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Commercial Broadcasting (Tax) Bill 2017



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ISSN 1328-8091

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BILLS DIGEST NO. 4, 2017-18 7 AUGUST 2017

Commercial Broadcasting (Tax) Bill 2017 Monica Biddington Law and Bills Digest Section

Dr Rhonda Jolly Social Policy Section

Contents

The Bills Digest at a glance ................................................... 2

Purpose of the Bill ............................................................... 3

Background ......................................................................... 3

Committee consideration .................................................... 4

Senate Standing Committee for the Selection of Bills ............. 4

Senate Standing Committee for the Scrutiny of Bills .............. 4

Policy position of non-government parties/independents ..... 5

Opposition ............................................................................... 5

Greens/NXT and independents ............................................... 5

Position of major interest groups ......................................... 6

Free-to-air commercial broadcasters ...................................... 6

Subscription broadcasters ....................................................... 7

Other responses ...................................................................... 7

Financial implications .......................................................... 8

Statement of Compatibility with Human Rights .................... 8

Key issues and provisions..................................................... 8

Date introduced: 15 June 2017

House: House of Representatives

Portfolio: Communications and the Arts

Commencement: 1 July 2017 (retrospectively from that date if the Bill is passed after 1 July 2017). If the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 does not pass the Parliament and receive Royal Assent, the provisions in the Bill do not commence.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at

August 2017.

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The Bills Digest at a glance

Purpose of the Bill

• The purpose of the Commercial Broadcasting (Tax) Bill 2017 (the Bill) is to introduce a tax on transmitter licences associated with commercial broadcasting licences which are issued under Part 4 of the Broadcasting Services Act 1992.

• The transmitter licences are issued under section 102 of the Radiocommunications Act 1992.

Background

• Since 2010 there have been a number of reductions in licensing fees for commercial television licensees but free-to-air commercial broadcasters have argued that ‘onerous and restrictive’ licence fees should be removed completely.

• As part of its commitment to media reform the Turnbull Government announced prior to the 2017-18 Budget that broadcasting licence fees would be abolished and replaced with a tax which would be imposed for the use of radiofrequency spectrum.

• This Bill proposes to introduce the new regime for setting prices for spectrum use.

Stakeholder concerns

• There is general industry support for the reductions in licence fees for commercial television and radio broadcasters.

• Some stakeholders have expressed concern that licence fee reductions should be accompanied by increased obligations to deliver local content or better services for specific audiences.

Key issues

• This Bill sets out the conditions for the imposition of the tax to be paid by the holder of a transmitter licence associated with a commercial broadcasting licence, the formula for the tax, caps on the tax and rebates from the tax.

• The Bill intends that Ministerial determinations will be crucial in setting the tax and in determining various aspects of its functioning. The Senate Standing Committee for the Scrutiny of Bills has expressed concern that a fundamental function of the Parliament, that is, the imposition of tax, will be impacted by this delegation of powers.

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Purpose of the Bill The purpose of the Commercial Broadcasting (Tax) Bill 2017 (the Bill) is to introduce a tax on transmitter licences associated with commercial broadcasting licences which are issued under Part 4 of the Broadcasting Services Act 1992 (the BSA). The transmitter licences are issued under section 102 of the Radiocommunications Act 1992 (the Radcomms Act).

Background Currently, under the BSA a person or entity providing a commercial broadcasting service (as defined by section 14 of that Act) on radio or television must hold a commercial radio or television broadcasting licence.1 Under the Radio Licence Fees Act 1964 and the Television Licence Fees Act 1964, a licence fee is payable annually by the holder of a commercial radio broadcasting licence or a commercial television broadcasting licence respectively.2 The BSA requires that, within six months after 30 June each year, licensees must give the Australian Communications and Media Authority (ACMA) a broadcasting licence fee return to pay a proportion of their gross earnings as fees for using the scarce public asset of radio spectrum.3

Few changes were made to this commercial licensing fees regime before 2010 and those changes that were made were more likely to involve increases in licensing fees.4 Since 2010, however, there have been a number of reductions in licensing fees for commercial television licensees.

