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Wednesday, 7 September 1983
Page: 517

Mr LLOYD(6.36) —The Government, in these two Bills-the Broadcasting Stations Licence Fees Amendment Bill 1983 and the Television Stations Licence Fees Amendment Bill 1983-is quite openly and blatantly using radio and television licence fees to increase general revenue for the Government. There is not even an attempt to talk about cost recovery or inflation. For example, the Minister for Communications (Mr Duffy) in his second reading speech on the Broadcasting Stations Licence Fees Amendment Bill said:

The main purpose of imposing a fee on companies licensed to earn income from broadcasting is to contribute to overall Commonwealth revenues.

In these two Bills, in the Government action taken in the mini-Budget on Telecom , in the radiocommunications licences fees increase which was also announced by the Minister on the night of the Budget, and in the debate that is going on with the Overseas Telecommunications Commission at present, it is obvious that the Government is using the communications sector as a new source of revenue; in other words, a new branch of the Australian Taxation Office. Everyone associated with communications should recognise what the Government is doing. The Government is, first of all, in these Bills increasing the maximum percentage of gross earnings which can be charged for licence fee purposes. It is lifting that percentage from 7.5 per cent of the gross earnings of television stations to 8 per cent and from 5 per cent to 5 1/2 per cent for radio stations. The two industry organisations, the Federation of Australian Commercial Television Stations and the Federation of Australian Radio Broadcasters, both oppose the increase-and quite rightly. Not only are the fees based on a percentage of gross earnings and not on net profit but also with inflation-I think this is more particularly the case-the stations automatically move into a higher tax bracket; that is, a higher fee-structured bracket in the overall structure. Of course, with inflation and gross earnings together that in no way means any increase in the ability for the radio or television station to pay the fee.

There is also the fact that a higher percentage fee has been introduced for the first time. Thus, rather than the fee bearing any resemblance to an ability to pay or just a straight charge for a licence fee for use of part of the spectrum, the way the Government has gone about these increases is actually to reduce the ability of the television and radio stations to make a profit because there has been no indexing for inflation in the gross earnings arrangements for licence fees. The opposite has happened. The fee structure also ignores the fact that many commercial radio stations, in particular, are operating at a loss at this time. The Goverment hopes to increase revenue from television licences from $36m to $47m this year. That is an increase of over 30 per cent in one year-a very dramatic increase in licence fees or, as the Government has stated, government revenue coming from this one source in one year. Of that amount, $2.4m is from the percentage increase in fees. The fees from radio stations will increase from $3.7m to $4.5m, a 25 per cent increase. Once again, that is a very dramatic increase when one considers that the Government believes that the inflation rate this year will be in single digits again, somewhere between 8 per cent and 9 per cent.

But those increases, savage as they are, form but a part of the Government's strategy of using communications as a branch of the Taxation Office. For example , with regard to radiocommunications licence fees, the Minister on Budget night also increased the majority of the 60 different types of radiocommunications licences that are issued to about 500,000 Australians or Australian organisations each year. There are about half a million radiocommunications licences. Once again, this is an increase in revenue of about 25 per cent over last year. It is a very savage increase, particularly when one compares it with the increase of 6 per cent in last year's Budget. The Government hopes to receive about $21.5m from radiocommunications licence fees. The Minister, in his statement announcing the increase in the radiocommunications licence fees, betrayed the intent of the Government and revealed a new and dangerous principle . Everybody in the radiocommunications area should be very clear and aware of the Government's intent. I quote from the Minister's Press statement:

Mr Duffy said that in former years fees were levied on a cost recovery basis. But as part of the overall 1983-84 Budget strategy the Government had made a decision to exercise its option under the Radiocommunications Licence Fees Act 1982 and include a royalty component in the fee structure.

I emphasise that it will include a royalty component in the fee structure. The Minister later said that this measure would raise about $4m this year. Radiocommunications licences are now not just a cost recovery measure by the Government, but an openly stated part of Government taxation policy because for the first time a royalty component has been included.

