Minister to appoint a person to act as the Chair of TUSMA 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 Australia or is, for any reason, unable to perform the duties of the office.

 

Similarly, subclause 40(2) empowers the Minister to appoint a person to act as a TUSMA member (other than the Chair). Subclause 40(3) makes clear that a person is not eligible to act as the Chair or a member unless the person is eligible for appointment as a TUSMA member.

 

Division 3 - Terms and conditions for TUSMA members

 

Clause 41 - Remuneration

 

Subclause 41(1) provides that a TUSMA member is to be paid the remuneration determined by the Remuneration Tribunal. In the event that the Tribunal has not made such a determination, the member is to be paid the remuneration that is prescribed by the regulations.

 

A TUSMA member is also to be paid the allowances (if any) that are prescribed by the regulations. For example, these allowances may include items such as travel and accommodation expenditure where appropriate.

 

Clause 41 has effect subject to the Remuneration Tribunal Act 1973 , which enables the Remuneration Tribunal to conduct inquiries and make determinations regarding the remuneration of certain office holders .

 

Clause 42 - Disclosure of interests to the Minister

 

Clause 42 requires a TUSMA member to give written notice to the Minister of all interests that the member has or acquires during his or her time as a member and that conflict or have the potential to conflict with the proper performance of the member’s functions. This obligation will apply irrespective of whether the interest is pecuniary or otherwise, and whether the interest was acquired before or after the member’s appointment. The purpose of this clause is to promote ethical conduct and ensure the integrity of TUSMA’s decisions.

 

Clause 43 - Disclosure of interests to TUSMA

 

Subclause 43(1) requires a TUSMA member who has an interest, pecuniary or otherwise, in a matter that is currently under consideration or will soon be the subject of consideration by TUSMA, to disclose the nature and extent of that interest to a meeting of TUSMA.

 

Subclause 43(2) requires the TUSMA member to make the disclosure to TUSMA as soon as possible after the relevant facts have come to the knowledge of the member. The disclosure of the interest is required to be recorded in the minutes of the meeting of TUSMA (subclause 43(3)).

 

Subclause 43(4) excludes the member with the interest from being present while the rest of the TUSMA members deliberate on the matter, or from having any involvement in the decision-making process in resolution of the matter, unless TUSMA decides that the member can in fact be present during the process.

 

Subclause 43(5) excludes the TUSMA member from being present during this initial deliberative period. TUSMA must first decide, in the absence of the member disclosing an interest, whether that member can be present during the deliberation and resolution of the matter. Only then and only where TUSMA decides in the affirmative can the member be present in deliberating and resolving the matter. In effect, subclause 43(4) can only operate after subclause 43(5) has been determined.

 

Subclause 43(6) requires that any determination made under subclause 43(4), to exclude or include the member in the deliberation and resolution of the matter, must be recorded in the minutes of the meeting of TUSMA.

 

Clause 44 - Outside employment

 

As TUSMA’s members will be appointed on a part-time basis, the members will not be restricted from undertaking paid employment outside their duties as a member of TUSMA. However, clause 44 prohibits a TUSMA member from engaging in any paid employment (other than their duties as a member of TUSMA) that conflicts or may conflict with the proper performance of the member’s duties. In the event that the TUSMA member believes a potential conflict may arise, they must disclose the conflict to the Minister under subclause 42 and to TUSMA under subclause 43.

 

Clause 45 - Leave of absence

 

Clause 45 enables the Chair to grant a leave of absence to a TUSMA member on any terms and conditions that the Chair may see fit.

 

Clause 46 - Resignation

 

Clause 46 allows for a TUSMA member to resign his or her appointment by giving the Minister notice in writing. The resignation is deemed to take effect on the day it is received by the Minister, or if a later date is specified in the letter of resignation, on that later day.

 

Clause 47 - Termination of appointment

 

Subclause 47(1) provides that the Minister may terminate the appointment of a member of TUSMA for misbehaviour or physical or mental incapacity. Subclause 47(2) further provides that the Minister may terminate the appointment of a TUSMA member if the member:

·          becomes bankrupt or the like (as described in subparagraphs (ii) to (iv));

·          engages in paid employment that conflicts or may conflict with the proper performance of the member’s duties;

·          fails without reasonable excuse to comply with clauses 42 or 43 (relating to the disclosure of the member’s interests); or

·          is absent, except on leave of absence, from three consecutive TUSMA meetings.

 

Subclause 47(3) enables the Minister to also terminate the appointment of a TUSMA member if the Minister is of the opinion that the performance of the member has been unsatisfactory. It is a matter for the Minister to decide, in exercising his or her discretion, whether or not the member’s appointment should be terminated due to unsatisfactory conduct.

 

Clause 48 - Other terms and conditions

 

Clause 48 enables the Minister to determine the terms and conditions of TUSMA members that are not otherwise covered in the Bill.

 

Division 4 - Decision-making by TUSMA

 

Clause 49 - Holding of meetings

 

Clause 49 provides that TUSMA may hold any meetings as are necessary for it to carry out its statutory functions. The Chair is able to convene a meeting at any time.

 

Clause 50 - Presiding at meetings

 

Clause 50 provides for the Chair to preside at all TUSMA meetings where he or she is present. However, if the Chair is not present at a meeting, the other TUSMA members present at that meeting will be required to appoint one of themselves to preside.

 

Clause 51 - Quorum

 

Clause 51 sets out the quorum rules for meetings of TUSMA. If the total number of TUSMA members (including the Chair) is five (which is the minimum number of members required by clause 37) - three TUSMA members are required to constitute a quorum. Where, however, there are six or seven TUSMA members (including the Chair), four members will constitute a quorum.

 

Clause 52 - Voting at meetings etc.

 

The procedures for voting at TUSMA meetings are set out in clause 52, which provides that questions at the meeting will be decided by a majority of the votes of the TUSMA members that are present and voting at that meeting. In the event that the votes at a meeting are equal, the person presiding at the meeting, irrespective of whether that person is the Chair or a nominated member, will have both a deliberative vote and a casting vote.

 

Clause 53 - Conduct of meetings

 

Clause 53 permits TUSMA to regulate the conduct of its meetings as it considers appropriate, subject to any requirements set out in the Bill, for example, the quorum and voting requirements set out in clauses 51 and 52. The note beneath this provision brings to the attention of the reader section 33B of the AIA which provides for participation in meetings by telephone, closed-circuit television or any other means of communication.

 

Clause 54 - Minutes

 

Under clause 54, TUSMA must keep minutes of all of its meetings.

 

Division 5 - Delegation

 

Clause 55 - Delegation by TUSMA

 

Clause 55 permits TUSMA to delegate, in writing, any or all of its statutory functions and powers to the CEO, a TUSMA member, or a staff member of TUSMA that is a Senior Executive Service (SES) employee, an acting SES employee or an APS employee employed in an Executive Level 2 or equivalent position. The terms ‘APS employee’, ‘SES employee’ and ‘acting SES employee’ have the meanings set out in section 17AA of the AIA.

As TUSMA is intended to be a small agency, the limit that has been placed on the delegation of functions and powers is that staff members must be either be Executive Level 2 employees , or SES or acting SES employees. The number of SES officers to be employed by TUSMA is anticipated to be small, and therefore a provision limiting delegation to only the CEO or SES officers would be too restrictive for the agency.