In 2010, the Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, announced a rebate of 33 per cent for 2010 and 50 per cent for 2011.5 The 50 per cent reduction was extended to the end of 2013 by regulation and confirmed in legislation at that time.6 The reduction in fees from nine per cent of gross annual earnings to 4.5 per cent was justified as a move to protect local content, and it was argued it would help counter the significant financial pressures faced by commercial television stations as a result of emerging and convergent technology and an increasingly challenging operating environment.7

The free-to-air networks were not satisfied with these licence fee reductions; they argued that what they labelled ‘onerous and restrictive licence fees’ should be removed completely. Only then would a fairer competition environment be realised and this would give the broadcasters capacity to invest in Australian jobs and production.8

As part of its commitment to media reform the Turnbull Government responded to the commercial broadcasters call for more licence fee relief by announcing in the 2016-17 Budget that it would further reduce licensing fees by 25 per cent.9 In announcing the reductions the Minister for Communications, Mitch Fifield said:

The Government's decision to reduce the fees recognises that the Australian media market has changed significantly since broadcasting licence fees were first introduced, with the move to online and on-demand content fragmenting the market for media services and increasing competition for audiences and advertising dollars.

In turn, this is placing increasing financial pressure on Australia's commercial broadcasters whose main competitors, including online operators such as Netflix and Apple, pay no licence fees.

1. Subsection 12(1) of the Broadcasting Services Act 1992. 2. Radio Licence Fees Act 1964 and Television Licence Fees Act 1964. 3. Australian Communications and Media authority (ACMA), Broadcasting licence fee requirements handbook: for commercial radio and television broadcasting licensees, ACMA, Canberra, September 2015; see Appendices B and C for licence fee formulae.

4. For example, costs associated with the conversion to digital television were recovered from the commercial television industry under the Television Licence Fees Act 1999 and legislation introduced in 2007 required that revenue earned from analogue and digital radio broadcasting services is counted for the purposes of calculating the radio broadcasting licence fee. B Jaggers, Radio Licence Fees Amendment Bill 2007, Bills digest, 144, 2006-07, Parliamentary Library, Canberra, 2007.

5. S Conroy (Minister for Broadband, Communications and the Digital Economy), Government moves to protect TV content, media release, 8 February 2010. 6. More detail can be found in A Holmes, Television Licence Fees Amendment Bill 2013, Bills digest, 95, 2012-13, Parliamentary Library, Canberra, 2013. 7. Conroy, op. cit. 8. Nine Entertainment Co., Submission to the Senate Environment and Communications Legislation Committee, Inquiry into the Broadcasting

Legislation Amendment (Media Reform Bill) 2016 [Provisions], 23 March 2016, p. 4. The submission cites information from Deloitte Access Economics, Economic contribution of the film and television industry in Australia, report prepared for the Australian Screen Association, Sydney, February 2015. 9. Australian Government, ‘Part 1: revenue measures’, Budget measures: budget paper no. 2: 2016-17, p. 8.

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The Government will consider further reductions in broadcasting licence fees later in 2016 as part of a broader package of reforms that will include consideration of the pricing of broadcasting spectrum. 10

Minister Fifield’s promise was fulfilled when he announced prior to the 2017-18 Budget that broadcasting licence fees would be abolished for commercial free-to-air broadcasters, and this commitment was confirmed in the Budget.11 At the time, the Minister also noted that the Government would set a price on the use of radiofrequency spectrum. He argued this policy would more accurately reflect the use of spectrum and give commercial broadcasters ‘flexibility to grow and adapt in the changing media landscape, invest in their businesses and in Australian content, and better compete with online providers’.12

This Bill proposes to introduce the new regime for setting prices for spectrum use. The Bill passed the House of Representatives on 21 June 2017 and was introduced in to the Senate on 22 June 2017. On 28 June 2017, the Minister announced an interim suspension of licence fees for commercial television and radio broadcasters for the 2016-17 financial year.13

Committee consideration Senate Standing Committee for the Selection of Bills On 15 June 2017 the Senate Standing Committee for the Selection of Bills recommended that this Bill and the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 not be referred to a committee for inquiry.14

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills reported on this Bill on 21 June 2017. The Committee was concerned that a fundamental function of the Parliament—to impose a tax—was being delegated to the Minister by the Bill.15

Clause 8 of the Bill proposes to provide the Minister with the power to determine by legislative instrument the amount of tax to be imposed on individual transmitters. Clause 13 provides for the disallowance of Ministerial determinations made under subclause 8(2). Clause 11 proposes that a termination time for the imposition of the transmitter tax is to be determined by the Minister and clause 14 provides that the Minister may make rules that provide for rebates for the whole or part of the transmitter tax payable by commercial broadcasters.

