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Telstra (Transition to Full Private Ownership) Bill 1998

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1998

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

 

TELSTRA (TRANSITION TO FULL PRIVATE OWNERSHIP) BILL 1998

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of Senator the Hon. Richard Alston, Minister for Communications, Information Technology and the Arts)

 

 



TELSTRA (TRANSITION TO FULL PRIVATE OWNERSHIP) BILL 1998

 

 

OUTLINE

 

 

This Bill amends the Telstra Corporation Act 1991 to repeal the provisions which require the Commonwealth to retain two-thirds of the equity in the company. 

 

Schedule 2 to the Bill will enable the Commonwealth to sell 49.9 per cent of its equity interest in Telstra but will require the Commonwealth to retain the remaining 50.1 per cent. 

 

Amendments are made to the Natural Heritage Trust of Australia Act 1997 to increase funding from the partial sale of Telstra for the Natural Heritage Trust of Australia Reserve by a further $250 million.  Other elements of the social bonus (totalling $421 million) are set out in proposed Part 9 of the Telstra Corporation Act and consist of:

 

·       rural transaction centres ($70 million over 5 years);



·       extended access to untimed local calls ($150 million over 3 years);



·       meeting the telecommunications needs of people in remote island communities, isolated island communities or the Australian Antarctic Territory ($20 million over 3 years);



·       Internet access for people in rural or regional areas ($36 million over 3 years);



·       mobile phone coverage along highways ($25 million over 3 years);



·       a Television Fund to enable improved television reception, to extend coverage of SBS television, and to support a New Media Unit to be established within the SBS ($120 million over 5 years).

 

Schedule 3 to the Bill provides a mechanism for the subsequent sale of the Commonwealth’s remaining equity in Telstra, with a commencement trigger in Part 1 of Schedule 3.  If an independent inquiry into Telstra’s performance finds that Telstra has met prescribed criteria for a designated period of at least 6 months, it must issue a written certificate to that effect and give the certificate to the Minister for Communications, Information Technology and the Arts.  The Minister is required to arrange for a copy of the certificate to be published in the Commonwealth Gazette .  The day on which the copy of the certificate is published in the Gazette is referred to as the inquiry certificate day.  With effect from this day, the Commonwealth will be able to sell its remaining equity interest in Telstra.

 

The Bill provides for the performance criteria to be prescribed by regulation.  This will enable further consultation with interested parties on the criteria.

 

Part 2 of Schedule 3 to the Bill makes amendments to the Telstra Corporation Act which allow the Commonwealth to sell its remaining equity interest in Telstra.

 

The current provisions of the Telstra Corporation Act which provide a power for the Minister to give directions to Telstra and place reporting obligations on Telstra will cease to apply on a date to be proclaimed when the Minister is satisfied that the Commonwealth’s equity has fallen below 50 per cent (Part 4 of Schedule 3 to the Bill).

 

The foreign ownership provisions will be amended to apply the 35% total and 5% individual limits in such a way that as the Commonwealth sells its remaining shares in separate tranches, the limits will apply to the proportion of non-Commonwealth shares following the sale of each tranche.

 

In general, the current provisions of the Telstra Corporation Act which provided a robust basis for the sale of one-third of the equity in Telstra will be retained for the purposes of the further sale.  The provision requiring the Commonwealth to conduct the sale in accordance with Chapter 7 of the Corporations Law will also be retained.

 

Schedule 2 to the Bill will make amendments to the sale provisions to:

 

·                     insert a power to make regulations to specify exceptions to the general exemption from State and Territory stamp duty and other taxes in relation to the sale;

 

·                     enable changes to be made by disallowable instrument to Telstra’s constitution to remove special privileges enjoyed by the Commonwealth when it is no longer the majority shareholder;

 

·                     clarify the Commonwealth’s ability to use the special appropriation mechanisms of the Act to pay any claims against indemnities issued by the Commonwealth in the sale process;

 

·                     give the relevant Ministers a power to direct Telstra in relation to the giving of assistance in connection with a sale scheme;

 

·                     make it clear that no liability or remedy may arise under stock exchange listing rules from giving such assistance or providing information to the Commonwealth in connection with a sale scheme; and

 

·                     update the delegation provisions.

 

The provisions in the Telstra Corporation Act relating to Telstra’s base of operations, headquarters and nationality of the Chairman and a majority of directors being Australian are being retained.  However, the requirement for Telstra to be incorporated in the ACT will be widened to permit it to be incorporated in any State or internal Territory of Australia to avoid discrimination in favour of any particular State or Territory.

 

Schedule 1 to the Bill contains minor technical amendments and contains an amendment which requires at least 2 directors of Telstra to have knowledge of, or experience in, the communications needs of regional areas.

 

Part 3 of Schedule 3 to the Bill includes transitional provisions which, notwithstanding Telstra ceasing to be Commonwealth controlled, preserve the rights of Telstra employees who have long service leave or maternity leave entitlements or certain retirement benefits under Commonwealth legislation, while they remain Telstra employees.

 

Transitional provisions will also:

 

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

 

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

 

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

 

·                     make it clear that Telstra employees’ access to Public Service mobility rights ceases when the Commonwealth no longer has a controlling interest;

 

·                     end Telstra’s future liability under the Commonwealth Borrowing Levy Act 1987 .

 

The Bill makes other minor consequential changes and removes certain spent provisions.

 

 

FINANCIAL IMPACT STATEMENT

 

Full financial costs and benefits from the sale are difficult to quantify at this stage. 

 

Revenue of around $14 billion was achieved from the sale of the first third of Telstra.  The remaining two-thirds of Telstra has a current market value of about $55 billion. The amount raised on the sale would be dependent on the sale processes and market circumstances at the time.

 

The costs of organising a sale are expected to be in line with previous Commonwealth experience, that is around 1.5 to 2 per cent of gross sale proceeds.  The sale process will be managed by OASITO in the Finance and Administration Portfolio.  The issues raised in the recent Australian National Audit Office report on the one-third sale will be taken into account.

 

The 1998-99 Budget papers indicated that the effect of a Telstra sale in the outyears would be for positive net income effects to broadly offset initial sale costs.  However, the papers also noted that estimates were highly dependent on the assumptions made.

 

Proceeds from sale of the Commonwealth's remaining shareholding in Telstra will be used substantially to retire public debt, thereby reducing the debt servicing burden both now and on future generations.  While the Commonwealth will forgo future dividends from Telstra it will continue to benefit from taxation payments, including through taxation of capital gains realised by the private shareholders.

 

Apart from the benefits to be derived from the reduction of debt (and associated reductions in interest payments) the Government has committed to funding a number of ‘social bonus’ measures out of the proceeds of the next partial sale (ie. retaining majority Commonwealth shareholding).  The first stage of a further sale could yield proceeds in the order of $10-15 billion, although daily variations in Telstra share price of 5 to 10 cents imply variations in proceeds of around $100-200 million and the actual proceeds will also depend on overall market movements prior to the sale.

 

The legislation makes appropriations consistent with the Government’s announced commitments for a range of measures and programs which would enhance access to telecommunications, broadcasting, electronic transactions and postal services, reduce the costs of some telephony services and provide substantial additional funding for the Natural Heritage Trust.  These measures would be of particular benefit to residents of regional and remote areas of Australia, including isolated island communities.  These appropriations total $671 million to be expended over periods up to 5 years.

 

 

REGULATION IMPACT STATEMENT

 

Issue

It is Government policy that it will seek approval of the Parliament to sell the remaining two-thirds of the Commonwealth's equity in Telstra Corporation Limited.  Prior to the last Federal election the Government committed to pursue the sale in two stages: first, to sell down to a bare majority Commonwealth shareholding, subject only to the passage of the proposed Telecommunications (Consumer Protection and Service Standards) Bill 1998 ; and second, no further sale of equity would occur prior to certification by an independent inquiry that Telstra’s service levels met certain performance criteria to be specified in legislation.

 



Objective

 

The objective of the Government is to privatise Telstra and, in so doing, ensure the protection of the public interest in the provision of competitive, innovative and affordable communications services to all Australians. The legislative package providing for Telstra’s sale supports this objective.  The telecommunications regulatory framework established to operate from 1 July 1997 provides the necessary consumer and competition safeguards for an open telecommunication market, without reliance on ownership of a telecommunications carrier.  This position is supported by overseas experience, both in markets where privatisations have occurred (eg the United Kingdom) and those where carriers have traditionally been privately owned (eg the United States of America).

 

The current regulatory framework was designed to apply to all carriers, regardless of ownership. The particular provisions relating to Telstra reflect its position in the market and its role as the universal service provider rather than its ownership (ie they will not be affected by any change in ownership).  There is no legislative or administrative mechanism in the current ownership arrangements which requires Telstra to provide services to anyone.  Telstra’s service obligations are all set out, in detail, in separate legislation and associated legislative instruments (eg licence conditions).  Telstra will continue to be subject to legal requirements in relation to universal service following any further change in ownership and the Government will retain the ability (with the cooperation of Parliament) to enhance the obligations or their enforcement through legislative change, where necessary.  As competition develops Australians (wherever they live) will become less and less dependent on Telstra for the delivery of services and will have greater choice in terms of services and providers.  This is already evident in a range of telecommunications markets (eg long-distance and mobile telephony, Internet service provision).

 

The proposed legislative package comprises three Bills.

 

The Telecommunications (Consumer Protection and Service Standards) Bill 1998 (‘the Consumer Bill’) brings together all consumer safeguards, including the Ministerial power of direction to Telstra in relation to consumer issues and provisions to strengthen the Customer Service Guarantee (CSG).  The Consumer Bill is essentially a transparency measure drawing together the full range of consumer safeguards and carrier service obligations in a single Bill.  The impact of this Bill is discussed in the explanatory memorandum to that Bill.

 

The Telecommunications Legislation Amendment Bill 1998 (‘TLAB’) makes a number of amendments consequential upon the creation of the Consumer Bill; as well as competition policy and monitoring and reporting amendments and amendments aimed at providing consumers with more information about terms and conditions governing supply of goods and services by carriage service providers, previously agreed by the Government.  The impact of TLAB is discussed in the explanatory memorandum to that Bill.

 

As indicated in the Outline above, other amendments will also be made to the sale provisions.  The impact of the Sale Bill is discussed in the Outline above.

 

The package contains two further Bills which provide for consequential amendments to the Telecommunications (Universal Service Levy) Act 1997 and the NRS Levy Imposition Act 1998 .  Neither makes any changes to the delivery or terms of the Universal Service Obligation or the National Relay Service.

 

Options

 

Section 8AB of the Telstra Corporation Act 1991 provides that neither the Commonwealth nor Telstra can do anything which would cause the Commonwealth’s stake (described in a number of ways in the legislation) to fall below two-thirds.  Accordingly, to implement the Government’s election commitment to sell Telstra there is no alternative than to take legislative action.

 

The alternative is retention of a mix of public and private ownership (either at the current 66.6667 per cent/33.3333 per cent or 50.1 per cent/49.9 per cent).  The drawbacks of this arrangement are that the Government would have to continue to balance both regulatory and shareholder objectives in addressing telecommunications policy.  Telstra would continue to be governed by a regime which seeks to emphasise competitive neutrality on the regulatory side, but also requires specific additional governance and reporting requirements related to public ownership.

 

Telstra would be constrained in its ability to raise new capital through equity (no Government will want to pay two-thirds of a call on shareholders).  It may also be constrained in forming strategic alliances and may find itself restrained from entering potentially lucrative ventures.

 

The community, private shareholders, business analysts, Parliamentarians and Telstra management would continue to have difficulty in discerning the differences between the roles of Government as majority owner of Telstra and regulator of the telecommunications industry.  Members of the public, in particular, would continue to have difficulty in accepting that majority ownership does not equate to Ministerial control of the management of day-to-day operations of Telstra.

 

In short it would tend to maintain the impression that Commonwealth ownership directly influences the price, quality and range of services provided.  The phased approach to full private ownership is intended to allay fears that privatisation will lead to service decline by introducing change on a graduated basis, but the confusion of roles will continue for so long as the Commonwealth is an owner.

 

Impact Analysis

 

It is intended that the further privatisation of Telstra will enhance its competitiveness and performance.  A recently published report by the Productivity Commission on the Performance of Government Trading Enterprises 1991-92 to 1996-97 concluded that Telstra had performed very strongly over the period, noting increased profits and dividends, real price declines for services, improved access to a wider range of services, particularly in regional areas and reduced days lost through industrial disputation etc.  The Report noted some mixed results on service quality measures.