 

Under subclause 55(2), a delegate of TUSMA will be required to comply with TUSMA’s written directions (if any).

 

Division 6 - Committees

 

Clause 56 - Committees

 

Clause 56 provides TUSMA with the power to establish committees to provide advice or assistance to TUSMA in the performance of its functions. Under subclause 56(2), the membership of a committee may comprise TUSMA members, non-members or a mixture of both.

 

The ability for TUSMA to create a committee enables the agency to receive advice from a range of appropriate expert sources to assist it in carrying out its functions effectively with respect to specialised subject areas. For example, TUSMA may consider it appropriate to establish a specific committee to deal with the provision of an emergency call service, which may have different membership from another committee which deals with, for example, the NRS. The clause also permits TUSMA to create mechanisms for a meaningful engagement with key stakeholders and interest groups, including stakeholders within the telecommunications industry.

 

Subclause 56(3) enables TUSMA to determine in writing the terms of reference, the terms and conditions of appointment, and the procedures to be followed, in relation to each committee that TUSMA establishes. Subclause 56(4) establishes that a determination under subclause 56(3) is not a legislative instrument. A determination under subclause 56(3) will not determine the law or alter the content of a law. It is therefore not a legislative instrument for the purposes of section 5 of the Legislative Instruments Act 2003 .

 

Subclause 56(5) provides that an appointment to a committee established under subclause 56(1) will not be a public office within the meaning of the Remuneration Tribunal Act 1973 . The Tribunal will not have any role in determining the remuneration (if any) that is to be paid to an appointee to such a committee. Subclause 56(6) provides TUSMA with the discretion to reimburse committee members for any expenses reasonably incurred.

 

Clause 57 - TUSMA may assist committees

 

Clause 57 provides that TUSMA may assist a committee established under clause 56 in the performance of any of the committee’s functions. Under subclause 57(2), this assistance may include (without limiting the type of assistance that may be provided) the provision of information to the committee, or making TUSMA resources and facilities (including secretarial and clerical assistance) available to the committee.

 

Division 7 - Chief Executive Officer of TUSMA

 

Clause 58 - Chief Executive Officer of TUSMA

 

Clause 58 provides that there is to be a Chief Executive Officer of TUSMA. The note at the end of the clause assists the reader by clarifying that ‘CEO’ means the Chief Executive Officer of TUSMA.

 

Clause 59 - Role

 

Clause 59 sets out the role of the CEO in relation to TUSMA. The CEO, as the head of a statutory agency under the Public Service Act 1999 , is responsible for the day-to-day administration of TUSMA and has the power to do all things necessary or convenient to be done for, or in connection with, the performance of his or her duties. The CEO must act in accordance with any policies determined by TUSMA, or directions given by TUSMA in writing.

 

Clause 60 - Appointment of the CEO

 

Under subclause 60(1), TUSMA appoints the CEO by written instrument. Before making the appointment, TUSMA is required to consult the Minister about that appointment (subclause 60(4)).

 

An instrument of appointment under subclause 60(1) would not be a legislative instrument as a result of the existing exemption under item 9 of Part 1 of Schedule 1 to the Legislative Instrument Regulations 2004 .

 

The CEO holds office on a full-time basis, and must not be a TUSMA member.

 

Clause 61 - Period of appointment of the CEO

 

The CEO holds office for the period specified in the instrument of appointment, which must not exceed five years. The CEO is eligible for reappointment; there is no limit to the number of reappointments the CEO is eligible for and nor is there any limit to the length of time in total for which the CEO may hold office. Given the appointment will be made by TUSMA, it is considered that the collective decision-making body of TUSMA is best placed to decide whether it is appropriate to reappoint the CEO.

 

Clause 62 - Acting CEO

 

Subclause 62(1) enables TUSMA to appoint a person to act as the CEO during a vacancy in the office of CEO or when the CEO is absent from duty, is overseas or is unable (for whatever reasons) to perform the duties of the office. The appointment of an acting CEO must be made by written instrument, but is not a legislative instrument because of the existing exemption under item 9 of Part 1 of Schedule 1 to the Legislative Instrument Regulations 2004 .

 

It is anticipated that this provision may be utilised to cover short term acting periods for the CEO whilst, for example, he or she is on holidays, as well as situations where a CEO ceases to be able to perform his duties and a longer term acting arrangement is required.

 

Clause 63 - Remuneration

 

Under subclause 63(1), the CEO is to be paid such remuneration as is determined by the Remuneration Tribunal. If no determination of that remuneration is in operation, the CEO is to be paid such remuneration as is prescribed in the regulations. The CEO is to be paid such allowances as are prescribed in the regulations.

 

Clause 63 has effect subject to the Remuneration Tribunal Act 1973 , and should be read in the context of that Act and the means by which the Remuneration Tribunal sets remuneration.

 

Clause 64 - Disclosure of interests to TUSMA 

 

Clause 64 provides that the CEO must disclose to TUSMA all interests, pecuniary or otherwise, that the CEO has or acquires and that could conflict with the proper performance of his or her functions. Such conflicting interests could include, for example, a financial interest in a telecommunications corporation or a grant recipient of TUSMA.

 

Clause 65 - Outside employment

 

To minimise the risk of a conflict of interest, clause 65 prevents the CEO from engaging in paid employment outside the duties of his or her office without the approval of the Chair of TUSMA. The Chair must notify the Minister of any approval the Chair has given regarding the CEO’s outside employment.

 

Clause 66 - Leave of absence

 

Under clause 66, the recreation leave entitlements of the CEO will be determined by the Remuneration Tribunal. The Chair of TUSMA may grant the CEO leave of absence, other than recreation leave, on the terms and conditions determined by the Chair on remuneration or other matters. Under subclause 66(3), the Chair is required to notify the Minister in writing if the Chair grants to the CEO leave of absence for a period of more than two months.

 

Clause 67 - Resignation

 

Under clause 67, the CEO may resign his or her appointment by giving the Chair a written notice of resignation. The resignation takes effect on the day it is received by the Chair (or a later day if specified in the notice of resignation). If the CEO resigns, the Chair is required to notify the Minister of the resignation.

 

Clause 68 - Termination of appointment

 

Clause 68 sets out the grounds upon which TUSMA may terminate the appointment of the CEO. These are the same grounds upon which the Minister may terminate a member’s appointment.

 

The grounds for termination include: for misbehaviour or physical or mental incapacity; bankruptcy; absence without leave for extended periods; or a failure to comply with the disclosure of interest and outside employment requirements set out in clauses 64 and 65 of the Bill. TUSMA may also terminate the appointment of the CEO if it is of the opinion that the CEO’s performance has been unsatisfactory. TUSMA will have broad discretion to decide what ‘unsatisfactory’ is in this context. For example, the CEO’s performance may be considered unsatisfactory if he or she has failed to prepare material required for TUSMA to complete its corporate plan or annual report.

 

None of the reasons set out in clause 68 imposes a requirement for TUSMA to terminate the appointment of the CEO. In the case of each ground listed in this clause, it is a matter for TUSMA to determine whether the termination of the appointment is the appropriate recourse.

 

Clause 69 - Other terms and conditions

 

Clause 69 provides that the CEO holds office subject to any terms and conditions determined by TUSMA where those terms and conditions do not relate to matters covered in the Bill.