While the Committee noted that a cap on the amount of tax set in the primary legislation partly addresses its concerns, it still believed that clauses in the Bill represent a ‘significant delegation’ of the Parliament’s legislative powers.16

In relation to the power of the Minister under clause 11 of the Bill to determine a ‘termination time’ after which no further transmitter tax would be imposed, the Committee noted that the Explanatory Memorandum says that if such a Ministerial determination were made it was ‘expected’ that would be after five years of the tax’s operation. However, the Committee noted that there is nothing in the Bill which would limit the making of a determination in this way.17 Similarly, the Committee noted that there is nothing in the Bill which ‘guide[s] the exercise of the Minister’s power to determine rebates’ for taxes paid.18

10. M Fifield (Minister for Communications and the Arts), Supporting public broadcasting and creating a more competitive environment for commercial broadcasters, media release, 3 May 2016. 11. M Fifield (Minister for Communications and the Arts), Major reforms to support Australian broadcasters, media release, 6 May 2017; Australian Government, Budget measures: budget paper no. 2: 2017-18, p. 9. 12. Ibid.

13. M Fifield (Minister for Communications and the Arts), Interim financial relief for Australian broadcasters as Labor engages in partisanship, media release, 28 June 2017; Television Licence Fees Amendment Regulations 2017; and Radio Licence Fees Regulations 2017. 14. Senate Standing Committee for Selection of Bills, Report, 6, 2017, The Senate, 15 June 2017, p. 3. 15. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017, The Senate, 21 June 2017, pp. 21-24. 16. Ibid., p. 22. 17. Ibid.

18. Ibid.

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The Committee concluded ‘that it may be appropriate for these clauses [clauses 8, 11 and 14] to be amended to require the positive approval of each House of the Parliament before a new determination comes into effect’.19

The Committee was also concerned that subclause 13(2) proposes to disregard the standard disallowance procedures in subsection 42(2) of the Legislation Act 2003 by requiring the Parliament to pass a resolution disallowing a determination within the 15 sitting day disallowance period in order for the disallowance to be effective. This would be contrary to subsection 42(2) of the Legislation Act which provides that where a motion to disallow an instrument is unresolved at the end of the disallowance period, the instrument (or relevant provision(s) of the instrument) are taken to have been disallowed. The Committee cites Odgers’ Australian Senate Practice, which argues that this provision in the Legislation Act ‘greatly strengthens the Senate in its oversight of delegated legislation’ by not allowing an instrument ‘to continue in force simply because a motion has not been resolved’.20

The Committee sought further justification from the Minister on the reversal of usual disallowance procedures.21 At the time of writing, a response from the Minister had not been made available.

Policy position of non-government parties/independents Opposition As noted earlier in this Digest, while in Government Labor reduced licence fees for commercial free-to-air broadcasters, noting that decreasing fees would ‘enable commercial television broadcasters to continue to innovate and thrive in Australia's rapidly changing media landscape’.22

With regards to the proposal to abolish fees, Shadow Minister for Communications, Michelle Rowland, has made little specific comment, although she has noted that Labor supports the Government’s media changes with the exception of removing the two out three media ownership rule.23 At the same time, Ms Rowland has accused the Government of an ad hoc approach to media reform—addressing the issue of licence fees while neglecting other sectors which have also felt ‘increased competitive pressures in the contemporary media landscape’.24 In making this criticism Ms Rowland singled out the issue of content reform arguing that the production sector is also suffering in the new media environment, but it is only recently that a review of content has been considered. Moreover, she has argued that despite licence fee cuts, commercial broadcasters have not increased their commitment to Australian content.25

With regards to the interim licence fee relief which has waived licence fees for the 2016-17 year, Ms Rowland considers that the Government is ‘robbing the public purse’ of returns on broadcasters’ use of spectrum for the period.26