 

The period examined by the Productivity Commission pre-dated the one-third privatisation.  The period could be characterised by corporatisation/commercialisation of Telstra, gradual opening of the telecommunications market and substantial growth in the market.  It is too early to draw substantive conclusions about performance since privatisation other than to note that Telstra’s strong financial performance has continued, competition in the telecommunications market is increasing and the trend for decline in prices continues.

 

The consequences of the first stage of further sale (ie down to 50.1 per cent Commonwealth ownership) are likely to be minor compared to the current position - apart from the financial impacts which are discussed below.

 

The proposed legislation will reduce the administrative requirements placed on Telstra as a result of direct Government ownership, when/if the Commonwealth ceases to be the majority shareholder.  These requirements relate to the governance of Telstra and include the directions power for the Minister and reporting requirements on Telstra.  It is intended that these will cease to apply on a date to be proclaimed when the Minister is satisfied that the Commonwealth’s equity has declined below 50 per cent.  A provision will also be inserted to enable changes to be made by disallowable instrument to Telstra’s constitution to remove special privileges enjoyed by the Commonwealth when the Commonwealth is no longer the majority shareholder.  The Government will continue to maintain requirements for carriers to have approved industry development plans.

 

The proposed legislation will, however, in no way lessen the obligations placed on Telstra as a telecommunications carrier and service provider under other related legislation.  The legislation re-affirms the commitment to key community and regulatory safeguards such as universal service obligations; continued residential access to untimed local calls and continued business access to untimed local voice calls; the customer service guarantee; special benefits for rural and regional customers; the price-cap regime and the maintenance of a flexible regulatory structure that is designed to stimulate competition in the telecommunications market and thus deliver cheaper prices and improved services to Australian residential and business telecommunications users.

 

It is intended to retain a number of provisions in the existing legislation which require Telstra to be Australian controlled.  The foreign ownership provisions will be amended to apply the announced 35% total and 5% individual limits, in such a way that as the Commonwealth sells its remaining shares in more than one tranche, the limits will apply to the proportion of non-Commonwealth shares following the sale of each tranche.  Consistent with the Government’s announcement, provisions relating to Telstra’s base of operations, headquarters and nationality of the Chairman and a majority of directors to be Australian are being retained.

 

The requirement for Telstra to be incorporated in the Australian Capital Territory will be amended to permit Telstra to be incorporated in any State or internal Territory of Australia.  This will remove an existing provision which could be seen as discriminatory and an unnecessary constraint.

 

The provision for stamp duty exemption for the sale transaction will be retained in the legislation.  However, a power will be inserted to make regulations to specify exceptions to the general exemption from State and Territory stamp duty and other taxes in relation to the sale.  This will provide a mechanism for the Commonwealth to consider the application of stamp duty to the sale in the context of Commonwealth/State taxation arrangements.

 

The proposed legislation will also retain (and clarify where necessary) provisions relating to the conduct of the sale, including providing for exemptions from Corporations Law, securities exchange listing rules and common law/equity in relation to assistance provided under the legislation for the sale scheme.  The further sale process will be conducted consistent with Chapter 7 of the Corporations Law.

 

The impact of the above legislation on the operations of businesses other than Telstra would largely be indirect.  However, certain sectors of the business community will benefit directly from the provision of opportunities to be involved in the sale process.  The extent of that benefit will be a matter for the Office of Asset Sales and Information Technology Outsourcing (OASITO) to manage in the sale process.

 

The business sector will benefit indirectly from the further widening of share ownership in Australia.  Telstra employees, current shareholders and new shareholders will be given the opportunity to increase or obtain a stake in the company.  Employees and small shareholders will be given incentives to acquire shares in any further sales.

 

Some business interests have expressed concern that full privatisation of Telstra will somehow release Telstra from constraints that prevent it from bringing the full weight of its size and market power to bear.  The competition issues have been addressed in the development of the telecommunications regulatory framework established through the Telecommunications Act 1997 and the Trade Practices Act 1974 .  The Government has the continuing ability to refine this framework as indicated by the Consumer Bill and TLAB (discussed in the explanatory memoranda to those Bills).  In doing so the Government needs to differentiate between claims which are genuinely seeking redress for an unfair competitive disadvantage and those which are simply seeking an unfair competitive advantage.

 

On the other hand the Government does not want to put Telstra in a position where it is incapable of responding flexibly and commercially to developments in the market.  For these reasons the regulatory framework is designed overwhelmingly to put Telstra on an equal footing with its competitors (the principle of competitive neutrality).  Where special provisions apply to Telstra they relate to its role in the market (eg as the Universal Service Provider) or its degree of market power (eg price caps, power of direction on consumer safeguards).

 

The scale of the proposed equity raising will be significant relative to the size of the Australian equity markets.  This may lead to some market liquidity effects and to some commercial pressure on share prices generally and on contemporary capital raising by other firms.  These factors will be addressed further when planning a specific sale scheme pursuant to the legislation, drawing on the experience gained in the first sale.  The staged approach will, in itself, mitigate these effects.

 

None of the above impacts are easily quantifiable.  However, it is difficult to see that there would be any adverse impact on the business sector by the proposed legislation.

 

Financial Impacts

 

The financial impacts are discussed in the Financial Impact Statement above.

 

Consultation

 

Privatisation of Telstra has been a clearly expressed policy in two Federal elections. 

 

There has been extensive public discussion and Parliamentary debate on the privatisation of Telstra since April 1996.  There have been two Senate enquiries on legislative proposals for the first third sale and the proposed full sale.  There has been extensive discussion with industry and consumer representatives on aspects of the legislation (including on the approach to performance criteria - see below) and reviews of various aspects of the regulatory framework.

 

Conclusion and Recommended Option

 

The proposed package of legislation will, if agreed by Parliament, meet the Government’s commitment to privatise Telstra in stages.  The package contains a number of elements designed to provide assurance to the community that telecommunications services will not decline and will improve through and following the process of privatisation of Telstra.

 

Implementation and Review

 

The proposals to reduce the governance requirements placed on Telstra as the Commonwealth interest declines should reduce the administrative burden on Telstra and on the agencies involved in collecting and evaluating the information required under the current legislation.

 

The provisions for an inquiry and for Telstra to meet certain performance criteria on quality of service need to set meaningful thresholds for performance that will provide assurance that acceptable standards of service will be achieved and sustained.  Consultations have been held with a range of stakeholders, based on a discussion paper issued by the Department but views were wide and varied.  Additionally the performance measures which have historically been measured by AUSTEL/ACA vary from what is now being undertaken through the CSG processes, so there is a lack of comparable data.  Further, the ACA is currently reviewing the CSG and it would be desirable to await the outcome of that review before determining the performance criteria.  There will need to be further consultations with industry, consumer organisations and the public before the specific criteria can be set.  The Bill, therefore, provides for these to be set later by regulation which will be subject to disallowance by the Parliament.

 

Review

 

No review is envisaged for this legislation.

 

 



NOTES ON CLAUSES

 

 

Clause 1 - Short title

 

Clause 1 provides that the Bill, when enacted, may be cited as the Telstra (Transition to Full Private Ownership) Act 1998 .

 

Clause 2 - Commencement

 

Clause 2 provides for the Bill, when enacted, to commence upon Royal Assent (subject to specific commencement provisions outlined in item 1 of Schedule 3 to the Bill).

 

Inquiry certificate day

 

Part 2 of Schedule 3 to the Bill contains provisions which repeal the provisions in Division 2 of Part 2 of the Telstra Corporation Act 1991 (which require the Commonwealth to retain a particular level of equity in Telstra) and make consequential amendments. 

 

Subitem 1(1) of Schedule 3 provides that Part 2 of Schedule 3 commences on the ‘inquiry certificate day’.  (If an independent inquiry into Telstra’s performance finds that Telstra has met prescribed criteria for a designated period of at least 6 months, it must issue a written certificate to that effect and give the certificate to the Minister for Communications, Information Technology and the Arts.  The Minister is required to arrange for a copy of the certificate to be published in the Commonwealth Gazette .  The day on which the copy of the certificate is published in the Gazette is referred to as the inquiry certificate day.  With effect from this day, the Commonwealth will be able to sell its remaining 50.1 per cent equity interest in Telstra.)

 

Designated day

 

Part 3 of Schedule 3 to the Bill permits the Auditor-General to resign as auditor of Telstra and inserts a new Part 3A in the Telstra Corporation Act which contains transitional provisions relating to the sale by the Commonwealth of its remaining equity interest in Telstra.  Some of those transitional provisions relate to Commonwealth Acts which cease to apply to Telstra when the Commonwealth ceases to hold a majority of the voting shares in Telstra.

 

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

 

Subitem 1(2) of Schedule 3 provides for Part 3 of Schedule 3 to commence on the designated day.

 

The designated day is declared by the Minister under item 4 of Schedule 3 and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Proclaimed day

 

Part 4 of Schedule 3 to the Bill includes provisions which repeal:

 

·                     the reporting requirements on Telstra which are imposed by Division 3 of Part 2 of the Telstra Corporation Act; and

 

·                     the Minister’s power in Part 3 of the Act to give directions to Telstra in the public interest.

 

The reporting requirements and directions power should cease to apply after the Commonwealth ceases to hold a majority equity interest in Telstra.

 

Special commencement arrangements apply to Part 4 of Schedule 3 to provide for the repeal of the reporting requirements after the Commonwealth ceases to hold a majority equity interest in Telstra.

 

Subitem 1(3) of Schedule 3 provides that Part 4 of Schedule 3 commences on a day to be fixed by Proclamation.

 

Subitem 1(4) of Schedule 3 prevents such a Proclamation being made until the Minister has certified in writing that the majority-interest sale time has occurred.  The ‘majority-interest sale time’ is defined in subitem 2(6) of Schedule 3 to mean the first time after the commencement of Part 2 of Schedule 3 when the Commonwealth no longer meets various tests of majority Commonwealth ownership or control.  These tests are based on the current tests found in subsection 8AB(2) of the Telstra Corporation Act.

 

Clause 3 - Schedule(s)

 

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

 

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



 

Schedule 1--General amendments

 

Commonwealth Borrowing Levy Act 1987

 

Item 1 - Amendment of item 22 of the Schedule to the Commonwealth Borrowing Levy Act

 

Item 1 repeals the reference to ‘Telstra Corporation Limited’ in the Schedule to the Commonwealth Borrowing Levy Act 1987 so that a levy cannot be imposed under that Act on any new Telstra borrowings.  The levy is currently set at a level of zero so the provision has no practical operation.

 

Item 2 - Transitional

 

Item 2 is a transitional provision which, when read with clause 2 of the Bill, provides that Telstra is not liable, from Royal Assent, to pay any levy imposed under the Commonwealth Borrowing Levy Act 1987 in respect of any borrowing undertaken before that time, though it is still required to pay an amount that became payable before Royal Assent.

 

Telstra Corporation Act 1991

 

Item 3 - Amendment of section 3 of the Telstra Corporation Act

 

Section 3 of the Telstra Corporation Act contains definitions of terms used in the Act.  The Act uses the term ‘Minister for Finance’.

 

Item 3 inserts a definition of ‘Minister for Finance’ to mean the Minister administering the Financial Management and Accountability Act 1997 .  This Minister is currently the Minister for Finance and Administration.

 

Item 4 - Amendment of paragraph 8BC(b) of the Telstra Corporation Act

 

Item 4 makes a minor technical amendment to update certain terms reflecting revised terminology used in the Telecommunications Act 1997 .

 

Item 5 - Insertion of new section 8BUA of the Telstra Corporation Act

 

Item 5 inserts a new section 8BUA in the Telstra Corporation Act.  This new section will require Telstra to ensure that at least 2 of its directors have knowledge of, or experience in, the communications needs of regional areas of Australia (proposed subsection 8BUA(1)).

 

A contravention of this requirement will not be a criminal offence, nor will it affect the validity of any transaction undertaken in contravention of the requirement.  The Minister for Communications, Information Technology and the Arts will, however, be able to apply to the Federal Court under Division 1 of Part 2B of the Telstra Corporation Act for an injunction requiring Telstra to remedy the contravention (proposed subsections 8BUA(2) and (3)).

 

Item 6 - Amendment of paragraph 8CC(b) of the Telstra Corporation Act

 

Item 6 makes a minor technical amendment to update certain terms reflecting revised terminology used in the Telecommunications Act 1997 .

 

 

Schedule 2--Amendments relating to the sale by the Commonwealth of 49.9% of its original equity interest in Telstra

 

Natural Heritage Trust of Australia Act 1997

 

Item 1 - Amendment of section 3 of the Natural Heritage Trust of Australia Act

 

Section 3 of the Natural Heritage Trust of Australia Act 1997 contains a simplified outline to that Act.  That Act establishes the Natural Heritage Trust of Australia Reserve, the main objective of which is to conserve, repair and replenish Australia’s natural capital infrastructure.  The main source of money for the Reserve was the $1.1 billion from the initial partial sale of Telstra.