 

Clause 70 - CEO not subject to direction by TUSMA on certain matters

 

Clause 70 clarifies that the CEO, as the head of a statutory agency, must not be subject to direction from TUSMA concerning the CEO’s performance of functions, or the exercise of the CEO’s powers, in relation to TUSMA, under either the FMA Act or the Public Service Act 1999 .

 

Division 8 - Staff of TUSMA etc.

 

Clause 71 - Staff of TUSMA

 

Clause 71 provides that the staff of TUSMA are to be engaged under the Public Service Act 1999 . For the purposes of that Act, the CEO and the staff of TUSMA together constitute a statutory agency, and the CEO is the head of the statutory agency.

 

Clause 72 - Consultants

 

Clause 72 confirms that TUSMA may engage consultants with suitable qualifications and experience to perform services for the agency. The consultants are to be engaged on the terms and conditions that TUSMA determines in writing.

 

Clause 73 - Persons assisting TUSMA

 

Clause 73 provides that TUSMA may also be assisted in connection with the performance of its functions by officers and employees of any of the following bodies:

·          agencies (within the meaning of the Public Service Act 1999 );

·          authorities of the Commonwealth;

·          a State or Territory; or

·          authorities of a State or Territory.

 

As a small agency, TUSMA may at times require the experience and expertise of persons from other Commonwealth, State or Territory bodies. In these circumstances, clause 73 would allow, for example, Commonwealth agency employees to be seconded to work for TUSMA.

 

Division 9 - Planning and reporting obligations of TUSMA

 

Clause 74 - Corporate plan

 

Clause 74 requires TUSMA to prepare a corporate plan that sets out TUSMA’s objectives, as well as the strategies and policies that TUSMA is to follow in achieving those objectives, plus any other matters required by the Minister.

 

TUSMA will be required to prepare a corporate plan at least once each three year period. The plan must cover that three year period and be given to the Minister. Subclause 74(7) will require TUSMA to prepare its first corporate plan within 12 months of the commencement of this clause.

 

Under subclause 74(4), the Chair of TUSMA is required to keep the Minister informed about any changes to the corporate plan and any matters that may significantly affect the achievement of the objectives described in the plan.

 

Subclause 74(5) enables the Minister to give the Chair written guidelines to assist the Chair in deciding the matters to be included in the plan, or in determining what matters might significantly affect the achievement of the objectives set out in the plan. For the avoidance of doubt, subclause 74(6) provides that such guidelines will not be a legislative instrument.

 

Clause 75 - Annual report

 

Clause 75 requires that TUSMA prepare and give to the Minister, as soon as practicable after the end of each financial year (which must be within six months, pursuant to section 34C of the AIA), a report on its operations during that year. If the Bill commences after the beginning of the financial year, TUSMA will be required to provide an annual report for the period of the financial year during which TUSMA was a statutory agency.

 

The annual report must include details of the amounts paid by the Commonwealth to contractors and grant recipients during that financial year, details of any action taken by TUSMA in that year in response to a direction given by the Minister under clause 77, as well as TUSMA’s performance monitoring report for the year.

 

Clause 76 - Minister may require TUSMA to prepare reports or give information

 

Subclause 76(1) provides that the Minister may require TUSMA, by written notice, to prepare a report about one or more specified matters relating to the performance of TUSMA’s functions. Subclause 76(2) enables the Minister, by written notice, to require TUSMA to prepare a document setting out specified information relating to the performance of TUSMA’s functions. For example, this document may have to contain certain statistics, account information or other raw data. A copy of a report or a document prepared under this clause must be given to the Minister within the period specified in the written notice.

 

Division 10 - Ministerial directions

 

Clause 77 - Minister may give directions to TUSMA

 

Clause 77 provides the Minister with the power to give directions to TUSMA in relation to the performance of its functions. TUSMA will be required to comply with any such directions.

 

This is a broad power and enables the Minister to give directions to TUSMA that are both of a general and a specific nature.

 

Directions given by the Minister under clause 77 will be legislative instruments. However, provisions in the Legislative Instruments Act 2003 relating to disallowance and sunsetting of instruments will not apply to Ministerial directions given under this clause under sections 44 and 54 of that Act.

 

Part 4--Access to information or documents held by an NBN corporation

Clause 78 - Access to information or documents held by an NBN corporation

Clause 78 applies to an NBN corporation if the Minister believes on reasonable grounds that the NBN corporation has information or documents relevant to the performance or exercise of any of TUSMA’s functions or powers (see clauses 32 and 33).

Subclause 78(2) enables the Minister to give written notice to the NBN corporation requiring it to give TUSMA any such information or documents, including copies, within the period and in the manner and form specified in that notice. Subclause 78(3) provides that for the purposes of subclause 78(2) the period specified in such a written notice must not be less than 14 days after the notice is given.

Subclause 78(4) requires an NBN corporation to comply with such a requirement to the extent that it is capable of doing so.

Subclause 78(5) provides that an NBN corporation commits an offence if it receives a notice under subclause 78(2) and the NBN corporation engages in conduct which contravenes a requirement in the notice. The penalty for contravention of this subclause is 50 penalty units.

An NBN corporation has the same meaning as in the National Broadband Network Companies Act 2011 , that is, the Minister may require information or documents under this clause from NBN Co, NBN Tasmania and any other company over which NBN Co is in a position to exercise control.

Clause 79 - Copying documents­­—compensation

Clause 79 provides for an NBN corporation to be paid reasonable compensation by TUSMA for complying with a requirement covered by paragraph 78(2)(c) to make copies of documents and produce them to TUSMA.

Clause 80 - Copies of documents

Clause 80 enables TUSMA to inspect a document or copy produced under subclause 78(2), to make copies or extracts from those documents, and to retain possession of copies of such documents.

Clause 81 - TUSMA may retain documents

Clause 81 allows TUSMA to take and retain possession of a document produced under subclause 78(2) for as long as is necessary.

Subclause 81(2) provides for the NBN corporation otherwise entitled to possession of the document to be supplied a certified true copy of the document by TUSMA as soon as is practicable. Subclause 81(3) provides that the certified copy must be received in all courts and tribunals as evidence as if it were the original.

Subclause 81(4) provides for TUSMA, where it determines appropriate, to permit the NBN corporation otherwise entitled to possession of the document, or another NBN corporation authorised on their behalf, to inspect, make copies, or take extracts from the document until a certified copy is supplied.

Clause 82 - Law relating to legal professional privilege not affected

Clause 82 makes clear that none of the provisions in Part 4 of the Bill will affect the law relating to legal professional privilege.

Clause 83 - Severability

Clause 83 provides for the continued operation of the provisions in Part 4 of the Bill in the event of a successful constitutional challenge. It sets out the ‘corporations power’ and the ‘communications power’ as possible constitutional heads of power upon which the Part can draw if its operation is expressly confined to only one of those constitutional powers. For example, if it were found that Part 4 was not supported by the communications powers in section 51(v) of the Constitution, subclause 83(2) would give the provisions of Part 4 the effect they would have if they applied only to an NBN corporation that was a constitutional corporation to which the corporations power in section 51(xx) of the Constitution applied.

 

Part 5--Telecommunications Universal Service Special Account

 

Clause 84 - Telecommunications Universal Service Special Account

 

Clause 84 establishes the Telecommunications Universal Service Special Account, to be administered by TUSMA as a ‘Special Account’ for the purposes of the FMA Act.