Greens/NXT and independents In past debates on licence fee reductions, the Greens have expressed concern that broadcasting fee reductions served only the interest of commercial television broadcasters and not the public interest. In 2013, Greens’ Member of the House of Representatives, Adam Bandt, believed that the ‘gift of public spectrum’ to be provided to commercial television broadcasters should come with increased Australian content obligations, and so proposed that these obligations were doubled from 1 January 2015.27 Greens’ Senator Scott Ludlam made a

19. Ibid.

20. Ibid. Cites JR Odgers, H Evans and R Laing, eds, Odgers’ Australian Senate practice: as revised by H Evans, 14th edn, Department of the Senate, Canberra, 2016, p. 445. 21. Ibid.

22. A Albanese, ‘Second reading speech: Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill 2013, Television Licence Fees Amendment Bill 2013’, House of Representatives, Debates, 19 March 2013, p. 2629. 23. The two out of three rule (cross-media ownership rule) allows a person only to control two of the regulated media platforms (commercial television, commercial radio and associated newspapers) in a commercial radio licence area. M Rowland (Shadow Minister for

Communications), Fifield’s media reform package coming apart at the seams, media release, 28 June 2017. 24. M Rowland, ‘Second Reading speech: Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017, Commercial Broadcasting (Tax) Bill 2017’, House of Representatives, Debates, 21 June 2017, p. 7169. 25. Ibid.

26. M Rowland (Shadow Minister for Communications), Fifield’s media reform package coming apart at the seams, media release, 28 June 2017. 27. A Bandt, ‘Consideration in detail: Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill 2013, Television Licence Fees Amendment Bill 2013’, House of Representatives, Debates, 19 March 2013, p. 2632.

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similar point that broadcasting spectrum was not a free gift, it was a public good, the use of which carried with it obligations.28

Speaking on the Government’s media reform proposals in September 2016, Senator Nick Xenophon supported reductions in licence fees for commercial free-to-air broadcasters. Senator Xenophon argued that the revenue loss from these fees should be recovered by imposing a turnover tax on foreign multinationals such as Google, Facebook and Netflix which have reaped a massive increase in online advertising revenue from Australian sources and who have ‘cannibalised’ free-to-air networks’ revenue.

29 Senator Xenophon has

continued to call for a tax on the likes of Google and has argued that he will pursue the matter ‘with enormous vigour’ in his negotiations with the Government on its media reform proposals in this Bill and the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017.30

There appears to be no specific comments made by other independents on this aspect of the Government’s media reform package.

Position of major interest groups Free-to-air commercial broadcasters For some time certain commercial broadcasters have been recorded as arguing that licence fee reform is a priority issue for commercial free-to-air broadcasters.31 Seven West Media’s Tim Worner, for example, has claimed that abolishing licence fees could do more to assist commercial broadcasters to remain financially viable than removing cross ownership and reach rules.32 In 2016 in arguing for the removal of licence fees, Seven West Media also stressed that Australia’s fees were substantially more than those paid in other countries. Seven West Media also claims that local content obligations are greater than those imposed by many international regimes.33

In a similar vein, Nine Entertainment also maintained in March 2016 that free-to-air television broadcasters not only pay licence fees, they also directly employ over 7,000 people and contribute $4.7 billion in direct value to the Australian production industry.34 In contrast, multinational content companies, such as Netflix, pay no licence fees and neither do they invest in Australian content, talent or production staff.35

Chairman of the television lobby group Free TV Australia, Harold Mitchell, has insisted for some time that television licence fees must be removed if broadcasters are to continue to invest in Australian programming. Mr Mitchell has added that without the onus of licence fees, broadcasters may be better able to position their businesses to adjust to changes in technology and consumer viewing habits.36 Similarly, Commercial Radio Australia’s (CRA) Chief Executive Officer, Joan Warner, has also pointed out that Australian commercial radio broadcasters pay higher licence fees than their overseas counterparts and claimed that only fee relief will allow radio to compete against unregulated international businesses.37

The commercial broadcasters welcomed the announcement of the Government’s 2017 media reform package and the promised abolition of licence fees. CRA commented that the licence fee removal together with the small increase in spectrum fees would amount to a 94 per cent decrease in commercial radio fees and Free TV