 

It is proposed that an additional $250 million be provided to the Reserve from the next partial sale of shares in Telstra.  This will be achieved by proposed section 22A of the Natural Heritage Trust of Australia Act 1997 to be inserted by item 3 of Schedule 2 to the Bill.  Item 1 amends the simplified outline to reflect this proposed amendment.

 

Item 2 - Amendment of section 22 of the Natural Heritage Trust of Australia Act

 

Section 22 of the Natural Heritage Trust of Australia Act 1997 provides that for each $1 that is received by the Commonwealth in a particular month by way of proceeds of the sale of shares in Telstra, $1 is to be transferred to the Reserve from the Consolidated Revenue Fund before the end of the next following month.  The total amount transferred to the Reserve is not to exceed $1.1 billion.

 

This provision was intended to deal with the funding of the Reserve from the initial partial sale of shares in Telstra.  Item 2 amends section 22 to make this clear in the light of the proposed subsequent partial sale of Telstra shares.  Item 3 deals with the funding of the Reserve from the next partial sale of shares in Telstra.

 

Item 3 - Insertion of new section 22A of the Natural Heritage Trust of Australia Act

 

Item 3 inserts a new section 22A which will ensure that the Natural Heritage Trust of Australia Reserve will be credited with an additional $250 million from the next partial sale of shares in Telstra. 

 



Telstra Corporation Act 1991

 

Item 4 - Amendment of section 3 of the Telstra Corporation Act (definition of rights )

 

Item 4 amends the definition of the term ‘rights’ in section 3 consequential upon the repeal of Part 2C of the Telstra Corporation Act by item 45 of Schedule 2 to the Bill.

 

Item 5 - Amendment of section 8AA of the Telstra Corporation Act

 

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

 

Item 5 amends the simplified outline as a consequence of item 6 below to indicate that the Commonwealth will be able, in an initial further sale, to sell 49.9% of its equity in Telstra, but will be required to retain the remaining 50.1%.

 

Item 6 - Amendment of section 8AB of the Telstra Corporation Act

 

Item 6 amends section 8AB of the Telstra Corporation Act to ensure that the Commonwealth will be able to sell down its current two-thirds equity in Telstra provided it maintains an interest of 50.1% in Telstra.

 

Item 7 - Amendment of section 8AK of the Telstra Corporation Act

 

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

 

It is proposed to include a regulation making power to enable stamp duty or other taxes to apply in some circumstances or for particular kinds of stamp duty to apply to some transactions related to the sale.  Accordingly, this item adds a new subsection 8AK(3) which ensures that the regulations can create exceptions to the general prohibition on stamp duty or other taxes applying to the sale.

 

Item 8 - Amendment of subsection 8AL(2) of the Telstra Corporation Act

 

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

 

Item 8 adds calls on indemnities granted by the Commonwealth as a further example of the costs and expenses covered by subsection 8AL(1).

 



Item 9 - Repeal of sections 8AM to 8AP (inclusive) of the Telstra Corporation Act

 

Sections 8AM to 8AP relate to the Commonwealth taking over obligations of Telstra or a Telstra subsidiary before the first sale of voting shares in Telstra.

 

These provisions were never used and are now spent.  Item 9 provides for their repeal.

 

Item 10 - Insertion of proposed subsections 8AQ(4A) and (4B) of the Telstra Corporation Act

 

Section 8AQ of the Telstra Corporation Act provides that Telstra, or a member of the Board, may on their own initiative assist the Commonwealth in connection with carrying out a Telstra sale scheme.

 

These are standard provisions which apply generally in legislation relating to the sale of Commonwealth assets.  However, section 8AQ does not include provisions which enable the Minister or the Minister for Finance and Administration to give directions about the giving of such assistance.

 

It is intended as part of the sale process to indemnify the directors of Telstra in relation to the assistance they give to the Commonwealth.  The directions power provides a mechanism to manage the accountability for the potential exposure under the indemnity.

 

Item 10 inserts new subsections (4A) and (4B) which, when read with item 3 of Schedule 1 to the Bill, allow the Minister for Communications, Information Technology and the Arts or the Minister for Finance and Administration to give directions to Telstra or a member of the Board about giving assistance to the Commonwealth.

 

Items 11 to 13 - Amendments of subsection 8AQ(5) of the Telstra Corporation Act

 

Items 11 and 12 make minor technical amendments consequential on the amendment in item 10.

 

Section 8AQ of the Telstra Corporation Act provides that Telstra, or a member of the Board, may on their own initiative assist the Commonwealth in connection with carrying out a Telstra sale scheme.

 

Subsection 8AQ(5) of the Telstra Corporation Act is included to avoid any doubt that actions taken under section 8AQ do not contravene the Corporations Law or a rule of common law or equity.

 

Item 13 inserts a new paragraph 8AQ(5)(ab) to avoid any doubt that actions taken under section 8AQ do not contravene the listing rules of a securities exchange.  Because of the definition of ‘securities exchange’ added by item 15 and related definitions in section 8AY and the Corporations Law, this exemption only applies in relation to local Australian securities exchanges.

 

Item 14 - Amendment of subsection 8AQ(6) of the Telstra Corporation Act

 

Item 14 makes a minor technical amendment consequential on the amendment in item 10.

 

Item 15 - Insertion of proposed subsection 8AQ(7) of the Telstra Corporation Act

 

Item 15 inserts definitions of the terms ‘listing rules’ and ‘securities exchange’ in section 8AQ consequential on the insertion of a new paragraph 8AQ(5)(ab) by item 13.

 

Item 16 - Repeal of paragraph 8AS(1)(b) of the Telstra Corporation Act

 

Section 8AS of the Telstra Corporation Act enables the Minister for Finance and Administration to authorise the payment to Telstra of an amount the Minister considers reasonable in relation to expenses incurred by Telstra or a member of the Board in giving assistance in connection with a Telstra sale scheme.

 

Item 16 repeals paragraph 8AS(1)(b) which otherwise limits the kinds of assistance in relation to which payment can be made under section 8AS.

 

Item 17 - Relettering of paragraph 8AS(1)(c) of the Telstra Corporation Act

 

Item 17 makes a minor technical amendment consequential on the repeal in the preceding item.

 

Item 18 - Insertion of proposed subsection 8AS(4) of the Telstra Corporation Act

 

Item 18 adds a new subsection 8AS(4) which is included for the avoidance of doubt.  The new subsection makes it clear that section 8AS, by providing specifically for the making of a payment to Telstra, does not limit the general executive power of the Commonwealth to make a payment to Telstra or a member of the Board.

 

Item 19 - Insertion of proposed section 8AUA of the Telstra Corporation Act - Alteration of Telstra’s constitution after the minority-interest sale time

 

Item 19 inserts a new section 8AUA in the Telstra Corporation Act to provide a simple mechanism to remove special rights and privileges of the Commonwealth that are included in Telstra’s constitution, once the Commonwealth no longer controls a majority of the voting shares in Telstra.

 

In the absence of such a provision, the company may be put to the expense of holding a general meeting to make the necessary changes to the constitution.

 

Proposed subsection 8AUA(1) enables the Minister to alter Telstra’s constitution if:

 

·       the alteration relates to a Telstra sale scheme;

 

·       the effect is to remove, restrict or limit any rights, privileges or immunities of the Commonwealth or remove any requirements for Commonwealth or Ministerial consent or direction; and

 

·       the instrument is made before the repeal of Division 3 of Part 2 (which contains Telstra’s reporting obligations).

 

Proposed subsection 8AUA(2) requires the Minister to consult the members of the Board of Telstra before making such an instrument.

 

Proposed subsection 8AUA(3) makes the instrument a disallowable instrument which must be notified in the Commonwealth Gazette and tabled in the Parliament and which is subject to disallowance by either House of the Parliament.

 

Proposed subsection 8AUA(4) makes it clear that the making of such an instrument does not contravene the Corporations Law, a listing rule or a rule of common law or equity.

 

Proposed subsection 8AUA(5) makes it clear that the Telstra Corporation Act does not prevent further alteration of Telstra’s constitution if such an instrument is made.

 

Proposed subsection 8AUA(6) contains definitions of the terms ‘listing rules’ and ‘securities exchange’.  Because of section 8AY and related definitions in the Corporations Law, the definition of ‘securities exchange’ only includes local Australian securities exchanges.

 

Item 20 - Insertion of proposed paragraph 8AW(5)(ab) of the Telstra Corporation Act

 

Subsection 8AW(5) of the Telstra Corporation Act is included to avoid any doubt that the use or disclosure of information by the Commonwealth under section 8AW does not contravene the Corporations Law or a rule of common law or equity.

 

Item 20 inserts a new paragraph 8AW(5)(ab) to also avoid any doubt that such use or disclosure does not contravene the listing rules of a securities exchange.  Because of the definition of ‘securities exchange’ added by item 22 and related definitions in section 8AY and the Corporations Law, this exemption only applies in relation to local Australian securities exchanges.

 



Items 21 and 22 - Amendments of subsection 8AW(6) of the Telstra Corporation Act

 

Items 21 and 22 insert definitions of the term ‘listing rules’ and ‘securities exchange’ in subsection 8AW(6) consequential on the insertion of new paragraph 8AW(5)(ab) by item 20.

 

Items 23 to 26 - Amendments of section 8BB of the Telstra Corporation Act

 

Item 23 makes a minor technical amendment consequential on the amendment in item 24.

 

Item 24 amends a delegation provision to enable the Minister for Communications, Information Technology and the Arts to delegate powers under the Part to the Chief Executive, Office of Asset Sales and IT Outsourcing.

 

Item 25 makes a minor technical amendment consequential on the amendment in item 26.

 

Item 26 amends a delegation provision to enable the Minister for Finance and Administration to delegate powers under the Part to the Chief Executive, Office of Asset Sales and IT Outsourcing.

 

Item 27 - Insertion of note after note 2 to section 8BE of the Telstra Corporation Act

 

Item 27 inserts a Note 2A to section 8BE as a consequence of the amendment to clause 12 of the Schedule to the Telstra Corporation Act made by item 56 of Schedule 2 to the Bill.

 

Items 28 to 31 - Amendments of section 8BG of the Telstra Corporation Act

 

Section 8BG of the Telstra Corporation Act sets out the foreign ownership limits which apply in relation to Telstra.

 

Paragraph 8BG(a) sets out the maximum aggregate foreign ownership allowed in Telstra, which is currently 11.6667% or 35% of one-third of the shares in Telstra.

 

Item 28 changes the maximum aggregate foreign ownership allowed in Telstra to 35%.  Due to the amendments of clause 12 of the Schedule to the Telstra Corporation Act made by item 56, aggregate foreign ownership is only measured in relation to shares held by persons other than the Commonwealth.  This ensures that as the further sale of shares occurs in more than one tranche, the 35% limit automatically applies to the shares in non-Commonwealth hands following the sale of each tranche.

 

Paragraph 8BG(b) sets out the maximum individual foreign ownership allowed in Telstra, which is currently 1.6667% or 5% of one-third of the shares in Telstra.

 

Item 29 changes the maximum individual foreign ownership allowed in Telstra to 5%.  Due to the amendment of clause 12 of the Schedule to the Telstra Corporation Act made by item 56, individual foreign ownership is only measured in relation to shares held by persons other than the Commonwealth.  This ensures that as the further sale of shares occurs in more than one tranche, the 5% limit automatically applies to the shares in non-Commonwealth hands following the sale of each tranche.

 

Item 30 repeals notes 1, 2 and 3 at the end of section 8BG as a consequence of the amendments in items 28 and 29 and the repeal of Division 5 of Part 2A (see item 35).

 

A new note is substituted as a consequence of the amendments to clause 12 of the Schedule to the Telstra Corporation Act made by item 56 of Schedule 2 to the Bill.

 

Item 31 makes a minor technical amendment consequential on the amendment in item 30.

 

Items 32 to 34 - Amendments of section 8BH of the Telstra Corporation Act

 

Section 8BH creates an offence for persons who acquire shares in a company with the result that an unacceptable foreign ownership situation is created or exacerbated.

 

Item 32 amends subparagraph 8BH(b)(ii) to reflect the change to the maximum aggregate foreign ownership allowed in Telstra from 11.6667% to 35%.

 

Item 33 amends subparagraph 8BH(b)(iii) to reflect the change to the maximum individual foreign ownership allowed in Telstra from 1.6667% to 5%.

