Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1998-99
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
TELEVISION LICENCE
FEES AMENDMENT BILL 1999
EXPLANATORY
MEMORANDUM
(Circulated
by authority of the Minister for Communications, Information
Technology and
the Arts, Senator the Hon Richard Alston)
ISBN: 0642 405883
TELEVISION LICENCE FEES AMENDMENT BILL
1999
BROADCASTING SERVICES AMENDMENT BILL (No. 2)
1999
OUTLINE
The Television Licence Fees Amendment Bill 1999 makes amendments to the
Television Licence Fees Act 1964 and the Broadcasting Services Amendment
Bill (No. 2) 1999 makes consequential amendments to the Broadcasting Services
Act 1992 (BSA).
The purpose of the amendments to the Television
Licence Fees Act is to impose a requirement on commercial television
broadcasting licensees to pay an additional amount in annual licence fees over
the next 3 years, and the purpose of the amendments to the BSA is to ensure that
the Australian Broadcasting Authority (ABA) cannot fix charges for its costs in
relation to the commercial television conversion scheme over the next 3 years.
The Government announced in the 1999-2000 Budget that it will provide
additional funds to the ABA over the next 3 years for its work associated with
the conversion of national and commercial television broadcasting services from
analog to digital. To offset this proposed expenditure, it is intended that
commercial television broadcasting licensees pay an additional amount in licence
fees for the next 3 years.
The total additional amounts to be paid by
commercial television broadcasting licensees are:
• 1999-2000 - $1.21 million;
• 2000-2001 - $1.21 million; and
• 2001-2002 - $0.99 million.
These
amounts will be paid into consolidated revenue. The first payment will be due
on 31 December 1999.
It is also intended that the ABA not be able to
make determinations under clause 61(1)(a) of Schedule 4 to the BSA fixing
charges relating to its costs incurred over the next 3 years in relation to the
commercial television conversion scheme. These costs will be recovered through
the additional licence fees payable under the Television Licence Fees Act.
The amendments will commence on Royal Assent.
FINANCIAL IMPACT STATEMENT
The amendments are intended to raise revenue for the Commonwealth of $1.21 million in each of the years 1999-2000 and 2000-2001, and $0.99 million in 2001-2002. The revenue raised reflects the expected impact on the ABA of work associated with the conversion of national and commercial television broadcasting services from analog to digital.
REGULATION IMPACT STATEMENT
1. The Television Broadcasting Services (Digital Conversion) Act 1998
amended the BSA to provide for the introduction of digital television and
datacasting services in Australia. The legislation requires digital television
services to commence on 1 January 2001 in metropolitan licence areas and between
1 January 2001 and 1 January 2004 in regional areas.
2. The legislation
further requires the ABA to develop digital conversion schemes, digital channel
plans and deal with implementation plans by each commercial and national
television broadcaster. The ABA also has the function of assessing technical
feasibility of access to transmission towers and sites by broadcasters and
datacasters for installation of transmission equipment. The ABA is empowered to
make determinations fixing charges to recover the expenses incurred in
developing the digital television conversion schemes.
3. The Television
Licence Fees Act imposes annual licence fees (by way of taxation) which are
payable to the Commonwealth by commercial television broadcasting licensees.
The fees are determined according to a series of formulae and are payable by 31
December of each year based on the gross earnings of licensees during the
previous financial year (or other accounting period as permitted by the ABA).
Commercial television licensees paid $194.5 million in licence fees for the
1997-98 financial year.
4. The ABA has estimated that it will need $1.21 million in 1999-2000,
$1.21 million in 2000-2001 and $0.99 million in 2001-2002 to undertake work
necessary to facilitate the conversion of television broadcasting from analog to
digital transmission.
5. The bulk of the ABA’s costs in this regard
will be associated with work which will benefit commercial television licensees
as a group. However, the cost recovery scheme introduced by the Television
Broadcasting Services (Digital Conversion) Act operates as a fee for service
arrangement which the ABA expects will allow it to recover significantly less
than the $3.41 million necessary to undertake this work over the three
years.
6. The objective of the surcharge proposal is to develop an efficient and
equitable scheme to recover the costs to be incurred by the ABA from the major
beneficiaries of the ABA’s digital conversion work.
7. Option 1: Continue to fund the majority of the ABA’s costs
through the Budget, with the balance being funded from specific fee for service
charges. This option would maintain the status quo.
8. Option 2:
Impose a temporary, three-year surcharge on licence fees paid by commercial
television licensees and suspend the existing fee for service arrangement during
this period in order to recover the ABA’s costs associated with its
digital conversion work. On the basis of the $194.5 million collected in
licence fee revenues in 1997-98, a surcharge of less than 0.7% would be required
to raise the necessary $1.21 million in 1999-2000. In subsequent years, this
percentage is expected to decline.
9. Option 3: Impose a comprehensive
scheme which will recover all of the ABA’s regulatory costs from the
broadcasting industry. Approximately 98% of the ABA’s total costs are
funded from Budget appropriations, with the balance being derived from specific
fee for service charges.