28. S Ludlam, ‘Second reading speech: Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill 2013, Television Licence Fees Amendment Bill 2013’, Senate, Debates, 20 March 2013, p. 2261. 29. N Xenophon, Deal or no deal: media law changes must include licence fee cuts and a fair tax on Facebook, Google and Netflix, media release, n.d. Note: a turnover tax is a tax levied on turnover (revenue) at a specific rate, irrespective of the source of revenue and whether or not the

revenue is associated with any profit or loss to the entity. 30. R Lewis, ‘Xenophon wants taxes on Google, Facebook’, The Australian, 9 May 2017, p. 9. See also: Parliament of Australia, ‘Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 homepage’, Australian Parliament website. 31. D White, ‘Malcolm Turnbull expected to play hard ball on TV licence fee cuts’, The Sydney Morning Herald, (online edition), 22 July 2015. 32. D Crowe and J Mitchell, ‘Forces massing to fight Fifield's media reforms’, The Australian, 2 March 2016, p. 6. 33. Seven West Media, Submission to Senate Environment and Communications Legislation Committee, Inquiry into the Broadcasting Legislation

Amendment (Media Reform Bill) 2016 [Provisions], 23 March 2016, pp. 13 and 43. 34. Nine Entertainment, op. cit., p. 5. 35. Ibid.

36. Free TV Australia, Free TV calls for abolition of broadcasting licence fees, media release, 15 September 2016. 37. Commercial Radio Australia (CRA), Commercial radio industry welcomes licence fee cut, media release, 10 November 2016.

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Australia assessed the change as ‘crucial’ for Australian jobs and for the industry’s ‘ability to continue creating great local programming that is watched by millions of Australians every day’.38

The commercial broadcasters also welcomed the Government’s interim fee relief when licence fees were suspended for the 2016-17 year pending the passage of the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 and this Bill.39

Subscription broadcasters Subscription television broadcasters have consistently criticised reductions to licence fees. The Australian Subscription Television and Radio Association (ASTRA) labelled the last reduction to fees in announced in May 2016 as a ‘tax payer-funded gift’.40 According to Andrew Maiden, ASTRA’s Chief Executive Officer, in exchange for paying licence fees, free-to-air broadcasters ‘enjoy a legislated ban on competition, guaranteed access to broadcasting spectrum and the world’s most protected market for sports broadcast rights’.41

Twelve months later, subscription television operators had revised their position sufficiently to be able to accept the 2017 media reform package which contained the licence fee abolition proposal. Clearly, as a May 2017 ASTRA press release conformed, the acceptance was based on the outcome of negotiations which delivered concessions for subscription broadcasters with regards to the anti-siphoning list and sports rights. ASTRA noted, however, that its support for the package was based on its acceptance as a whole.42

Other responses In 2016 the Australian Communications Consumer Action Network (ACCAN) called for free-to-air networks to use the savings from licence fee cuts to improve captioning on free-to-air television for people who are deaf or hard-of-hearing and to put in place technology that would allow the networks to introduce audio description for people who are blind or vision-impaired.43 In 2017 in response to the media reform package announcement, Disability Policy Advisor, Wayne Hawkins, iterated ACCAN’s previous appeal arguing that ‘a $90 million per year windfall for broadcasters, should be contingent on broadcasters providing greater access services for viewers with disability’.44

Screen Producers Australia Chief Executive, Matthew Deaner, has made a number of pleas for savings from licence fee reductions for free-to-air broadcasters to be accompanied by further obligations to invest in local content.45 In 2016 Mr Deaner claimed that ‘commercial free-to-air's investment in drama, documentary and children's production is around $160 million annually, less than half that spent by these broadcasters on sports’.46

In response to the June 2017 suspension of licence fees for the 2016-17 financial year, Mr Deaner noted that the suspension of licence fees was based in part on arguments ‘that they will use these windfalls to invest in local content’. Mr Deaner quotes Australian Bureau of Statistics figures to argue that previous reductions in fees have not delivered on these promises; he contends in fact that in the case of commercial television broadcasters, since 2011-12 they have:

… cut their commitment to Australian drama and documentaries by 20 per cent and increased the substitution of Australian content for cheap second-run New Zealand content. The broadcasters are also moving more production in-house, from 44 per cent of production in 2011-12 to 55 per cent in 2015-16. This, together with worsening deals