 

Item 34 repeals notes 1, 2 and 3 at the end of section 8BH as a consequence of the amendments in items 32 and 33 and the repeal of Division 5 of Part 2A (see item 35). 

A new note is substituted as a consequence of the amendment to clause 12 of the Schedule to the Telstra Corporation Act made by item 56 of Schedule 2 to the Bill.

 

Item 35 - Repeal of Division 5 of Part 2A of the Telstra Corporation Act

 

Division 5 of Part 2A of the Telstra Corporation Act provided a mechanism for regulations to reduce the ownership limit percentages in the event that the Commonwealth’s one-third equity interest in Telstra was transferred in two or more tranches.

 

Item 35 repeals this Division as a consequence of the amendment to clause 12 of the Schedule to the Telstra Corporation Act made by item 56 of Schedule 2 to the Bill.  Item 56 provides for ownership to be measured only in relation to shares held by persons other than the Commonwealth.  This ensures that as the further sale of shares occurs in more than one tranche, the foreign ownership limits automatically apply to the shares in non-Commonwealth hands following the sale of each tranche.

 



Item 36 - Amendment of subsection 8BS(1) of the Telstra Corporation Act

 

Subsection 8BS(1) of the Telstra Corporation Act requires Telstra to ensure that it remains incorporated under the Corporations Law of the ACT.  There is no reason in principle why Telstra should not be able to be incorporated anywhere in Australia.

 

Item 36 amends subsection 8BS(1) to require Telstra to remain incorporated under the Corporations Law of a State or an internal Territory. 

 

‘State’ is defined in paragraph 17(o) of the Acts Interpretation Act 1901 to mean a State of the Commonwealth of Australia.  ‘Internal Territory’ is defined in paragraph 17(pe) of that Act to mean the Australian Capital Territory, the Jervis Bay Territory or the Northern Territory.

 

Item 37 - Amendment of section 8BV of the Telstra Corporation Act

 

Section 8BV of the Telstra Corporation Act enables the Minister, by notice before the minority-interest sale time (ie. the time when a person other than the Commonwealth first became the legal owner of voting shares in Telstra) to require Telstra’s constitution to divide its ordinary shares into particular classes.

 

This provision has not been used and is now spent.  Item 37 accordingly provides for its repeal.

 

Items 38 to 41 - Amendments of section 8CB of the Telstra Corporation Act

 

Item 38 makes a minor technical amendment consequential on the amendment in item 39.

 

Item 39 amends a delegation provision to enable the Minister for Communications, Information Technology and the Arts to delegate powers under Part 2A of the Telstra Corporation Act (dealing with restrictions on ownership of Telstra), the Schedule to the Act (dealing with ownership definitions) or regulations made for the purposes of section 8BN of the Act (dealing with record-keeping and giving of information) to the Chief Executive, Office of Asset Sales and IT Outsourcing.

 

Item 40 makes a minor technical amendment consequential on the amendment in item 41.

 

Item 41 amends a delegation provision to enable the Minister for Finance and Administration to delegate powers under Part 2A of the Telstra Corporation Act (dealing with restrictions on ownership of Telstra) to the Chief Executive, Office of Asset Sales and IT Outsourcing.

 



Item 42 - Insertion of new Part 2AA (Anti-avoidance) of the Telstra Corporation Act

 

Item 42 inserts a new Part 2AA in the Telstra Corporation Act to prevent Telstra entering into schemes to avoid the application of provisions of the Act, such as the foreign ownership provisions and the requirements for its head office and base of operations to be in Australia.

 

Part 2AA--Anti-avoidance

 

Proposed section 8CCA - Anti-avoidance

 

Proposed subsection 8CCA(1) provides that Telstra must not, either alone or together with other persons, begin to carry out a scheme for the sole or dominant purpose of avoiding the application of any provision of the Act.

 

Proposed subsection 8CCA(2) makes a contravention of proposed subsection (1) a ground for obtaining an injunction under Division 1 of Part 2B of the Act.

 

Proposed subsection 8CCA(3) provides that a contravention of proposed subsection (1) does not affect the validity of any transaction.

 

Proposed subsection 8CCA(4) provides a definition of the term ‘scheme’ for the purposes of the section.

 

Item 43 - Amendment of Part 2B (heading) of the Telstra Corporation Act

 

Part 2B--Remedial provisions relating to Telstra

 

Item 43 amends the heading to Part 2B consequential on the amendment in item 44.

 

Item 44 amends section 8CD, the injunction provision in Part 2B of the Telstra Corporation Act, to enable injunctions to be sought in relation to the anti-avoidance provision to be inserted by item 42.

 

Item 44 - Amendment of subsection 8CD(1) of the Telstra Corporation Act

 

Subsection 8CD(1) of the Telstra Corporation Act enables the Federal Court to grant a restraining injunction in relation to a contravention of Part 2 or 2A of the Act.

 

Item 44 amends subsection 8CD(1) to enable the Federal Court also to grant a restraining injunction for a contravention of new Part 2AA of the Act to be inserted by item 42.

 

Item 45 - Repeal of Part 2C of the Telstra Corporation Act

 

Part 2C of the Telstra Corporation Act provides for the reaffirmation of the universal service obligation.

 

The wording in Part 2C reflected the provisions of Part 13 of the Telecommunications Act 1991 , which was current at the time Part 2C was enacted.  That wording is now out of date as the universal service obligation is now provided for in Part 7 of the Telecommunications Act 1997 (which is proposed to be transferred to Part 2 of the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 ).

 

It is proposed to repeal Part 2C given that it is now out of date.

 

Item 46 - Amendment of section 32 of the Telstra Corporation Act

 

Item 46 makes a minor technical amendment consequential on the amendment to subsection 8BS(1) of the Telstra Corporation Act made by item 36 of this Schedule.

 

Items 47 to 50 - Amendments of section 36 of the Telstra Corporation Act

 

Item 47 makes a minor technical amendment consequential on the amendment to subsection 8BS(1) of the Telstra Corporation Act made by item 36 of this Schedule.

 

Section 36 of the Telstra Corporation Act requires the Auditor-General to be the auditor of Telstra.  It is intended that Telstra be able to appoint a further auditor.  This will enable a handover period from the Auditor-General to the new auditor.

 

The Auditor-General will be able to resign as Telstra’s auditor by written notice given to the Telstra at any time on or after the designated day (item 22 of Schedule 3 to the Bill).  The designated day is declared by the Minister under item 4 of Schedule 3 and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 48 permits the Telstra Board to appoint an additional auditor at any time after the Bill receives Royal Assent provided that auditor’s consent has been obtained and the Auditor-General has been consulted about the appointment.  If the Auditor-General resigns, subsection 327(6) of the Corporations Law will permit the surviving auditor to continue to act as Telstra’s auditor.  This will enable there to be no disruption of any audit which is only partially completed at the time the Commonwealth ceases to have a majority equity interest in Telstra.  If the surviving auditor were to resign, subsection 327(5) of the Corporations Law would require the vacancy in the office of auditor to be filled within one month.

 

Item 49 amends subsection 36(4) consequential on the amendment in item 48.

 

Item 50 inserts a new subsection 36(6), a transitional provision to provide for the continued application of references in section 36 in a situation where provisions of the Corporations Law are replaced.

 



Item 51 - Amendment of subsection 41(1) of the Telstra Corporation Act

 

Item 51 makes a minor technical amendment consequential on the repeal of Part 2C of the Telstra Corporation Act made by item 45 of this Schedule.

 

Item 52 - Insertion of new Part 9 of the Telstra Corporation Act - Social bonus resulting from the partial sale of Telstra

 

Item 52 inserts a new Part 9 of the Telstra Corporation Act.  This Part gives effect to policy statements issued by the Government during the recent election period.  In these statements the Government indicated that certain ‘social bonus’ elements would be funded from the proceeds of the further 16% sale of Telstra.

 

$70 million is to be made available over 5 years to establish Rural Transaction Centres in certain towns in rural Australia to provide services, where necessary, such as personal banking services, postal services, Medicare Easyclaim facilities and telephone and facsimile facilities.

 

$150 million is to be allocated over 3 years with the intention of abolishing Telstra’s pastoral call rate and to provide extended access to untimed local calls.  Funds allocated are intended to upgrade the telecommunications network in remote Australia to handle the expected increase in traffic.

 

$81 million more is proposed to be allocated over 3 years to the Regional Telecommunications Infrastructure Fund.  This allocation is not to be subject to the State and Territory sub-caps which presently apply to that Fund.

 

$20 million of this amount is to be allocated to telecommunications needs of remote and isolated island communities such as the Torres Strait; the Cocos (Keeling) group; Christmas, Norfolk, King, Flinders, Kangaroo and other Islands; and in the Australian Antarctic Territories. 

 

The remaining $61 million is to be allocated to provide Internet access for people in rural or regional areas of Australia ($36 million) and mobile phone coverage along highways ($25 million).  The $36 million is intended to stimulate Internet service delivery in regional and rural Australia, in a manner that would enhance the commercial, competitive roll-out of these services.  As a result, all Australians would have local call access to the Internet.  Funds would be allocated to establish community-owned Internet points of      presence.

 

$120 million is to be allocated over 5 years to establish a Television Fund, with the intention being to extend SBS television to transmission areas with more than 10,000 people and to eradicate up to 250 television reception black spots with $2 million of the Fund being used to establish a New Media Unit within the SBS. 

 

Reception black spots can be overcome by installing new or better transmitters, leading to improved reception of national and commercial broadcasters.  Funding for black spots is intended to be made by application and awarded on the basis of need.  $2 million is proposed to be provided (funded f r om the Television Fund) to the SBS over 3 years to assist it to establish a new media unit.

 

Administrative guidelines will be developed to deal with how the elements of the social bonus are to be administered.

 

An additional $250 million is to be provided to the Natural Heritage Trust of Australia Reserve (see items 1 to 3 of Schedule 2 to the Bill).  The Natural Heritage Trust of Australia Reserve is established by the Natural Heritage Trust of Australia Act 1997 .

 

Part 9--Social bonus resulting from the partial sale of Telstra

 

Division 1--Introduction

 

Proposed section 43 of the Telstra Corporation Act - Simplified outline

 

Proposed section 43 of the Telstra Corporation Act contains a simplified outline of proposed Part 9 of the Act to assist readers.

 

Proposed section 44 of the Telstra Corporation Act - Definitions

 

Proposed section 44 of the Telstra Corporation Act contains definitions of key terms used in proposed Part 9.

 

Proposed section 45 of the Telstra Corporation Act - Social bonus commencement day

 

Proposed section 45 of the Telstra Corporation Act defines the ‘social bonus commencement day’ for the purposes of proposed Part 9.  Unless the Minister for Finance and Administration agrees to an earlier advance in relation to particular programs, this is the first day on which payments could be made under the social bonus programs.

 

Proposed subsection 45(1) provides that if, in the opinion of the Minister for Communications, Information Technology and the Arts, a particular day is the day on which the total amount received by the Commonwealth, after the Bill receives Royal Assent, by way of proceeds of the sale of shares in Telstra first reaches $671 million, the Minister must, by written instrument, declare the day to be the social bonus commencement day.  The figure of $671 million represents $421 for the social bonus elements in Part 9 of the Telstra Corporation Act and an additional $250 million to be provided to the Natural Heritage Trust of Australia Reserve.

 

The term ‘proceeds of the sale of shares in Telstra’ is defined in proposed section 44 to include:

 

·       an amount received by the Commonwealth directly or indirectly from the sale-scheme trustee (as defined in section 8AJ of the Telstra Corporation Act) or an investor in Telstra under a Telstra sale scheme (as defined in section 8AJ); and



·       an amount received by the Commonwealth by way of the redemption of redeemable preference shares in Telstra held by the Commonwealth, where the redemption was in accordance with a Telstra sale scheme.

 

Proposed subsection 45(2) provides that the Minister’s declaration has effect accordingly.

 

Proposed subsection 45(3) provides that a copy of the Minister’s declaration must be published in the Commonwealth Gazette within 21 days after the social bonus commencement day.

 

Division 2--Rural Transaction Centres Reserve

 

Division 2 gives effect to the Government’s commitment to establish Rural Transaction Centres in certain towns in rural Australia to provide services, where necessary, such as personal banking services, postal services, Medicare Easyclaim facilities and telephone and facsimile facilities.

 

Proposed section 46 of the Telstra Corporation Act - Rural Transaction Centres Reserve

 

Proposed subsection 46(1) provides for the establishment of the Rural Transaction Centres Reserve.

 

Proposed subsection 46(2) provides that the Rural Transaction Centres Reserve is a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 .