 

Clause 85 - Credits to the Account

 

Clause 85 sets out the amounts that must be credited to the Special Account as follows:

(a)     amounts equal to those paid to the Commonwealth by way of the levy payable by participating persons under clause 105 of the Bill. The amounts that participating persons will be required to contribute will be assessed by the ACMA, on behalf of the Commonwealth, under clause 100. Although the levy will be collected by the ACMA, the amount of that levy will be paid into the Special Account as administered by TUSMA; and

(b)    amounts equal to those paid to Commonwealth, either pursuant to a contract under clause 13 (including payments of damages or compensation for a breach of contract), or by way of the repayment of funds provided through a grant under that clause. These payments would be paid to TUSMA, on behalf of the Commonwealth. In paragraph 85(c), a reference to ‘damages’ refers to damages for breach of contract at common law, and would not include the payment of exemplary or punitive damages.

 

Clause 86 - Purposes of the Account

 

Clause 86 sets out the purposes for which money in the Special Account may be expended, which are as follows:

·          to make payments payable by the Commonwealth under a contract entered into under clause 13 (including contracts taken to have been entered into under clauses 22 to 26);

·          to make grants of financial assistance under clause 13;

·          to pay TUSMA’s administrative costs (as defined in clause 4);

·          to redistribute the remaining balance of the Special Account in accordance with clause 87; and

·          to refund levy overpayments under clause 111.

The note to this clause draws the reader’s attention to section 21 of the FMA Act, which outlines the circumstances in which funds in a Special Account may be expended.

Clause 87 - Distribution of remaining balance of the Account

 

Clause 87 provides that once all amounts payable by or on behalf of the Commonwealth in relation to an eligible levy period have been paid, TUSMA may distribute the remaining balance of the Special Account to persons who are or were participating persons (as defined in clause 92 of the Bill). Under subclause 87(2), the Minister may, by legislative instrument, determine the rules for making distributions and the ACMA must comply with those rules.

 

This power gives TUSMA the flexibility of being able to distribute the balance of the Special Account to participating persons once all payments from that Account are made for the eligible levy period, rather than, for example, requiring either the ACMA to recalculate levy payments for current or past participating persons or for the amounts to be carried over and included in the overall levy target amount for a new levy period.

 

Part 6 - Assessment, collection and recovery of levy

 

Outline

 

Part 6 of the Bill sets out the provisions for the assessment, collection and recovery of an industry levy to be imposed under the Telecommunications (Industry Levy) Bill 2011. It is intended that, from 1 July 2012, this levy will replace the existing universal service and NRS levies that currently apply to carriers. The proceeds of the new levy will be used to pay contractors and grant recipients under clause 13 and to meet TUSMA’s administrative costs.

 

The levy provisions in Part 6 are broadly based on the existing legislative provisions for the assessment and collection of the universal service levy in Part 2 of the Consumer Protection Act, and will operate in a similar way. Under the new levy scheme, eligible revenue returns will continue to be lodged by participating persons with the ACMA. The ACMA will assess each person’s eligible revenue and collect levy payments based on that assessment.

 

The assessment of levy payable under Part 6 will need to be made with respect to each successive ‘eligible levy period’, commencing with the financial year 2012-13. The assessment is based on the eligible revenue of participating persons for the preceding financial year, the ‘eligible revenue period’. The eligible revenue is used to determine each participating person’s portion of industry revenue for that year (‘levy contribution factor’). This factor is multiplied by the overall levy target amount to calculate each person’s levy amount.

 

Assessment of levy for the first eligible levy period

 

For the first eligible levy period of the new levy scheme, that is, the 2012-13 financial year, the levy assessment will need to rely on the eligible revenue assessed by the ACMA in accordance with the Consumer Protection Act (see subclause 93(7) of the TUSMA Bill). This is necessary because an eligible revenue period is the year prior to an eligible levy period, and given the 2012-13 financial year will be the commencement of the new scheme there will have been no assessment of eligible revenue under the new scheme for financial year

2011-12. While the first eligible revenue period under the new scheme will be deemed to be

2011-12, the calculations of eligible revenue for this period will be made under the Consumer Protection Act.

 

This approach will minimise the impacts on carriers in transitioning to the new levy scheme under Part 6 of the Bill since they will be required to undertake the same actions in lodging an eligible revenue return and later paying the levy as they are currently required to do under the Consumer Protection Act.

 

Levy contributions in the first two eligible levy periods

 

For the first two financial years of the new levy scheme, the levy amount under clause 99 will be worked out by applying the levy contribution factor to an ‘overall levy cap amount’ in a legislative instrument made by the Minister in writing under subclause 99(4) of the Bill, instead of an overall levy target amount in clause 88. The different arrangements for these initial two years of the new levy scheme arise because TUSMA’s liabilities in the first year of its operation are substantially less than that which would ordinarily apply for a levy period due to the deferral of substantive clause 13 contract payments to early in the following financial year. If the new scheme was to rely on the overall levy target amount for that first year, the levy collected would be insufficient to meet those substantive payments. From the 2014 - 15 eligible levy period onwards, the new levy scheme will operate in full.

 

Division 1 - Overall levy target amount

 

Clause 88 - Overall levy target amount

 

Clause 88 defines the ‘overall levy target amount’. Under clause 89 the Minister is required to prepare and publish a written estimate of this amount prior to the beginning of each eligible levy period and under clause 90 prepare and publish an actual statement of this amount within three months of ending an eligible levy period.

 

The overall levy target amount for an eligible levy period is the sum of:

·          all payments made by TUSMA pursuant to clause 13 contracts;

·          all payments made by TUSMA by way of grants of financial assistance made under clause 13; and

·          the total amount of TUSMA’s administrative costs incurred during that period;

 

reduced by the total amount of money appropriated by any Appropriation Acts during that period for the purposes of meeting TUSMA’s administrative costs, or making payments under clause 13 contracts or grants. These appropriated amounts are intended to include the Government’s dedicated Budget funding to TUSMA of $50 million in each of the first two financial years of its operation, and $100 million per annum funding in subsequent financial years.

 

The administrative costs of TUSMA are defined in clause 4 to mean: remuneration and allowances of TUSMA members and the CEO; remuneration, and other employment-related costs and expenses, in respect of staff of TUSMA; and any other costs, expenses and other obligations incurred by TUSMA in connection with the performance of TUSMA’s functions or the exercise of TUSMA’s powers. It does not include payments for contracts or grants of financial assistance under clause 13.

 

The overall levy target amount is multiplied by each person’s levy contribution factor (as set out in clause 98) to determine the person’s levy amount.

 

First two eligible levy periods (2012 - 13, 2013 - 14)

 

As part of the transitional arrangements relating to the calculation of levy payments during the first two eligible levy periods from commencement, the levy amounts payable by participating persons will be assessed by reference to an ‘overall levy cap amount’ (as defined in clause 99) rather than the ‘overall levy target amount’ worked out under clause 88. Consequently, whilst the Minister will continue to estimate and determine the overall levy target amount for the first two financial years for the purposes of transparency, these amounts will not be used to calculate levy amounts.

 

Clause 89 - Statement of estimate of overall levy target amount

Clause 90 - Statement of overall levy target amount

 

Clause 89 requires the Minister to prepare a written estimate of the overall levy target amount for each eligible levy period before the start of that period. Clause 90 requires the Minister to prepare a statement setting out the actual overall levy target amount.