But there is more to come. I refer to the mini-Budget. At the same time when the Government assisted certain of the statutory corporations such as Australian National Line with $90m, Qantas Airways Ltd with $60m and Trans Australian Airlines with $115m, a special tax of $100m was imposed on Telecom Australia-the most financially successful of the Government's statutory authorities. What incentive is there for any Federal Government statutory authority ever to have efficient management, to make a profit or be a success? If it runs at a loss or gets into trouble with superannuation arrangements the Government will give it $ 90m, $60m or $115m, but if it is a success an additional tax of $100m is imposed . Hence, Telecom in an unprecedented move was required to increase its charges twice in one year. The $100m tax on Telecom is an example of the Government moving into a new area of the communications sector as a new and bright source of government revenue, as a new part of the taxation system.

That is not the whole story. I refer to the current disagreement between the Overseas Telecommunications Corporation and the Government on the level of dividend to be paid to the Government from OTC. We should remember that OTC is treated and acts as an ordinary private company. It must, and does, pay tax in the same manner as any other company. On top of this, a dividend is payable to the Government and the Government declares what that dividend will be. I acknowledge that not only this Government this year but also previous governments have decided to take almost all of OTC's remaining profit after the payment of taxes. I believe this is a very short sighted attitude by the Government because in obtaining $32m from OTC over two years it is forcing OTC to borrow all the $300m, or whatever is the exact figure it needs, for its new overseas cable projects. That will result in a reduced profit and reduced payments to the Government in dividends in future years as these loans must be repaid over the next five years or so. In other words, the Government is taking the money now and just hoping that something else will come along at a later stage as the loans need to be repaid.

I believe it is time for the Government-I do not mean only this Government in this case, but the Federal Government generally-to establish basic arrangements with both Telecom and OTC which can apply on a stable basis in future. At the moment the opposing policies are being applied by the Government to these corporations. Telecom is being required to fund an increasing percentage, now up to 80 per cent, of its capital from retained profit. OTC is not being allowed to invest any of its retained profit in capital expansion and new projects because the Government is taking the lot. I do not believe that one could ever see anything as inconsistent and contradictory as that from one government in one sector of government operations. Licence fees have increased by 30 per cent and 25 per cent. The Government has openly admitted that it is looking for government revenue, not for cost recovery. A royalty component has been included for the first itme in the radiocommunications licence fee area. Telecom has been hit for $100m. All of OTC's profit is being taken from it.

Where does that policy leave Australia Post and other areas of the communications sector? Australia Post has just declared a profit of $8.9m. Does that mean that it is next on the Government's hit list as a source of new taxation revenue? If one looks at the track record of this Government in its period of about six months in office, there are not many areas of the communications sector that have not been taxed in some new way to gain money for the Government. I would welcome some comment from the Minister as to what are the intentions of the Government in the communications sector generally with regard to the use of communications as a source of government revenue, as a branch of the Taxation Office. Where does that leave the remaining sectors of communications which as yet have not been hit but which must be rather worried at present about their future?

These are Budget Bills. It is not the intention of the Opposition to require a division on these Bills. It is up to those in the communications area to be made aware of and to realise the intent of this Government and the way it is getting at them to obtain more money. But we condemn the Government for turning communications into a branch of the Taxation Office. Therefore, on behalf of the Opposition, I propose to move now an amendment to the second reading of the Broadcasting Station Licence Fees Amendment Bill and at the appropriate time I will move a similar amendment to the second reading of the Television Stations Licence Fees Amendment Bill. Therefore, I move:

That all words after 'That' be omitted with a view to substituting the following words: 'whilst not declining to give the Bill a second reading, the House deplores the action of the Government in extending the use of fees in the broadcasting area beyond cost recovery to a new source of taxation revenue'.

The DEPUTY SPEAKER (Hon. Les Johnson) —Is the amendment seconded?

Mr Fisher —I second the amendment.