 

Proposed subsection 46(3) provides that amounts equal to income derived from the investment of money in the Rural Transaction Centres Reserve are to be transferred to that Reserve from the Consolidated Revenue Fund.

 

Proposed subsection 46(4) provides that the Rural Transaction Centres Reserve is to be administered by the Department of Transport and Regional Services.

 

Proposed section 47 of the Telstra Corporation Act - Transfer of money to the Rural Transaction Centres Reserve

 

Proposed section 47 provides that as soon as practicable after the social bonus commencement day (as defined in proposed section 45), $70 million is to be transferred to the Rural Transaction Centres Reserve from the Consolidated Revenue Fund.

 



Proposed section 48 of the Telstra Corporation Act - Purposes of the Rural Transaction Centres Reserve

 

Proposed subsection 48(1) provides that the purposes of the Rural Transaction Centres Reserve are as follows:

 

·       the purpose of enabling people in rural areas to have access to services and technology that enables them to obtain information or carry out transactions; or



·       a purpose incidental or ancillary to the above purposes eg. to cover running costs of the rural transaction centres program; or



·       the making of grants of financial assistance for either of the above purposes.

 

Proposed subsection 48(2) provides that money in the Rural Transaction Centres Reserve must not be debited after 30 June 2004 or such later day (being earlier than

1 July 2005) as the Minister for Transport and Regional Services specifies by notice published in the Commonwealth Gazette .

 

The Minister for Transport and Regional Services is given the power to specify a later day for the program to end to provide some flexibility at the tail-end of the program. For example, some projects may obtain approval close to 30 June 2004, but funds may not be paid until after that date.

 

Proposed subsection 48(3) gives examples of the types of services intended to be covered by proposed section 48.  These include phone services, fax services, postal services, data transmission services, Internet services and videoconferencing services.

 

Proposed subsection 48(4) gives examples of the types of transactions intended to be covered by proposed section 48.  These include commercial transactions, banking transactions, insurance transactions, dealings about employment matters and dealings with governments and government authorities.

 

Proposed section 49 of the Telstra Corporation Act - Advances

 

Proposed subsection 49(1) empowers the Minister for Finance and Administration, during the ‘interim period’, by notice published in the Commonwealth Gazette , to determine that a specified amount is to be transferred to the Rural Transaction Centres Reserve from the Consolidated Revenue Fund by way of an advance on account of the amount that may become transferable to the Reserve under proposed section 47.  Such a determination will have effect accordingly.  The ‘interim period’ is defined in proposed section 44 as the period commencing on Royal Assent and ending immediately before the social bonus commencement day as defined in proposed section 45.

 

The Minister for Finance and Administration is given the power to advance the beginning of the program to enable early commencement of some funding before the sale proceeds are in.  That Minister also determines the amount of funding available during this interim period under proposed subsection 49(1).

 

Proposed subsection 49(2) provides that for each $1 transferred under proposed subsection 49(1), the amount transferred under proposed section 47 is to be reduced by $1.

 

Proposed section 50 of the Telstra Corporation Act - Grant of financial assistance to a State

 

Proposed section 50 deals with grants of financial assistance from the Rural Transaction Centres Reserve to a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant State or Territory (proposed subsection 50(2)).

 

An agreement under proposed subsection 50(2) will be able to be entered into by the Minister for Transport and Regional Services or his or her delegate (see proposed section 70) on behalf of the Commonwealth (proposed subsection 50(3)).

 

Proposed section 51 of the Telstra Corporation Act - Grant of financial assistance to a person other than a State

 

Proposed section 51 deals with grants of financial assistance from the Rural Transaction Centres Reserve to persons other than a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The term ‘person’ is defined in paragraph 22(1)(a) of the Acts Interpretation Act 1901 to include a body politic and a body corporate (such as a company or an incorporated association) as well as an individual.

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant person (proposed subsection 51(2)).

 

An agreement under proposed subsection 51(2) will be able to be entered into by the Minister for Transport and Regional Services or his or her delegate (see proposed section 70) on behalf of the Commonwealth (proposed subsection 51(3)).

 



 

Division 3--Untimed Local Call Access Reserve

 

Division 3 gives effect to the Government’s commitment to provide extended access to untimed local calls.  The intention is that all telephone calls within an extended zone would become untimed local calls. 

 

In addition, it is proposed to provide certain people in inner extended zones who currently have limited access to untimed local calls with extended access to such calls.  These people can make untimed local calls to others in their standard zone but are surrounded by areas where people cannot make untimed local calls to others in their areas.

 

Funds allocated are intended to upgrade the telecommunications network in remote Australia to handle the expected increase in traffic.

 

Proposed section 52 of the Telstra Corporation Act - Untimed Local Call Access Reserve

 

Proposed subsection 52(1) provides for the establishment of the Untimed Local Calls Access Reserve.

 

Proposed subsection 52(2) provides that the Untimed Local Calls Access Reserve is a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 .

 

Proposed subsection 52(3) provides that amounts equal to income derived from the investment of money in the Untimed Local Calls Access Reserve are to be transferred to that Reserve from the Consolidated Revenue Fund.

 

Proposed subsection 52(4) provides that the Untimed Local Calls Access Reserve is to be administered by the Department of Communications, Information Technology and the Arts.

 

Proposed section 53 of the Telstra Corporation Act - Transfer of money to the Untimed Local Call Access Reserve

 

Proposed section 53 provides that as soon as practicable after the social bonus commencement day (as defined in proposed section 45), $150 million is to be transferred to the Untimed Local Calls Access Reserve from the Consolidated Revenue Fund.

 



Proposed section 54 of the Telstra Corporation Act - Purposes of the Untimed Local Call Access Reserve

 

Proposed subsection 54(1) provides that the purposes of the Untimed Local Call Access Reserve are as follows:

 

·       the purpose of enabling carriage service providers (as defined in the Telecommunications Act 1997 ) to provide access to untimed local calls to people who are outside standard zones (as defined by Part 4 of the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 ) and who do not currently have access to untimed local calls; or



·       the purpose of enabling carriage service providers to provide extended access to untimed local calls to people in standard zones who currently have only limited access to such calls and who are included in a class of persons specified in the regulations;



·       a purpose incidental or ancillary to either of these purposes eg. to cover running costs of this program; or



·       the making of grants of financial assistance for any of the above purposes.

 

Proposed subsection 54(2) provides that money in the Untimed Local Call Access Reserve must not be debited after 30 June 2002 or such later day (being earlier than

1 July 2003) as the Minister for Communications, Information Technology and the Arts specifies by notice published in the Commonwealth Gazette .

 

The Minister for Communications, Information Technology and the Arts is given the power to specify a later day for the program to end to provide some flexibility at the tail-end of the program.  For example, some projects may obtain approval close to

30 June 2002, but funds may not be paid until after that date.

 

Proposed subsection 54(3) provides that for the purposes of proposed section 54, calls are untimed if, and only if, the charges for those calls are worked out by reference to the number of such calls made during a particular period, regardless of how long each call lasted.

 

Proposed section 55 of the Telstra Corporation Act - Advances

 

Proposed subsection 55(1) empowers the Minister for Finance and Administration, during the ‘interim period’, by notice published in the Commonwealth Gazette , to determine that a specified amount is to be transferred to the Untimed Local Call Access Reserve from the Consolidated Revenue Fund by way of an advance on account of the amount that may become transferable to the Reserve under proposed section 53.  Such a determination will have effect accordingly.  The ‘interim period’ is defined in proposed section 44 as the period commencing on Royal Assent and ending immediately before the social bonus commencement day as defined in proposed section 45.

 

The Minister for Finance and Administration is given the power to advance the beginning of the program to enable early commencement of some funding before the sale proceeds are in.  That Minister also determines the amount of funding available during this interim period under proposed subsection 55(1).

 

Proposed subsection 55(2) provides that for each $1 transferred under proposed subsection 55(1), the amount transferred under proposed section 53 is to be reduced by $1.

 

Proposed section 56 of the Telstra Corporation Act - Grant of financial assistance to a State

 

Proposed section 56 deals with grants of financial assistance from the Untimed Local Call Access Reserve to a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant State or Territory (proposed subsection 56(2)).

 

An agreement under proposed subsection 56(2) will be able to be entered into by the Minister for Communications, Information Technology and the Arts or his or her delegate (see proposed section 69) on behalf of the Commonwealth (proposed subsection 56(3)).

 

Proposed section 57 of the Telstra Corporation Act - Grant of financial assistance to a person other than a State

 

Proposed section 57 deals with grants of financial assistance from the Untimed Local Call Access Reserve to persons other than a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The term ‘person’ is defined in paragraph 22(1)(a) of the Acts Interpretation Act 1901 to include a body politic and a body corporate (such as a company or an incorporated association) as well as an individual.

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant person (proposed subsection 57(2)).

 

An agreement under proposed subsection 57(2) will be able to be entered into by the Minister for Communications, Information Technology and the Arts or his or her delegate (see proposed section 69) on behalf of the Commonwealth (proposed subsection 57(3)).

 

Division 4--Supplementation of the Regional

Telecommunications Infrastructure Fund

 

Proposed section 58 of the Telstra Corporation Act - Meeting the telecommunications needs of people in isolated or remote island communities or the Australian Antarctic Territory

 

Proposed section 58 of the Telstra Corporation Act gives effect to the Government’s commitment to allocate additional funds to the Regional Telecommunications Infrastructure Fund  (RTIF) (which is a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 ).  This allocation is intended to assist in serving the telecommunications needs of remote and isolated island communities such as islands in the Torres Strait; islands in the Cocos (Keeling) group; Christmas, Norfolk, King, Flinders, Kangaroo and other Islands; and in the Australian Antarctic Territories.   The allocation is proposed not to be subject to the State and Territory sub-caps which presently apply to RTIF.

 

Proposed subsection 58(1) provides that as soon as practicable after the social bonus commencement day (as defined in proposed section 45), $20 million is to be transferred to RTIF from the Consolidated Revenue Fund.

 

Proposed subsection 58(2) provides that the $20 million allocation may only be debited for the following purposes:

 

·       the purpose of assisting in meeting the telecommunications needs of people in remote island communities, isolated island communities (examples of which are set out in proposed subsection 58(8)) or the Australian Antarctic Territory;



·       a purpose incidental or ancillary to the above purpose (such as providing for the running costs of the program);



·       the making of grants of financial assistance for either of the above purposes.

 

Proposed subsection 58(3) makes it clear that the purposes of RTIF as presently constituted will be taken to include each purpose set out in proposed subsection 58(2).

 

Proposed subsection 58(4) provides that the proposed $20 million allocation to RTIF will not be able to be debited after 30 June 2002 or such later day (being earlier than

1 July 2003) as the Minister for Communications, Information Technology and the Arts specifies by notice published in the Commonwealth Gazette .

 

The Minister for Communications, Information Technology and the Arts is given the power to specify a later day for the program to end to provide some flexibility at the tail-end of the program.  For example, some projects may obtain approval close to

30 June 2002, but funds may not be paid until after that date.

 

Proposed subsection 58(5) empowers the Minister for Finance and Administration, during the ‘interim period’, by notice published in the Commonwealth Gazette , to determine that a specified amount is to be transferred to RTIF from the Consolidated Revenue Fund by way of an advance on account of the amount that may become transferable to RTIF under proposed subsection 58(1). Such a determination will have effect accordingly.  The ‘interim period’ is defined in proposed section 44 as the period commencing on Royal Assent and ending immediately before the social bonus commencement day as defined in proposed section 45.

 

The Minister for Finance and Administration is given the power to advance the beginning of the program to enable early commencement of some funding before the sale proceeds are in.  That Minister also determines the amount of funding available during this interim period under proposed subsection 58(5).

 

Advances made under proposed subsection 58(5) may only be debited for the purposes specified in proposed subsection 58(2) (proposed subsection 58(7)).

 

Proposed subsection 58(6) provides that for each $1 transferred under proposed subsection 58(5), the amount transferred under proposed subsection 58(1) is to be reduced by $1.

 

Proposed section 59 of the Telstra Corporation Act - Internet access for people in rural and regional areas

 

Proposed section 59 of the Telstra Corporation Act will give effect to the Government’s commitment to allocate funds to provide Internet access for people in rural or regional areas of Australia.  The funds are intended to stimulate Internet service delivery in regional and rural Australia, in a manner that would enhance the commercial, competitive roll-out of these services.  As a result, it is intended that virtually all Australians would have local call access to the Internet.  The funds are also to be allocated to establish community-owned Internet points of presence.