 

Under subclauses 89(5) and 90(5), the Minister must consult with TUSMA in preparing the clause 89 and 90 statements. The statements are to include a breakdown of the different components that make up the overall levy target amount, namely:

·          the amounts paid or to be paid under a contract made under clause 13;

·          the amounts paid or to be paid under a grant made under clause 13; and

·          the administrative costs incurred by TUSMA together with a breakdown of these costs into categories (if any) specified in the regulations.

 

The estimate and the subsequent statement of the overall levy amount are required to be published on the websites of both TUSMA and the ACMA. This requirement enhances the transparency and accountability of TUSMA’s levy arrangements. Providing for an estimate enables participating persons to estimate in advance their levy amounts for the period. Since the actual statement of the overall levy target amount made under clause 90 is made after the eligible levy period, this means the calculations of levy amounts will be based on exact figures and so should reduce the need for adjustments later on.

 

Subclauses 89(8) and 90(8) confirm that neither the estimate of the overall levy target amount nor the statement of the actual overall target levy amount are legislative instruments. Neither are legislative in character, and therefore do not fall within the meaning of section 5 of the Legislative Instruments Act 2003 .

 

Division 2 - Eligible revenue of participating persons

 

Clause 91 - Participating person must lodge return of eligible revenue

 

Clause 91 requires each participating person for an eligible revenue period (other than the first eligible revenue period) to provide the ACMA with a written return of their eligible revenue for that period in a form approved in writing by the ACMA, and within a time period specified in writing by the ACMA (any specification of this time period by the ACMA will be a legislative instrument). Under clause 120, the failure of a person to submit an eligible return is an offence of strict liability.

 

Each participating person’s return must set out their eligible revenue amount, details on how that amount of revenue was worked out, and any other information required by the approved ACMA form, including, if required, a verification of the eligible amount by statutory declaration. The information submitted to the ACMA under this clause will, once provided, be used by the ACMA in its assessments under clauses 96 (each participating person’s eligible revenue) and 98 (each participating person’s levy contribution factor).

 

What constitutes a ‘participating person’ and ‘eligible revenue’ for the purposes of this section is covered in clauses 92 and 93 respectively.

 

For the first eligible revenue period (financial year 2011-12), a participating person’s obligation to lodge an eligible revenue return arises under the Consumer Protection Act rather than the Bill. Under that Act, the ACMA has specified four months from the end of the eligible revenue period as being the time by which the returns must be lodged (see the Telecommunications (Period for Providing Return of Eligible Revenue) Specification 2010 ) .

 

Clause 92 - Participating person

 

Clause 92 defines a ‘participating person’ for an eligible revenue period as being any:

·          carrier (i.e. the holder of a carrier licence under the Telecommunications Act) for that eligible revenue period; or

·          carriage service provider, if the Minister determines by legislative instrument that carriage service providers are participating persons.

 

However, under subclause 92(2), the Minister may determine by legislative instrument that specified persons are exempt from being participating persons under Part 6 of the Bill. This could be done by reference to a class of persons, for example, an exemption from being a participating person that applies to all carriers or carriage service providers with eligible revenues below a specified revenue amount.

 

The provision for determining a participating person in this Bill is effectively the same as that provided for in section 20A of the Consumer Protection Act. Under that Act, the Minister has determined that participating persons with either an eligible revenue, initial sales revenue or gross telecommunications sales revenue below the threshold amount of $25 million are exempt from being participating persons (see the Telecommunications (Participating Persons) Determination (No.1) 2011 ) .

 

A participating person for an eligible revenue period is liable to pay the levy for the subsequent financial year, i.e. the eligible levy period. See clause 105 of the Bill.

 

Clause 93 - Eligible revenue

 

Subclause 93(1) defines ‘eligible revenue’ of a person for an eligible revenue period (other than the first eligible revenue period) as the amount ascertained in accordance with a written determination made by the ACMA. This determination will be a legislative instrument.

 

Subclause 93(5) clarifies that a determination made under subclause (1) must not include in the calculation of a participating person’s eligible revenue any amount payable under a contract entered into (or taken to have been entered into), or any grant moneys received, pursuant to clause 13.

 

Subclause 93(4) clarifies that the ACMA determination under subclause (1) may in working out that revenue, refer to revenue of other persons; that is, the determination of eligible revenue may count the revenue of another person as if it were the revenue of a participating person. This may be necessary to allow for particular industry groupings to be adequately covered, or to deal with any levy avoidance strategies.

 

Subclause 93(3) applies a ‘threshold amount’ of eligible revenue for participating persons, as determined by the Minister by legislative instrument. Under this clause the Minister is able to reduce the eligible revenue of participating persons with respect to an eligible revenue period (other than the first eligible revenue period) by the threshold amount.

 

If a participating person’s eligible revenue falls below a threshold amount determined by the Minister (if any), the person is taken to have eligible revenue of zero dollars. If the participating person’s revenue is at or above a determined threshold amount, the person’s eligible revenue will be reduced by the threshold amount. The purpose of allowing the Minister to set a threshold under subclause 93(3) is to provide the Minister with the ability to minimise the impact on those participating persons that may be just above any threshold amount determined by the Minister. By ensuring there is minimal impact for being above the revenue threshold, the incentive for carriers or carriage service providers to structure their revenues to stay below that amount is reduced.

 

First eligible revenue period

 

The definition of ‘eligible revenue’ in subclause 93(1) does not apply to the ‘first eligible revenue period’ (the 2011-12 financial year). Instead, subclause 93(7) provides that for this period, the ‘eligible revenue’ of a person will be the amount of eligible revenue that is assessed by the ACMA under section 20F of the Consumer Protection Act. In accordance with subsection 20B(1) of that Act, the ACMA has made an eligible revenue determination being the Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003 , and so for the first eligible revenue period, eligible revenue will be calculated in accordance with this Determination.

 

Clause 94 - Audit report to accompany eligible revenue return

 

Subclause 94(1) provides that eligible revenue returns lodged under clause 91 must be accompanied by a report prepared by an approved auditor in a form that is approved in writing by the ACMA. This auditing requirement is intended to provide another check on the appropriateness of returns and place the onus on participating carriers to ensure that their returns are correct.

 

The report prepared under this clause must state that the approved auditor has audited the return and include a determination of the auditor’s opinion (in the terms that the ACMA has set out in its approved form). The report must also state that the auditor has had sufficient access to the person’s records in order to audit the claim, and include any other statements and information as required by the ACMA.

 

Subclause 94(2) permits the ACMA by written notice to exempt a person from the requirements of subclause 94(1) and mirrors subsection 20D(3) of the Consumer Protection Act. This provision is intended to provide the ACMA with administrative flexibility to waive audit report requirements in appropriate circumstances. For example, where a carrier was only a participating person for a brief period during the eligible revenue period, it may be appropriate for the ACMA to exempt that carrier from the requirement to submit an audit report.

 

An exemption notice made by the ACMA would be administrative in character and would therefore not be a legislative instrument for the purposes of section 5 of the Legislative Instruments Act 2003 .