38. CRA, Commercial radio welcomes removal of licence fees, media release, 6 May 2017; and Free TV Australia, Broadcasting reforms positive for Aussie content and local jobs, media release, 6 May 2017. 39. Free TV Australia, Interim relief on TV licence fees a welcome step, media release, 28 June 2017. 40. Australian Subscription Television and Radio Association (ASTRA), Taxpayers foot $150 million handout to ‘free’ television, media release,

3 May 2016. 41. Ibid.

42. ASTRA, Media changes a welcome first step, media release, 6 May 2017. 43. Australian Communications Consumer Action Network (ACCAN), Free-to-air networks should use budget windfall for improved accessibility features, media release, 4 May 2016. 44. ACCAN, ACCAN calls for more accessibility on free-to-air TV, media release, 18 May 2017. 45. M Mason and D White, ‘Free and pay TV row over licence fees’, The Australian Financial Review, 14 March 2016, p. 30. 46. M Mason, ‘Budget 2016: free-to-air and pay TV clash over licence fee cut’, The Sydney Morning Herald, (online edition), 3 May 2016.

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being offered to the independent production sector, should be ringing competition alarm bells in the Government and the ACCC. Independent producers are being driven to the wall. 47

Professor Peter Wells from the University of Technology Sydney has commented on the Government’s media reform package that there are not enough measures in it to save free-to-air commercial broadcasters.48 Professor Wells considers that the abolition of licence fees and the replacement tax proposed in this Bill ‘pales in comparison to the [commercial television] industry’s recent losses’.49

Financial implications It is estimated that the transmitter tax will deliver $43.5 million to the Government each year over the period 2017-18 to 2020-21 ($174 million in total across this period).50

This revenue does not compensate for the loss of revenue which will result from the provisions in Schedule 5 of the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017. These will amount to an estimated revenue loss of $417.7 million in the period 2017-18 to 2020-21.51 In addition, the Government will also make payments to assist broadcasters affected by the transitional transmitter licence arrangements. These payments are estimated at approximately $18.4 million for the period to 2020-21.52

As noted earlier in this Digest, the Government has also exempted commercial radio and television broadcasters from paying licence fees for the 2016-17. Based on the savings estimated by the Government for the period to 2020-21, this exemption will represent a further revenue loss of approximately $100.0 million. The Government’s announcement estimated that the measure would save the industry around $127 million.53

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.54

The Parliamentary Joint Committee on Human Rights considers that the Bill does not raise human rights concerns.55

Key issues and provisions This section does not discuss all clauses in this Bill. For a detailed analysis of all clauses, see the Explanatory Memorandum and for discussion of the issues raised in clauses 8, 11, 13 and 14 see the section relating to matters raised by the Senate Scrutiny of Bills Committee earlier in this Digest.

The clauses in the Bill define the entities to which the transmitter tax would be applied, who would determine the amount of the tax applied and the conditions relating to determinations which affect individual transmitters.

Clause 4 sets out that tax will be imposed on a ‘transmitter licence associated with a commercial broadcasting licence’. The clause defines what constitutes such a transmitter licence. It will be a transmitter licence issued under section 102 of the Radcomms Act where a related licence referred to under section 102 was allocated under Part 4 of the BSA. In addition, a transmitter licence issued to a commercial broadcaster under section 100 of the Radcomms Act for the purposes of re-transmitting services on the basis of a decision by ACMA under

47. Screen Producers Australia, SPA welcomes relief for broadcasters, but notes the entire value chain is under pressure, media release, 28 June 2017. 48. P Wells, Budget 2017: TV licence fee cut pales against losses, media release, 12 May 2017. 49. Ibid.

50. Explanatory Memorandum, Commercial Broadcasting (Tax) Bill 2017, p. 3. 51. Explanatory Memorandum, Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017, p. 12. 52. Ibid.

53. M Fifield (Minister for Communications and the Arts), Interim financial relief for Australian broadcasters as Labor engages in partisanship, media release, 28 June 2017. 54. The Statement of Compatibility with Human Rights can be found at pages 4 and 5 of the Explanatory Memorandum to the Bill. 55. Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 6, 2017, 20 June 2017, p. 26.