 

Proposed subsection 59(1) provides that as soon as practicable after the social bonus commencement day (as defined in proposed section 45), $36 million is to be transferred to the Regional Telecommunications Infrastructure Fund (RTIF) from the Consolidated Revenue Fund.  (RTIF is an existing component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 ).  This allocation is proposed not to be subject to the State and Territory sub-caps which presently apply to RTIF.

 

Proposed subsection 59(2) provides that the $36 million allocation may only be debited for the following purposes:

 

·       the purpose of facilitating the provision of Internet access for people in rural or regional areas, being access that is reasonably priced and involving sufficient bandwidth to enable people in these areas to make use of the Internet;



·       a purpose incidental or ancillary to the above purpose (such as providing the running costs for this program);



·       the making of grants of financial assistance for either of the above purposes.

 

An example of facilitating access to the Internet is increasing the number of Internet points of presence in rural or regional areas.  An Internet point of presence is the location of an access point to the Internet proper, and is typically operated by an Internet service provider.  It includes an array of information and telecommunications technologies necessary for managing and maintaining Internet connections.  It typically includes modems, databases, switches and routers.  A point of presence may actually reside in rented space owned by the telecommunications carrier to which the Internet service provider is connected and may be ‘physical’ (located within a particular region) or ‘virtual’ (located outside such an area, perhaps in a capital city, but providing services to a rural or regional area).

 

Proposed subsection 59(3) makes it clear that the purposes of RTIF as presently constituted will be taken to include each purpose set out in proposed subsection 59(2).

 

Proposed subsection 59(4) provides that the proposed $36 million allocation to RTIF will not be able to be debited after 30 June 2002 or such later day (being earlier than

1 July 2003) as the Minister for Communications, Information Technology and the Arts specifies by notice published in the Commonwealth Gazette .

 

The Minister for Communications, Information Technology and the Arts is given the power to specify a later day for the program to end to provide some flexibility at the tail-end of the program.  For example, some projects may obtain approval close to

30 June 2002, but funds may not be paid until after that date.

 

Proposed subsection 59(5) empowers the Minister for Finance and Administration, during the ‘interim period’, by notice published in the Commonwealth Gazette , to determine that a specified amount is to be transferred to RTIF from the Consolidated Revenue Fund by way of an advance on account of the amount that may become transferable to RTIF under proposed subsection 59(1).  Such a determination will have effect accordingly.  The ‘interim period’ is defined in proposed section 44 as the period commencing on Royal Assent and ending immediately before the social bonus commencement day as defined in proposed section 45.

 

Advances made under proposed subsection 59(5) may only be debited for the purposes specified in proposed subsection 59(2) (proposed subsection 59(7)).

 

Proposed subsection 59(6) provides that for each $1 transferred under proposed subsection 59(5), the amount transferred under proposed subsection 59(1) is to be reduced by $1.

 

Proposed section 60 of the Telstra Corporation Act - Mobile phone coverage along highways

 

Proposed section 60 of the Telstra Corporation Act is intended to give effect to the Government’s commitment to provide mobile phone coverage along highways.

 

Proposed subsection 60(1) provides that as soon as practicable after the social bonus commencement day (as defined in proposed section 45), $25 million is to be transferred to the Regional Telecommunications Infrastructure Fund (RTIF) from the Consolidated Revenue Fund.  (RTIF is an existing component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 ).  This allocation is proposed not to be subject to the State and Territory sub-caps which presently apply to RTIF.

 

Proposed subsection 60(2) provides that the proposed $25 million allocation may only be debited for the following purposes:

 

·       the purpose of facilitating mobile phone coverage along highways;



·       a purpose incidental or ancillary to this purpose (eg. providing running costs for this program);



·       the making of grants of financial assistance for either of the above purposes.

 

Proposed subsection 60(3) makes it clear that the purposes of RTIF as presently constituted will be taken to include each purpose set out in proposed subsection 60(2).

 

Proposed subsection 60(4) provides that the proposed $25 million allocation to RTIF will not be able to be debited after 30 June 2002 or such later day (being earlier than

1 July 2003) as the Minister for Communications, Information Technology and the Arts specifies by notice published in the Commonwealth Gazette .

 

The Minister for Communications, Information Technology and the Arts is given the power to specify a later day for the program to end to provide some flexibility at the tail-end of the program.  For example, some projects may obtain approval close to

30 June 2002, but funds may not be paid until after that date.

 

Proposed subsection 60(5) empowers the Minister for Finance and Administration, during the ‘interim period’, by notice published in the Commonwealth Gazette , to determine that a specified amount is to be transferred to RTIF from the Consolidated Revenue Fund by way of an advance on account of the amount the may become transferable to RTIF under proposed subsection 60(1).  Such a determination will have effect accordingly.  The ‘interim period’ is defined in proposed section 44 as the period commencing on Royal Assent and ending immediately before the social bonus commencement day as defined in proposed section 45.

 

The Minister for Finance and Administration is given the power to advance the beginning of the program to enable early commencement of some funding before the sale proceeds are in.  That Minister also determines the amount of funding available during the interim period under proposed subsection 60(5).

 

Advances made under proposed subsection 60(5) may only be debited for the purposes specified in proposed subsection 60(2) (proposed subsection 60(7)).

 

Proposed subsection 60(6) provides that for each $1 transferred under proposed subsection 60(5), the amount transferred under proposed subsection 60(1) is to be reduced by $1.

 

Proposed section 61 of the Telstra Corporation Act - Grant of financial assistance to a State

 

Proposed section 61 deals with grants of financial assistance from RTIF relating to:

 

·       meeting the telecommunications needs of people in isolated or remote island communities or the Australian Antarctic Territory;



·       providing Internet access for people in rural and regional areas; and



·       providing mobile phone coverage along highways;

 

to a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant State or Territory (proposed subsection 61(2)).

 

An agreement under proposed subsection 61(2) will be able to be entered into by the Secretary to the Department of Communications, Information Technology and the Arts or his or her delegate (see proposed section 69) on behalf of the Commonwealth (proposed subsection 61(3)).

 

Proposed section 62 of the Telstra Corporation Act - Grant of financial assistance to a person other than a State

 

Proposed section 62 deals with grants of financial assistance from RTIF relating to:

 

·       meeting the telecommunications needs of people in isolated or remote island communities or the Australian Antarctic Territory;



·       providing Internet access for people in rural and regional areas; and



·       providing mobile phone coverage along highways;

 

to persons other than a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The term ‘person’ is defined in paragraph 22(1)(a) of the Acts Interpretation Act 1901 to include a body politic and a body corporate (such as a company or an incorporated association) as well as an individual.

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant person (proposed subsection 62(2)).

 

An agreement under proposed subsection 62(2) will be able to be entered into by the Secretary to the Department of Communications, Information Technology and the Arts or his or her delegate (see proposed section 71) on behalf of the Commonwealth (proposed subsection 62(3)).

 

Division 5--Television Fund Reserve

 

Proposed section 63 of the Telstra Corporation Act - Television Fund Reserve

 

Proposed section 63 of the Telstra Corporation Act gives effect to the Government’s commitment to establish a Television Fund and a New Media Unit within the SBS.  It is intended to extend SBS television to transmission areas with more than 10,000 people and to eradicate up to 250 television reception black spots. 

 

SBS television extensions to major population centres will generally involve the installation of a high power transmitter to provide the main coverage in each area and one or more low power transmitters to provide infill coverage.  Under the extension program, SBS television will be made available to a further 1.5 million Australians in more than 25 regions.

 

Reception black spots can be overcome by installing new or better transmitters, leading to improved reception of national and commercial broadcasters.  Funding will be granted on the basis of need.  Guidelines covering criteria for grant applications and funding will be developed by the Department of Communications, Information Technology and the Arts.

 

Proposed subsection 63(1) establishes the Television Fund Reserve.

 

Proposed subsection 63(2) provides that the Television Fund Reserve is a component of the Reserved Money Fund under the Financial Management and Accountability Act 1997 .

 

Proposed subsection 63(3) provides that amounts equal to income derived from the investment of money in the Television Fund Reserve are to be transferred to the Television Fund Reserve from the Consolidated Revenue Fund.

 

Proposed subsection 63(4) provides that the Television Fund Reserve is to be administered by the Department of Communications, Information Technology and the Arts.

 



Proposed section 64 of the Telstra Corporation Act - Transfer of money to the Television Fund Reserve

 

Proposed section 64 of the Telstra Corporation Act provides that as soon as practicable after the social bonus commencement day (as defined in proposed section 45), $120 million is to be transferred to the Television Fund Reserve from the Consolidated Revenue Fund.

 

Proposed section 65 of the Telstra Corporation Act - Purposes of the Television Fund Reserve

 

Proposed subsection 65(1) of the Telstra Corporation Act sets out the purposes of the Television Fund Reserve.  These are:

 

·       extending areas in which television services transmitted by the SBS (otherwise than by means of direct satellite broadcast to a viewer’s home) are capable of being received;



·       enabling people to obtain reception, or improved reception, of television broadcasting services transmitted by the national broadcasters (the ABC and the SBS) and by commercial broadcasters;



·       supporting the establishment of a New Media Unit within the SBS;



·       a purpose incidental or ancillary to any of the above purposes eg. providing running costs for the above programs;



·       the making of grants of financial assistance for any of the above purposes.

 

Proposed subsection 65(2) provides that money in the Television Fund Reserve will not be able to be debited after 30 June 2004 or such later day (being earlier than 1 July 2005) as the Minister specifies by notice published in the Commonwealth Gazette .

 

The Minister is given the power to specify a later day for the program to end to provide some flexibility at the tail-end of the program.  For example, some projects may obtain approval close to 30 June 2004, but funds may not be paid until after that date.

 

Proposed section 66 of the Telstra Corporation Act - Advances

 

Proposed subsection 66(1) empowers the Minister for Finance and Administration, during the ‘interim period’, by notice published in the Commonwealth Gazette , to determine that a specified amount is to be transferred to the Television Fund Reserve from the Consolidated Revenue Fund by way of an advance on account of the amount that may become transferable to the Reserve under proposed section 64.  Such a determination will have effect accordingly.  The ‘interim period’ is defined in proposed section 44 as the period commencing on Royal Assent and ending immediately before the social bonus commencement day as defined in proposed section 45.

 

The Minister for Finance and Administration is given the power to advance the beginning of the program to enable early commencement of some funding before the sale proceeds are in.  That Minister also determines the amount of funding available during this interim period under proposed subsection 66(1).

 

Proposed subsection 66(2) provides that for each $1 transferred under proposed subsection 66(1), the amount transferred under proposed section 56 is to be reduced by $1.

 

Proposed section 67 of the Telstra Corporation Act - Grant of financial assistance to a State

 

Proposed section 67 deals with grants of financial assistance in connection with the purposes set out in proposed section 65 to a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant State or Territory (proposed subsection 67(2)).

 

An agreement under proposed subsection 67(2) will be able to be entered into by the Secretary to the Department of Communications, Information Technology and the Arts or his or her delegate (see proposed section 69) on behalf of the Commonwealth (proposed subsection 67(3)).

 

Proposed section 68 of the Telstra Corporation Act - Grant of financial assistance to a person other than a State

 

Proposed section 68 deals with grants of financial assistance in connection with the purposes set out in proposed section 65 to persons other than a State or the Australian Capital Territory or the Northern Territory.  (The term ‘State’ is defined in proposed section 44 to include these Territories.)

 

The term ‘person’ is defined in paragraph 22(1)(a) of the Acts Interpretation Act 1901 to include a body politic and a body corporate (such as a company or an incorporated association) as well as an individual.

 

The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the relevant person (proposed subsection 68(2)).

 

An agreement under proposed subsection 68(2) will be able to be entered into by the Secretary to the Department of Communications, Information Technology and the Arts or his or her delegate (see proposed section 71) on behalf of the Commonwealth (proposed subsection 68(3)).

 

Division 6--Delegation

 

Proposed section 69 of the Telstra Corporation Act - Delegation by Minister

 

Proposed subsection 69(1) of the Telstra Corporation Act empowers the Minister for Communications, Information Technology and the Arts to delegate all or any of his or her powers under proposed sections 45, 54, 56, 57, 58, 59, 60 and 65 to:

 

·       the Secretary to the Department of Communications, Information Technology and the Arts; or



·       a person holding or performing the duties of an SES office in that Department.

 

Proposed subsection 69(2) provides that the delegate is, in the exercise of the power delegated under subsection 69(1), subject to the directions of the Minister for Communications, Information Technology and the Arts.