 

Under subclause 94(4), the ACMA may, by legislative instrument, determine that a specified person will be an ‘approved auditor’ for the purposes of this clause. A note at the end of this subclause assists readers by referring to subsection 13(3) of the Legislative Instruments Act 2003 , which provides that where an instrument requires identification of matters or things, the rule-maker may identify those matters or things by class. An ‘approved auditor’ could therefore be identified, for example, by referring to all persons registered as an auditor under the Corporations Act 2001 . A similar determination has been made under the Consumer Protection Act (see the Telecommunications (Approved Auditor) Determination 2010 ).

 

For the first eligible levy period, participating persons must also ensure that an eligible revenue return is accompanied by an approved audit report. However, this requirement will arise under section 20D of the Consumer Protection Act.

 

Clause 95 - ACMA may inquire into correctness of return

 

This clause enables the ACMA to make whatever inquiries it thinks necessary or desirable to assess whether a participating person’s eligible revenue return has correctly stated that person’s eligible revenue for an eligible revenue period. Information and documents obtained as a result of such inquiries may be used by the ACMA in making its assessment of eligible revenue under clause 96 of the Bill.

 

The ACMA also has the power to require information from service providers who are not participating persons in accordance with section 521 of the Telecommunications Act.

 

Clause 96 - ACMA to assess eligible revenue

 

Subclause 96(1) requires the ACMA to make a written assessment of each participating person’s eligible revenue for an eligible revenue period (other than for the first eligible revenue period). The ACMA must provide a participating person with a copy of ACMA’s assessment of their eligible revenue (subclause 96(4)). A note provided to assist the reader clarifies that multiple assessments of eligible revenue under this clause may under clause 104 be included in the same document.

 

Under subclause 96(2), the ACMA’s assessment must be based on:

·          the eligible revenue return lodged by the participating person under clause 91;

·          any information or document obtained by the ACMA through its inquiries into the correctness of that return under clause 95; and

·          any other information or documents the ACMA has that it thinks is relevant to making the assessment.

 

The ACMA is not required to rely solely on the information provided to it in claims and returns to make its assessment. Subclause 96(2) gives the ACMA the discretion to take into account the findings of its inquiries and other relevant matters in making its assessment.

 

Subclause 96(5) confirms that the ACMA’s assessment of eligible revenue is not a legislative instrument, as it is administrative in character, and therefore does not fall within the meaning of section 5 of the Legislative Instruments Act 2003 .

 

First eligible revenue period

 

In accordance with the transitional arrangements, the ACMA’s assessment of each participating person’s eligible revenue with respect to the first eligible revenue period, that is the 2011-12 financial year, will be carried out under section 20F of the Consumer Protection Act.

 

Clause 97 - Assessment based on estimate of eligible revenue

 

Clause 97 sets out how a participating person’s eligible revenue may be assessed under clause 96 if the person fails to lodge an eligible revenue return with the ACMA. This clause enables the ACMA to estimate a person’s eligible revenue for the eligible revenue period, and make a written assessment of the person’s eligible revenue based on that estimate. If the ACMA did not have the power to make this estimate it could not determine the total eligible revenue for all participating persons and nor calculate each person’s levy contribution factor. The failure to lodge an eligible revenue return is an offence under clause 120 of the Bill.

 

Under subclause 97(2), the ACMA must give at least 14 days written notice to a person who has not lodged a return of both the amount of the eligible revenue proposed to be assessed and the ACMA’s proposal to make the assessment based on that estimate.

 

If the ACMA receives an eligible return from a person that previously failed to provide a return within the required period, it will no longer be able to make an estimate under this clause. If, however, the ACMA has already made an assessment of such a person’s eligible revenue, it will not be required to change it if that person subsequently gives the ACMA its own eligible revenue return (subclause 97(4)).

 

First eligible revenue period

 

If a participating person fails to lodge an eligible revenue return with respect to the first eligible revenue period, the estimate of that person’s eligible revenue under section 20F of the Consumer Protection Act will be made in accordance with the provisions of section 20G of that Act.

 

Clause 98 - Levy contribution factor

 

Once the ACMA has assessed the eligible revenue of participating persons under clause 96, subclause 98(2) requires the ACMA to work out the ‘levy contribution factor’ for those participating persons for the ‘eligible levy period’ starting immediately after the eligible revenue period.

 

As provided in a note under that subclause, this levy contribution factor is then used by the ACMA to work out the levy amount of a participating person under clause 99.

 

Subclause 98(3) provides that the formula for the calculation of a person’s levy contribution factor for an eligible revenue period will be the person’s ‘individual eligible revenue’ divided by the ‘total eligible revenue’.

 

In this context, ‘individual eligible revenue’ refers to the eligible revenue of the participating person for the eligible revenue period as assessed by the ACMA under clause 96. The ‘total eligible revenue’ is the total assessed amount of eligible revenue of all participating persons in relation to the eligible revenue period. The levy contribution factor for each participating person will therefore represent the participating person’s proportion of the total eligible revenue amount.

 

Division 3 - Levy amount

 

Clause 99 - Levy amount of a participating person

 

This clause sets out the mechanisms by which the ACMA is to assess the levy amount of a participating person under clause 100.

 

Levy amount - general rule

 

Subclause 99(1) provides that the levy amount will be calculated for each participating person for an eligible levy period by multiplying each person’s ‘levy contribution factor’ by the ‘overall levy target amount’.

 

The ‘levy contribution factor’ refers to the contribution factor for the eligible levy period worked out under clause 98. The ‘overall levy target amount’ is the amount of money to be paid, or incurred as administrative costs, by TUSMA with respect to the same eligible levy period as provided for in clause 88. As the note beneath subclause (1) advises, the resulting ‘levy amount’ worked out under this clause will be the levy imposed on participating persons under the Telecommunications (Industry Levy) Bill 2011.

 

Levy amount - first or second eligible revenue period

 

Subclause 99(3) provides that the levy amount imposed on a participating person for the first two eligible levy periods (i.e. financial years 2012-13 and 2013-14) will be the ‘levy contribution factor’, as worked out under clause 98, multiplied by an ‘overall levy cap amount’.

 

The rationale for relying on different amounts to calculate the levy in the first two eligible levy periods is as explained in the outline to Part 6 of this Bill. TUSMA’s liabilities in the first year of its operation are substantially less than those which it will ordinarily incur in a levy period. If the new scheme was to rely on the overall levy target amount (clause 88) for that first year, insufficient levy will have been collected to meet the substantive payments from clause 13 contracts that fall due early in the following financial year.

 

Subclause 99(4) specifies that the ‘overall levy cap amount’ for the purposes of that subclause will be an amount determined by the Minister by legislative instrument. This instrument must not be made before the end of the eligible levy period (subclause 99(6)) but the Minister must take all reasonable steps to ensure such a determination is made within a three month period starting immediately after the end of each period (subclause 99(7)).

 

Subclause 99(5) exempts a determination made under subclause 99(4) from the disallowance requirements in section 42 of the Legislative Instruments Act 2003 . This exemption from the disallowance regime is intended to provide certainty for industry levy participants that a levy amount will be payable by participating persons in relation to each of the first two eligible levy periods, and that TUSMA will, through the making by the Minister of an overall levy cap and the subsequent collection of that levy amount, be able to meet its expected liabilities during the transitional period.

 

It is intended that the overall levy cap amount will not exceed the amount needed for TUSMA to meet its expected liabilities during the transitional period, and that TUSMA will publish details on the liabilities it incurs (through, e.g., contract or grant payments) with respect to the first two years of its operation.