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subsection 34(1) of the BSA is also to be considered a transmitter licence associated with a commercial broadcasting licence.56

The Explanatory Memorandum confirms that because commercial radio and television broadcasters are the only ones eligible to hold transmitter licences covered under the tax, the holders of these licences will be required to pay the tax (clause 10).57

Clause 6 describes the conditions for the tax imposed on transmitter licences. Subclause 6(1) provides that a transmitter licence, issued on or after 1 July 2017 and associated with a commercial broadcasting licence is subject to the tax. For these licences, the tax would be imposed on the issue of the transmitter licence and the anniversary of the day the licence came into force. The tax would be imposed for the time the licence is in force up to the termination time (see clause 11, discussed below).

For a transmitter licence issued before 1 July 2017 that is associated with a commercial broadcasting licence, the tax would be imposed on the anniversary of the day the licence came into force, during the period the licence is in force up to the termination time (subclause 6(2)).

Termination time is described in clause 11 as a time determined by the Minister by legislative instrument; the termination time cannot be retrospective of such a determination (subclause 11(2)). No tax will be imposed after the termination time. As discussed above, the Explanatory Memorandum states:

It is expected that if the Minister were to make such a determination in the future, it would be after five years of its operation, in order to transition the commercial broadcasters to a spectrum usage charging regime. 58

Subclause 7(1) provides that the amount of tax to be imposed under subclause 6(1) on the issue of a relevant transmitter licence on or after 1 July 2017 ‘is the total of the individual transmitter amounts for the transmitters covered by the licence immediately after the licence came into force’. Subclause 7(2) provides that the amount of tax to be imposed on the anniversary of the date that a relevant transmitter licence comes into force is the total of the individual transmitter amounts for the transmitters covered by a licence on the day of that anniversary.

Clause 9 provides a table for a transmitter amount cap for individual transmitters for the financial year beginning on 1 July 2017. It also provides a formula for determining individual transmitter caps for financial years from 1 July 2018. Individual transmitter amount caps from 1 July 2018 onwards will be calculated by indexing the previous financial year’s cap. The indexation factor is set out in clause 12 and is based on changes in the Consumer Price Index. The annual caps as set are based on the maximum power levels at which transmitters are licensed to operate.

Clause 13 sets out the process for disallowance of a ministerial determination made under subclause 8(2). Subclause 13(2) outlines that either House can disallow the determination by moving a disallowance motion within 15 sittings days of the tabling of the determination and then passing the resolution within 15 sitting days of that motion. As discussed above under ‘Senate Standing Committee for the Scrutiny of Bills’, this is a departure from the standard disallowance procedure under section 42 of the Legislation Act 2003 (which is disapplied by subclause 13(5) of the Bill). Under section 42 of the Legislation Act, a legislative instrument will be disallowed if a disallowance motion is not resolved within 15 sitting days, whereas under clause 13 of the Bill, specific action must be taken by the relevant House in order to disallow the determination. This means that if the notice of motion to disallow is not put to the vote within 15 sitting days of being made, the determination will come into effect. As set out above, the Scrutiny of Bills Committee has sought further information from the Minister on the justification for this approach.59

56. Subsection 34(1) of the BSA allows ACMA to make parts of the broadcasting services bands available for temporary allocation in a licence area, for purposes including re-transmission of services. This allows ACMA ‘to make efficient use of the broadcasting services bands, and … ensure that parts of those bands do not remain unnecessarily idle’: Revised Explanatory Memorandum, Broadcasting Services Bill 1992, p. 30.

57. Explanatory Memorandum, op. cit., p. 16. 58. Ibid., p. 16. 59. Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 7, 2017, The Senate, 21 June 2017, p. 24.

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Clause 15 explicitly states that the Act has no effect to the extent (if any) to which it imposes a tax on property of any kind belonging to a state. The Explanatory Memorandum provides that this has been included in the ‘unlikely event that a State may end up owning the entire shareholdings in a commercial broadcaster, … and the High Court were to find that in such circumstances the State included the commercial broadcaster owned by the State. This provision is included for consistency with section 114 of the Australian Constitution, which prohibits the Commonwealth imposing taxes on States’.60

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60. Explanatory Memorandum, op. cit., p.18; and Constitution.