 

Proposed section 70 of the Telstra Corporation Act - Delegation by Minister for Transport and Regional Services

 

Proposed section 70(1) of the Telstra Corporation Act empowers the Minister for Transport and Regional Services to delegate all or any of his or her powers under proposed sections 48, 50 and 51 to:

 

·       the Secretary to the Department of Transport and Regional Services; or



·       a person holding or performing the duties of an SES office in that Department.

 

Proposed subsection 70(2) provides that the delegate is, in the exercise of the power delegated under subsection 70(1), subject to the directions of the Minister for Transport and Regional Services.

 

Proposed section 71 of the Telstra Corporation Act - Delegation by Secretary to the Department of Communications, Information Technology and the Arts

 

Proposed subsection 71(1) of the Telstra Corporation Act empowers the Secretary to the Department of Communications, Information Technology and the Arts to delegate all or any of his or her powers under proposed sections 61, 62, 67 and 68 to a person holding or performing the duties of an SES office in that Department.

 

Proposed subsection 71(2) provides that the delegate is, in the exercise of the power delegated under subsection 71(1), subject to the directions of the Secretary.

 



Items 53 and 54 - Amendments of clause 2 of the Schedule of the Telstra Corporation Act (paragraph (b) of the definition of foreign person )

 

Item 53 makes a minor technical amendment to paragraph (b) of the definition of ‘foreign person’ in clause 2 of the Schedule to the Telstra Corporation Act.

 

The amendment deems a company incorporated outside Australia to be a foreign person for the purposes of the ownership provisions of the Act where a foreigner holds a stake in the company of ‘15% or more’, rather than the current amount of ‘more than 15%’.

 

The amendment aligns the definition in the Telstra Corporation Act more closely with the definition of a ‘foreign person’ in subsection 5(1) of the Foreign Acquisitions and Takeovers Act 1975 .

 

Item 54 makes a similar minor technical amendment to paragraph (c) of the definition of ‘foreign person’ in clause 2 of the Schedule to the Telstra Corporation Act.

 

The amendment deems a company to be a foreign person for the purposes of the ownership provisions of the Act where a group of foreign persons holds a total stake in the company of ‘40% or more’, rather than the current amount of ‘more than 40%’.

 

The amendment aligns the definition in the Telstra Corporation Act more closely with the definition of a ‘foreign person’ in subsection 5(1) of the Foreign Acquisitions and Takeovers Act 1975 .

 

Item 55 - Amendment of subparagraphs (b)(iii) and (iv) of clause 3 of the Schedule to the Telstra Corporation Act

 

Item 55 makes a minor technical amendment to subparagraphs (b)(iii) and (iv) of clause 3 of the Schedule to the Telstra Corporation Act to remove unnecessary references to New Zealand citizens.

 

Items 56 to 58 - Amendment of clause 12 of the Schedule to the Telstra Corporation Act

 

Clause 12 of the Schedule to the Telstra Corporation Act provides the mechanism for calculating a person’s ‘direct control interests’ in a company at a particular time.  Under clause 11, in determining a particular type of stake that a person holds in a company, the person’s direct control interests of that type are aggregated with the ‘direct control interests’ of that type held by the person’s associates.

 

Item 56 inserts a new subclause 12(4A) to provide that in determining the direct control interest of a particular type that a person holds in Telstra, it is to be assumed that the only shares in Telstra are shares held by persons other than the Commonwealth. 

 

New subclause 12(4B) provides that for the purposes of new subclause 12(4A), a ‘share’ does not include an interest in a share.  Clause 8 of the Schedule to the Telstra Corporation Act contains a definition of the term ‘interest in a share’ for the purposes of the ownership provisions.  New subclause 12(4B) displaces this definition, so that new subclause 12(4A) would have the ordinary meaning that shares held in legal ownership by persons other than the Commonwealth are taken into account for the purposes of the foreign ownership restrictions.  Because the shares held by the Commonwealth are ignored, it follows that any interests in and rights flowing from those shares must also be ignored.

 

Accordingly, if a Telstra sale scheme for the sale of the remaining Commonwealth equity involves the sale of shares in more than one tranche, the number of shares that can be held by foreign persons will increase progressively with each tranche, but will always be limited to 35% in aggregate, and 5% individually, of the shares no longer held in legal ownership by the Commonwealth.

 

Item 57 makes a minor technical amendment consequential on the amendment made by item 58, discussed below.

 

Subclause 12(5) of the Schedule to the Telstra Corporation Act provides a fractional tracing rule for the purpose of identifying a person’s interest in a company when that interest may be held through interposed companies.

 

When calculating the interests of a group of persons for the purposes of the 35% aggregate foreign ownership limitations, it is arguable that the fractional tracing rule can result in the anomalous situation that foreign interests held through an interposed foreign company are counted in addition to the interests of the first foreign company (a form of double counting).

 

Item 58 inserts new subclauses 12(6) and (7) which have the effect of preventing this form of double counting.

 

Schedule 3--Amendments relating to the sale by the Commonwealth of more than 50% of its original equity interest in Telstra

 

Part 1--Commencement

 

Item 1 - Commencement

 

Item 1 of Schedule 3 to the Bill contains commencement provisions relating to Parts 2 to 4 of Schedule 3.

 

Inquiry certificate day

 

Part 2 of Schedule 3 to the Bill contains provisions which repeal the provisions in Division 2 of Part 2 of the Telstra Corporation Act (which require the Commonwealth to retain two-thirds of the equity in Telstra) and make consequential amendments. 

 

Subitem 1(1) of Schedule 3 provides that Part 2 of Schedule 3 commences on the ‘inquiry certificate day’.  (If an inquiry into Telstra’s performance finds that Telstra has met prescribed criteria for a designated period of at least 6 months, it must issue a written certificate to that effect and give the certificate to the Minister for Communications, Information Technology and the Arts.  The Minister is required to arrange for a copy of the certificate to be published in the Commonwealth Gazette .  The day on which the copy of the certificate is published in the Gazette is referred to as the inquiry certificate day.  With effect from this day, the Commonwealth will be able to sell its remaining 50.1 per cent equity interest in Telstra.)

 

Designated day

 

Part 3 of Schedule 3 to the Bill permits the Auditor-General to resign as Telstra’s auditor and inserts a new Part 3A in the Telstra Corporation Act which contains transitional provisions relating to the sale by the Commonwealth of its remaining equity interest in Telstra.  Some of those transitional provisions relate to Commonwealth Acts which cease to apply to Telstra when the Commonwealth ceases to hold a majority of the voting shares in Telstra.

 

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

 

Subitem 1(2) of Schedule 3 provides for Part 3 of Schedule 3 to commence on the designated day.

 

The designated day is declared by the Minister under item 4 of Schedule 3 and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Proclaimed day

 

Part 4 of Schedule 3 to the Bill includes provisions which repeal:

 

·                     the reporting requirements on Telstra which are imposed by Division 3 of Part 2 of the Telstra Corporation Act; and

 

·                     the Minister’s power in Part 3 of the Act to give directions to Telstra in the public interest.

 

The reporting requirements and directions power should cease to apply after the Commonwealth ceases to hold a majority equity interest in Telstra.

 

Special commencement arrangements apply to Part 4 of Schedule 3 to provide for the repeal of the reporting obligations after the Commonwealth ceases to hold a majority equity interest in Telstra.

 

Subitem 1(3) of Schedule 3 provides that Part 4 of Schedule 3 commences on a day to be fixed by Proclamation.

 

Subitem 1(4) of Schedule 3 prevents such a Proclamation being made until the Minister has certified in writing that the majority-interest sale time has occurred.  The ‘majority-interest sale time’ is defined in subitem 2(6) of Schedule 3 to mean the first time after the commencement of Part 2 of Schedule 3 when the Commonwealth no longer meets various tests of majority Commonwealth ownership or control.  These tests are based on the current tests found in subsection 8AB(2) of the Telstra Corporation Act.

 

Item 2 - Independent inquiry into Telstra’s performance

 

Subitem 2(1) empowers the Minister for Communications, Information Technology and the Arts to arrange for an independent inquiry to be established into whether Telstra has met certain prescribed performance criteria for a particular designated period.  The role of the inquiry would be to assess Telstra’s performance against criteria set out in the regulations relating to service levels to customers in metropolitan, rural and remote areas.

 

Subitem 2(9) provides that for the purposes of item 2, a ‘designated period’ is each of one or more specified periods, or each period in a specified series of periods, of at least 6 months specified in the regulations.  A designated period will be able to begin before or after Royal Assent

 

The ability to specify a series of periods will ensure that subsequent inquiries can be held if the first inquiry finds that Telstra has not met the prescribed criteria for the particular designated period dealt with by that inquiry.  Subitem 2(12) provides that to avoid doubt, if a person or body has conducted an inquiry in relation to a designated period, item 2 does not prevent an inquiry being conducted under subitem 2(1) in relation to another designated period.

 

Subitem 2(10) provides that for the purposes of item 2, the ‘prescribed criteria’ are the criteria specified in the regulations.

 

Subitem 2(13) provides for the making of regulations for the purposes of item 2.  These regulations will be required to be made within 18 months of the commencement of item 2.

 

Subitem 2(2) provides that an inquiry in relation to a designated period will be required to begin during, or within 6 months after the end of, the designated period.

 

Subitem 2(3) provides that if such an inquiry finds that Telstra has met the prescribed criteria for a designated period, it will be required to issue a written certificate to that effect and give the certificate to the Minister for Communications, Information Technology and the Arts. 

 

Subitem 2(4) provides that the Minister must arrange for a copy of the certificate to be published in the Commonwealth Gazette

 

Subitem 2(5) provides that the day on which the copy of the certificate is published in the Gazette is referred to as the inquiry certificate day.  With effect from this day, the Commonwealth will be able to sell its remaining 50.1 per cent equity interest in Telstra.)

 

Subitem 2(6) requires the Minister to table copies of the certificate before each House of Parliament within 15 sitting days of that House after receiving the certificate.

 

Subitem 2(7) enables the ACA or the ACCC, or both, to assist the inquiry.  That assistance may include (but is not limited to) the provision of information, advice, and the making available of resource and facilities such as secretariat services and clerical assistance.

 

Subitem 2(8) ensures that the ACA will be able to conduct an investigation under Part 26 of the Telecommunications Act or exercise its information-gathering powers under Part 27 of that Act in connection with providing assistance to the inquiry under subitem 2(7).

 

Subitem 2(11) ensures that the inquiry will be independent.  It provides that the following persons and bodies are not eligible to conduct the inquiry:

 

·       Telstra or an officer (such as a director or company secretary) or employee of Telstra;



·       a Telstra subsidiary - see the definition of that term and the term ‘subsidiary’ in section 3 of the Telstra Corporation Act - or an officer or employee of such a subsidiary;



·       an employee of the Commonwealth;



·       a Commonwealth authority or an employee of such an authority; or



·       a person who holds a full-time office under a law of the Commonwealth.

 

Item 3 - Automatic repeal of this Schedule

 

Item 3 provides that if, at the end of 24 months after the commencement of item 3, Part 2 of Schedule 3 has not commenced and no regulations are in force for the purposes of subitem 2(10), Schedule 3 is repealed on the first day after the end of that period.  This provision is included to ensure that unproclaimed legislation will not remain on the statute books for an indefinite period in the event that the Parliament disallows the regulations specifying the prescribed criteria.

 



Item 4 - Designated day for Telstra

 

Item 4 provides a mechanism for public notification of the day on which the Commonwealth ceases to have a controlling interest in Telstra.  Various provisions of the Bill will operate with effect from the designated day.  For example, the employee benefits saving provisions will apply from that day.

 

Subitem 4(1) provides that the Minister must declare the day on which a majority of the voting shares in Telstra are acquired by persons other than the Commonwealth as the ‘designated day’ for Telstra.

 

Subitem 4(2) provides that the declaration has effect accordingly.

 

Subclause 4(3) requires a copy of the declaration to be published in the Commonwealth Gazette within 21 days after the designated day.

 

Part 2--Amendments commencing on the inquiry certificate day

 

Item 5 - Amendment of section 8AA of the Telstra Corporation Act

 

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

 

Item 5 amends the simplified outline as a consequence of the repeal of Division 2 of Part 2 by item 6.

 

The simplified outline will be amended to indicate that the Commonwealth will be able, with effect from the inquiry certificate day, to sell its remaining 50.1% equity interest in Telstra.

 

Item 6 - Repeal of Division 2 of Part 2 of the Telstra Corporation Act

 

Following the making of the amendments in Schedule 2 to the Bill, Division 2 of Part 2 of the Telstra Corporation Act will require the Commonwealth to retain 50.1% of the equity interest in Telstra.

 

Item 6 repeals that Division to enable the Commonwealth to sell its remaining equity interest in Telstra.