 

Modification of the levy amount

 

Under subclauses 99(2) and 99(8), the Minister may, by legislative instrument, modify the formulas for the levy amount under subclauses (1) and (3) respectively. This ability to vary the formula of a levy amount would allow the Minister to modify the means by which the overall levy amount is calculated to account for any irregularities that might otherwise adversely affect the accurate assessment of a levy amount under this clause. For example, this power could be utilised to adjust the calculations of a levy amount in the event of a participating person going into receivership, liquidation or general administration or who for any reason has ceased to exist. Through an instrument made under this clause, the ACMA could exclude that person from the assessment and recalculate the levy amounts owed by other participating persons in accordance with clause 102. For instance, the Levy Debit Formula Modification Determination (No.1) 2002 , made by the Minister under the equivalent provision in subsection 20R(3) of the Consumer Protection Act, sets out a special formula to apply if a participating person is in receivership or liquidation or for any reason ceases to exist.

 

A determination made under subclauses 99(2) or 99(8) is a legislative instrument and so any modification to the formula will be subject to parliamentary scrutiny and possible disallowance.

 

Clause 100 - ACMA to make written assessment

 

Clause 100 requires the ACMA to make a written assessment setting out the levy amount, as worked out under clause 99, and the levy that is payable by each participating person for the eligible levy period. This assessment must be prepared in a timely manner, however, failure to do so will not affect the validity of the assessment (subclause 100(3)).

 

Subclause 100(4) clarifies that an assessment of the levy amount under this clause will not be a legislative instrument under the Legislative Instruments Act 2003 . Assessments of tax are not legislative instruments under Schedule 1 of the Legislative Instruments Regulations 2004 .

 

The ACMA may utilise clause 104 to set out multiple assessments made under clause 100 in one document.



Clause 101 - Publication of assessment

 

This clause requires that the ACMA publish a copy of its assessment of the levy amount under clause 100 on its website as soon as practicable after that assessment is made, and provide participating persons with a copy of that assessment. If an assessment is amended under clause 102, then that amended assessment will also need to be published and given to participating persons.

 

Division 4 - Assessments

 

The provisions in this Division, in substance, replicate sections 20W to 20Y of the Consumer Protection Act.

 

Clause 102 - Variation of assessments

 

This clause enables the ACMA to make any alterations or additions to an assessment made under clause 96 (assessment of eligible revenue) or clause 100 (assessment of levy amount) as it deems necessary, even if the assessed levy amount has already been paid by the relevant participating person.

 

Unless the contrary intention appears, an assessment amended under this clause will be taken to be an assessment made under clauses 96 or 100 (as the case may be).

 

Clause 103 - ACMA may accept statements

 

Clause 103 permits the ACMA to partially or completely accept a statement in an eligible revenue return for the purposes of making an assessment under Part 6 of the Bill.

 

Clause 104 - Multiple assessments in the same document

 

Clause 104 provides that the ACMA may include more than one assessment made under Part 6 of the Bill within the same document. This clause allows for the ACMA to make combined assessments, if it is more administratively efficient to do so.

 

Division 5 - Collection and recovery of levy

 

Clause 105 - When levy payable

 

Clause 105 makes the levy due and payable by a participating person 28 days after the ACMA has given the person a copy of an assessment under clause 100. Under paragraph 105(1)(b), the ACMA may extend this to a later date as determined in writing. The ACMA must publish a copy of a determination made under paragraph (1)(b) on the ACMA website. This determination would be administrative in character and therefore does not fall within the meaning of section 5 of the Legislative Instruments Act 2003 .

 

Clause 106 - Recovery of levy

 

Clause 106 makes levy that is due and payable recoverable in a court of competent jurisdiction as a debt due to the ACMA on behalf of the Commonwealth.

 

Clause 107 - Validity of assessment

 

Clause 107 provides that the validity of an assessment under Part 6 of this Bill is not affected by a contravention of this Bill. Clause 107 will apply whether the contravention is by the ACMA or a person. This clause is intended to prevent the validity of an assessment being challenged on a minor technical matter or failure of procedure. This clause mirrors section 20ZB of the Consumer Protection Act.

 

Clause 108 - Evidence of assessment

 

If a document that purports to be a copy of an assessment under clause 100 is produced in a proceeding, clause 108 presumes, unless the contrary is established, that the document is a copy of the assessment, that the ACMA has duly made the assessment and that the amounts and other particulars set out in the assessment are correct.

 

Clause 109 - Onus of establishing incorrectness of assessment

 

This clause provides that the onus of establishing that an assessment under clause 100 is incorrect is on the party that makes that assertion. Clause 100 provides for the ACMA to make a written assessment of a participating person’s levy amount and levy liability. This clause mirrors section 20ZD of the Consumer Protection Act.

 

Clause 110 - Set-off

 

This clause enables the Minister, for the financial years 2012-13 and 2013-14, to set-off the whole or part of the amount of levy payable by the person as against the whole or part of any amount payable by the Commonwealth to the person. For example, the Commonwealth may decide to make grants of financial assistance to persons, including persons falling within a class or classes of levy payers. Those grants might be made during the first and/or second year. Any such grant which was payable to an individual levy payer could be set off against the amount of the levy which the person was liable to pay to the ACMA. This provision does not in any way affect the amount of the person’s levy liability.

 

Subclause 110(2) makes clear that if a person is eligible to receive a grant of financial assistance from the Commonwealth, the amount of the grant is taken to be an amount payable by the Commonwealth to the person.

 

Clause 111 - Refund of overpayment of levy

 

Clause 111 provides that if there is an overpayment of levy, the overpayment is to be refunded by TUSMA on behalf of the Commonwealth.

 

Clause 112 - Cancellation of certain exemptions from levy

 

Clause 112 cancels the effect of a provision of another Act that would have the effect of exempting a person from liability to pay levy, except if the provision of the other Act is enacted after the commencement of this clause and refers specifically to levy imposed by the Telecommunications (Industry Levy) Bill 2011 .

 

The purpose of this provision is to prevent the unintentional exemption of persons being liable to the taxation by virtue of another Act, by ensuring that the exemption will only apply if legislation specifically refers to the Telecommunications (Industry Levy) Bill 2011.

 

Clause 113 - Commonwealth not liable to levy

 

Clause 113 provides that the Commonwealth is not liable to pay levy, as the Commonwealth cannot tax itself. It makes clear that a reference in this clause to the ‘Commonwealth’ includes a reference to an authority of the Commonwealth that cannot, by law of the Commonwealth, be made liable to taxation by the Commonwealth.

 

Clause 114 - Performance bonds and guarantees

 

This clause enables the Minister, by written determination, to require a person who has a liability (or anticipated liability) to pay levy, to obtain performance bonds or guarantees in respect of the person’s liability (or anticipated liability). The performance bond has the meaning given in the determination. A determination under this clause is a legislative instrument. This clause mirrors clause 20ZH of the Consumer Protection Act.

 

Division 6 - Disclosure of information

 

The purpose of this division is to enable the process regarding the ACMA’s assessment of the new industry levy to be open to public and industry scrutiny. The provisions in this division provide a balance between making information available to the public as against ensuring persons do not incur substantial damage to their commercial or other interests as a result of the disclosure of information. This Division 6 is largely modelled on Division 15 of Part 2 of the Consumer Protection Act.