 

Items 7 and 8 - Amendments of section 8AJ of the Telstra Corporation Act

 

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

 

Item 7 amends subsection 8AJ(2) to make a technical amendment consequential on the repeal of Division 2 of Part 2 by item 6.  The amendment recognises that the object of a Telstra sale scheme may be to transfer the whole or a part of the Commonwealth’s equity in Telstra to other persons.

 

Item 8 repeals subsection 8AJ(3) consequential on the repeal of Division 2 of Part 2 by item 6 of Schedule 3 to the Bill.

 

Item 9 - Amendment of sections 8CI, 8CJ and 8CK of the Telstra Corporation Act

 

Item 9 makes minor technical amendments consequential on the repeal of Division 2 of Part 2 by item 6 of Schedule 3 to the Bill.

 

Item 10 - Amendment of subsections 8CI(6) and 8CJ(6) of the Telstra Corporation Act

 

Item 10 makes minor technical amendments consequential on the repeal of Division 2 of Part 2 by item 6 of Schedule 3 to the Bill.

 

Item 11 - Amendment of section 8CL of the Telstra Corporation Act

 

Item 11 makes a minor technical amendment consequential on the repeal of Division 2 of Part 2 by item 6 of Schedule 3 to the Bill.

 

Part 3--Amendments commencing on the designated day

 

Long Service Leave (Commonwealth Employees) Regulations

 

Item 12 - Amendment of item 4 of Schedule 1A to the Long Service Leave (Commonwealth Employees) Regulations

 

Item 12 repeals item 4 in Schedule 1A to the Long Service Leave (Commonwealth Employees) Regulations to ensure that from the designated day Telstra employees will not continue to accrue benefits under the Long Service Leave (Commonwealth Employees) Act 1976 .

 

Item 21 of Schedule 3 to the Bill inserts a new Division 1 of Part 3A in the Telstra Corporation Act which includes savings provisions for Telstra employee long service leave entitlements accrued up to the designated day.

 

Maternity Leave (Commonwealth Employees) Regulations

 

Item 13 - Repeal of item 2 of Schedule 2A to the Maternity Leave (Commonwealth Employees) Regulations

 

Item 13 repeals item 2 in Schedule 2A to the Maternity Leave (Commonwealth Employees) Regulations.

 

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

 

Item 21 of Schedule 3 to the Bill inserts a new Division 4 of Part 3A in the Telstra Corporation Act which includes savings provisions for maternity leave entitlements of Telstra employees accrued up to the designated day, including benefits for those employees entitled to begin their maternity leave within the 12 months following the designated day.

 

Occupational Health and Safety (Commonwealth Employment) Act 1991

 

Item 14 - Amendment of the Schedule to the Occupational Heath and Safety (Commonwealth Employment) Act

 

Item 14 omits a reference to Telstra from the Schedule to the Occupational Health and Safety (Commonwealth Employment) Act 1991 (the ‘OH&S Act’), so that Telstra is not, from the designated day, deemed to be a Government Business Enterprise for the purposes of that Act.  After the designated day, a Telstra body will also not be a Commonwealth authority for the purposes of the Act.

 

Item 21 of Schedule 3 to the Bill inserts a new section 9S in the Telstra Corporation Act which is a related transitional provision.

 

Telstra Corporation Act 1991

 

Items 15 to 20 - Amendments of section 3 of the Telstra Corporation Act

 

Item 4 of Schedule 3 to the Bill provides a mechanism for the Minister to declare a designated day for Telstra.

 

Item 15 inserts a definition of the term ‘designated day’ for the purposes of the new Part 3A inserted by item 21 of Schedule 3 to the Bill.

 

Item 16 inserts a definition of the term ‘employee’ in section 3 consequential on the inclusion of the new Part 3A which contains various employee benefit savings provisions (see item 21 of Schedule 3).

 

Item 17 inserts a definition of the term ‘Long Service Leave Act’ in section 3 consequential on the inclusion of the new Part 3A which contains employee benefit savings provisions relating to long service leave.

 

Item 18 inserts a definition of the term ‘Maternity Leave Act’ in section 3 consequential on the inclusion of the new Part 3A which contains employee benefit savings provisions relating to maternity leave.

 

Item 19 inserts a definition of the term ‘SRC Act’ in section 3 consequential on the inclusion of a transitional provision relating to safety, rehabilitation and compensation by item 21 of Schedule 3 to the Bill (see proposed section 9H of the Telstra Corporation Act).

 

Item 20 inserts a definition of the term ‘Telstra body’ in section 3.

 

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

 

Item 21 - Insertion of new Part 3A of the Telstra Corporation Act before Part 4 of that Act

 

Item 21 inserts a new Part 3A in the Telstra Corporation Act dealing with transitional provisions relating to the sale of the remaining Commonwealth equity interest in Telstra.

 

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

 

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

 

Many of the transitional and savings provisions operate in relation to the ‘designated day’.  Item 4 of Schedule 3 to the Bill provides a mechanism for public notification of the day on which the Commonwealth ceases to have a controlling interest in Telstra.  The ‘designated day’ is the day declared by the Minister for Communications, Information Technology and the Arts by written instrument under that item.

 

Division 1--Long service leave

 

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

 

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

 

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

 

Proposed section 9A of the Telstra Corporation Act - Interpretation

 

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

 

Proposed subsection 9A(1) provides that expressions used in this Division have the same meaning as in the LSL(CE) Act.

 

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

 

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

 

This provision applies to a person who was an employee of Telstra immediately before the designated day and whose period of service at the designated day was less than 10 years.  If the employee continues to be employed by a Telstra body (as defined in item 20 of Schedule 3 to the Bill) until his or her combined service period is at least 10 years, a Telstra body may grant the employee long service leave.

 

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

 

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

 

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

 

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

 

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

 

Proposed section 9C provides that a Telstra body (as defined in item 20 of Schedule 3 to the Bill) must, in certain circumstances, pay an amount to an employee in lieu of the employee taking long service leave (proposed subsection 9C(1)).  For proposed section 9C to apply, an employee must have been an employee of Telstra immediately before the designated day and not have accrued a period of service under the LSL(CE) Act of 10 or more years at that time (proposed subsection 9C(2)).

 

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

 

If a person does not have a combined service period of 10 years or more, but does have a combined service period of at least one year, then he or she is entitled to be paid an amount in lieu of long service leave if the reason that he or she ceases to be an employee is:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Proposed section 9F is included to avoid doubt and declares that the provisions of the Division do not affect an employee’s post-sale long service leave rights. 

 

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

 

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

 

Proposed section 9G ensures that accrued long service leave credits (ie for those employees with 10 or more years of service on the designated day) arising from previous service with Telstra under the LSL(CE) Act are retained post-sale.

 

Division 2--Operation of the Safety, Rehabilitation and

Compensation Act 1988 (‘SRC Act’)

 

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

 

Proposed section 9H provides that a Telstra body (as defined in item 20 of Schedule 3 to the Bill) that was, before the designated day, liable as a prescribed Commonwealth authority to pay an amount in respect of an injury, loss or damage suffered by one of its employees prior to 1 July 1989, under section 128A of the SRC Act, continues to be so liable after the sale day.

 

Division 3--Retirement benefits

 

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

 

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

 

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

 

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

 

·       are employed by a Telstra body on the sale day;

 

·       had deferred their benefits under the DFRDB Act; and

 

·       were accruing service in public employment with that body;

 

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

 

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

 

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

 

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

 

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

 

Proposed section 9L provides that if an employee of a Telstra body (as defined in item 20 of Schedule 3) was an eligible employee for the purposes of the Superannuation Act 1976 immediately before the designated day, the employee is taken to have ceased to be an eligible employee for the purposes of that Act on the designated day.  Employees of a Telstra body will no longer be entitled to contribute to the Commonwealth Superannuation Scheme established under that Act.

 

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

 

Division 4--Other transitional and saving provisions

 

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

 

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

 

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

 

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

 

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

 

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

 

The Crimes (Superannuation Benefits) Act 1989 will cease to apply to acts or omissions of employees of a Telstra body (as defined in item 20 of Schedule 3 to the Bill) that would or might constitute corruption offences, where those acts or omissions occur on or after the designated day.

 

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

 

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

 

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

 

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

 

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

 



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

 

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

 

Proposed section 9R of the Telstra Corporation Act - Avoidance of doubt - cessation of mobility rights

 

Proposed section 9R is included to avoid any doubt in relation to the cessation of mobility rights after the designated day.  On the cessation of Commonwealth control of Telstra, the residual mobility rights (if any) of employees of Telstra bodies under Part IV of the Public Service Act 1922 and the repealed Officers’ Rights Declaration Act 1928 will be extinguished.

 

Proposed section 9S of the Telstra Corporation Act - Refund of contribution paid under the Occupational Health and Safety (Commonwealth Employment) Act 1991

 

Item 14 of Schedule 3 to the Bill omits a reference to Telstra from the Schedule to the Occupational Health and Safety (Commonwealth Employment) Act 1991 (the ‘OH&S Act’), so that Telstra is not, from the designated day, deemed to be a Government Business Enterprise for the purposes of that Act.  After the designated day, a Telstra body will also not be a Commonwealth authority for the purposes of the Act.

 

Proposed section 9S provides for a refund if the designated day falls part way through a financial year and the Telstra body has paid a contribution under section 67H of the OH&S Act in respect of the administration of that Act.

 

Item 22 - Amendment of section 36 of the Telstra Corporation Act

 

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

 

Proposed subsection 36(1) enables the Auditor-General to resign as Telstra’s auditor by written notice given to Telstra at any time on or after the designated day.  The designated day is declared by the Minister under item 4 of Schedule 3 and is the day which, in the Minister’s opinion, is the first day on which a majority of the voting shares in Telstra are or were acquired by persons other than the Commonwealth.

 

Item 48 in Schedule 2 permits the Telstra Board to appoint an additional auditor at any time after the Bill receives Royal Assent provided that auditor’s consent has been obtained and the Auditor-General has been consulted about the appointment.  If the Auditor-General resigns, subsection 327(6) of the Corporations Law will permit the surviving auditor to continue to act as Telstra’s auditor.  This will enable there to be no disruption of any audit which is only partially completed at the time the Commonwealth ceases to have a majority equity interest in Telstra.  If the surviving auditor were to resign, subsection 327(5) of the Corporations Law would require the vacancy in the office of auditor to be filled within one month.

 

Proposed subsection 36(2) provides for the repeal of existing subsections 36(3) and (4) and proposed subsection 36(3A) (to be inserted by item 48 of Schedule 2) at the earlier of:

 

·       the time when the Auditor-General resigns;



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

 

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

 

Part 4--Amendments commencing on the proclaimed day

 

Telstra Corporation Act 1991

 

Item 23 - Amendment of section 8AA of the Telstra Corporation Act

 

Item 23 makes a minor amendment to the simplified outline of Part 2 of the Telstra Corporation Act consequential on the amendment made by item 24.

 

Item 24 - Repeal of Division 3 of Part 2 of the Telstra Corporation Act

 

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

 

It is inappropriate to continue to have special reporting requirements that favour the Commonwealth in a situation where the Commonwealth no longer holds a majority equity interest in Telstra.

 

Accordingly, item 24 provides for the repeal of Division 3 of Part 2.

 

Items 25 to 27 - Amendment of subsection 8AW(1), paragraph 8AX(1)(a) and subsection 8AY(1) of the Telstra Corporation Act

 

Items 25 to 27 make minor technical amendments to subsection 8AW(1), paragraph 8AX(1)(a) and subsection 8AY(1) of the Telstra Corporation Act consequential on the repeal of Division 3 of Part 2 by item 24.

 



Item 28 - Repeal of Part 3 of the Telstra Corporation Act

 

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

 

Item 28 provides for the repeal of that Part.  It would be inappropriate to retain such a power in a situation where the Commonwealth no longer holds a majority equity interest in Telstra.

 

The public interest in telecommunications is protected through the comprehensive community and regulatory safeguards set out in the Telecommunications Act 1997 , the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 , the Telstra Corporation Act 1991 and Parts XIB and XIC of the Trade Practices Act 1974 .  Section 581 of the Telecommunications Act gives the Australian Communications Authority a broad power of direction over carriers and carriage service providers in relation to the performance of its telecommunications functions and powers.  Section 159 of the proposed Telecommunications (Consumer Protection and Service Standards) Act 1998 will also empower the Minister to direct Telstra to comply with that Act.  An additional power of Ministerial direction over Telstra in the Telstra Corporation Act is unnecessary and furthermore conflicts with the rights of other shareholders in the company.