 

Clause 115 - Public may request information

 

This clause, which is based on section 22 of the Consumer Protection Act, enables a member of the public to request the ACMA to make available to the person information or documents about the basis on which the ACMA may make or has made its assessment under clause 100 and information about how the ACMA may work out, or has worked out that assessment. This is to enhance industry and public scrutiny in relation to the preparation of the assessments. However, the ACMA is not required to comply with the request if the information sought was obtained from, or relates to, a participating person and the disclosure of that information could reasonably be expected to cause substantial damage to the participating person’s commercial or other interests (which would include any disclosure of personal information in breach of the Privacy Act 1988 ). Subclause 115(3) further provides that the ACMA is not required to disclose information if it is prescribed for the purposes of that subclause.

 

Clause 116 - Request for information that is unavailable under section 115

 

Clause 116 enables a participating person for an eligible revenue period to request the ACMA to make available specified information, being information the ACMA cannot provide under clause 115. This clause also sets out rules in relation to the ACMA’s compliance with the request.

 

Clause 117 - How the ACMA is to comply with a request

 

This clause replicates section 22B of the Consumer Protection Act. It sets out how the ACMA is to comply with a request for information under clauses 115 or 116 in communicating or otherwise providing the information to a party requesting that information.

 

Clause 118 - Minister’s information-gathering powers

 

This clause, which is based on section 22C of the Consumer Protection Act, enables the Minister to obtain from a carrier or carriage service provider information that is relevant to the exercise of the Minister’s powers or the performance of the Minister’s functions under Part 6 of this Bill. It is anticipated that information covered by this clause will be business or financial information rather than personal information. However, if any personal information is received, it is intended that such information not be disclosed in breach of the Privacy Act 1998 . The Minister may give written notice to the carrier or carriage service provider requiring the provision of information and the carrier or carriage service provider must comply within the time and in the manner specified in the notice. The notice must allow for a minimum of 14 days within which to comply. Subclause 118(7) provides that the notice is a legislative instrument.

 

Subclauses 118(5) ensures that the Minister’s information-gathering powers under this clause will not abrogate the privilege of self incrimination as it relates to individuals, while subclause 118(6) likewise ensures that this clause will not affect the law relating to legal professional privilege.

 

Division 7 - Other matters

 

Clause 119 - Delegation by the Minister

 

Clause 119 enables the Minister to delegate, in writing, any or all of his or her functions or powers under Part 6 of the Bill to a member of the staff of the ACMA. The delegate must be either an SES employee or acting SES employee of the ACMA, and he or she must comply with any written direction made by the Minister.

 

The terms ‘SES employee’ and ‘acting SES employee’ are defined in the Public Service Act 1999 .

 

Clause 120 - Offence of failing to lodge eligible revenue return

 

Subclause 120(1) provides that a person commits an offence if the person is a participating person for an eligible revenue period and omits to do an act required under clause 91. For example, an offence will be committed if the person fails to give the ACMA a written return within the timeframe specified (clause 91(1)) or fails to provide the information required by the approved form (clause 91(4)).

 

Subclause 120(2) provides that an offence against subclause (1) is an offence of strict liability. If the offence is proven, the participating person will be liable to pay a fine of 50 penalty units.

 

Subclause 120(3) provides that a person who contravenes subclause 120(1) commits a separate offence for each day during which the contravention continues. This includes the day of conviction for the offence or any later day.

 

Clause 121 - Late payment penalty

 

Subclause 121(1) provides that if a levy remains unpaid after the day on which it becomes due and payable under clause 105, the person is liable to pay a late payment penalty on the unpaid amount. This penalty continues for each day until the entire levy has been paid.

 

The late payment penalty rate is 20 per cent per year, unless the ACMA determines in writing that the penalty shall be lower. This determination is a legislative instrument.

 

Subclause 121(5) provides that the late payment penalty is a debt due to the ACMA on behalf of the Commonwealth and may be recovered by the ACMA on behalf of the Commonwealth in a court of competent jurisdiction.

 

Part 7 - Miscellaneous

 

Clause 122 - Disclosure of information to the ACMA and the ACCC

 

Subclause 122(1) enables TUSMA to disclose information to the ACMA or the ACCC if it is satisfied that the information will assist the relevant authority to perform or exercise any of its functions or powers. Subclause 122(2) enables TUSMA to impose, in writing, conditions which must be complied with regarding information disclosed under subclause 122(1). It is not anticipated that the disclosure of any information under this provision will be personal information (as defined by section 6 of the Privacy Act 1988 ), since ordinarily TUSMA will not collect personal information in the performance of its functions and exercise of its powers.

 

Subclause 122(3) provides for an instrument made under subclause 122(2) to not be a legislative instrument where it relates to one particular disclosure; otherwise it is taken to be a legislative instrument. This is declaratory of the law and is provided to assist the reader.

 

Clause 123 - Review of the operation of this Act

 

Subclause 123(1) requires the Minister to cause to be conducted a review of the operation of the Bill, the legislative instruments made under the Bill and the Telecommunications Act to the extent to which that Act relates to this Bill, prior to 1 January 2018.

 

Subclause 123(2) sets out the matters which must be considered under the review, including:

·          whether the policy objectives listed in clause 11 have been achieved;

·          whether any changes to the arrangements for standard telephone services, payphones, the emergency call service and the NRS are required; and

·          whether any changes to the functions of TUSMA are required.

 

A review conducted under subclause 123(1) must have regard to developments in the telecommunications industry, including developments in the technology for the provision of standard telephone services, payphones, emergency call services and the NRS (subclause 123(3)).

 

Subclause 123(4) provides that the review must make provision for public consultation.

 

Subclause 123(5) requires the Minister to cause a report to be prepared of the review, and cause copies of the report to be tabled in both the House of Representatives and the Senate within 15 sitting days after the completion of the report.

 

Clause 124 - Compensation for acquisition of property

 

Subclause 124(1) provides for the Commonwealth to be liable to pay a reasonable amount of compensation to any person who may, by operation of the Bill, be subject to having their property acquired on anything other than just terms. If the person and the Commonwealth cannot agree on a reasonable amount of compensation, the person may institute proceedings in a court of competent jurisdiction.

 

Clause 125 - Regulations

 

Clause 125 enables the Governor-General to make regulations prescribing matters which may be required or permitted by the Bill to be so prescribed, or necessary or convenient to be prescribed in order to carry out and give effect to the Bill.




[1] For more information see:

·          USO framework policy statement: www.dbcde.gov.au/broadband/national_broadband_network/nbn_policy_statements

·          USO reform media release: www.minister.dbcde.gov.au/media/media_releases/2010/060

[2] The NRS contracts were recently extended until 30 June 2013; see ACMA media release 59/2011 of 24 June 2011, ‘National Relay Service contracts extended’, at www.acma.gov.au/WEB/STANDARD/pc=PC_410058 .

.

[3] OECD (2006), Rethinking Universal Service for a Next Generation Network Environment,

OECD Digital Economy Papers , No. 113, http://dx.doi.org/10.1787/231528858833 .

[4] The ABS defines active subscribers as subscribers that have an internet connection with an internet retail service provider on the last day of the reference period (see the ABS Internet Activity Survey December 2010: www.abs.gov.au/ausstats/abs@.nsf/mf/8153.0 )