10. Under this option, the bulk of the ABA’s regulatory activity would
be met by taxpayers through Budget appropriations. The main beneficiaries of
the ABA’s digital conversion work (ie the commercial television licensees)
would contribute only a minimal amount under the current fee for service
arrangement. This option is not favoured.
Option 2: Temporary ABA cost recovery surcharge/suspension
of
fee for service arrangement over three-year period
11. The proposed surcharge on licence fees will directly increase costs
for commercial television broadcasters by almost 0.7% in 1999-2000 and to a
lesser extent in 2000-2001 and 2001-2002. In absolute terms, commercial
television broadcasters in metropolitan areas will contribute most under this
proposal, reflecting their relative ability to pay when compared to their
regional counterparts. This relative ability to pay is reflected in the sliding
scales built into the existing licence fees regime and will thus flow through to
the proposed cost recovery surcharge scheme. The benefits from the digital
conversion work being undertaken by the ABA will not be skewed in the same
way.
12. The commercial television broadcasting industry could be expected to
oppose any scheme which will increase the financial imposts on licensees,
claiming that they already pay considerably more in licence fees than the
ABA’s annual operating costs (ie approximately $16 million in 1999-2000).
However, annual licence fees are charged for the benefits these licensees gain
from the use of the radiofrequency spectrum and from the closed market created
by legislative restrictions on the number of commercial television licences
available, not for the planning and regulatory work of the ABA.
13. The national broadcasters are Budget funded and do not pay annual
licence fees. They will benefit from the digital conversion work to be
undertaken by the ABA to the extent that some of this work will have some
application for digital television broadcasting generally. However, this will
be off-set to a degree as the current fee for service arrangement applying to
the national broadcasters will be retained.
14. The ABA will not require any additional resources to administer the
collection of the proposed surcharge. The ABA will receive surcharge payments
from the commercial television licensees at the same time and in the same manner
as licence fees are paid.
15. The proposed surcharge will raise some $1 million per annum over
three years and, if passed on, could be expected to have minimal impact on
viewers of commercial television broadcasting services and users of products
advertised on commercial television broadcasting services.
16. As noted above, the national broadcasters are Budget funded. There
would appear to be little to be gained, from a Commonwealth budgetary
perspective, by providing funding to the national broadcasters which they would
have to return to the Commonwealth under a comprehensive cost recovery
scheme.
17. The operations of the community broadcasting sector are subsidised by
Commonwealth grants. As in the case of the national broadcasters, there would
appear to be little to be gained, from a Commonwealth budgetary perspective, by
imposing additional charges on community broadcasters which would have to be met
from increased Budget appropriations. The scope for the community broadcasting
sector to make cost savings by reducing the existing limited and low-cost
community broadcasting services is negligible.
18. The extent of the ABA’s regulatory activities affecting open
narrowcasters is minimal. This is consistent with the regulatory policy
approach reflected in the BSA that different levels of regulatory control be
applied across the range of broadcasting services according to the degree of
influence that different types of broadcasting services are able to exert in
shaping community views in Australia. There is little scope to recover any
worthwhile level of regulatory costs directly attributable to open
narrowcasters.
19. Virtually the total burden of recovering the ABA’s regulatory
costs would fall on the commercial broadcasting and pay TV sectors. While these
sectors account for much of the ABA regulatory activity, licensees in these
sectors would be required to also meet the costs associated with a range of ABA
functions, as stipulated by the BSA, which cannot be attributed to specific
licensees. While the commercial broadcasting sector is generally financially
healthy, no pay TV operator has yet made a profit in Australia.
20. The ABA may require additional resources to establish and operate a
cost recovery mechanism applying to the pay TV sector which does not pay annual
licence fees. The existing annual licence fee collection arrangements applying
to the commercial broadcasting sector may be able to be broadened at minimal
additional cost to accommodate a more comprehensive cost recovery
approach.
21. The recovery of some $16 million in 1999-2000 and comparable amounts
in subsequent years represents some 16 times the revenues to be raised under
Option 2 and, if passed on, could be expected to have a more substantial impact
on end-users than Option 2. The commercial broadcasters are likely to pass
their share of these charges on to their advertisers who, in turn, are likely to
recoup the costs from the consumers of their products and services. The pay TV
operators would be likely to pass their share of the additional charges on to
their subscribers and advertisers.
22. As is common practice with taxation measures, industry was not
consulted on the imposition of the proposed temporary surcharge prior to its
announcement in the 1999-2000 Budget context.
23. Option 2 is preferred. The introduction of a temporary three-year
surcharge on commercial television licence fees will ensure that the commercial
television licensees meet the costs associated with the ABA’s digital
conversion work. These licensees will be the major beneficiaries of the
ABA’s work in this regard and will account for the bulk of the ABA’s
expenditure on digital conversion.
24. The effect of the surcharge will
be partially off-set over the three years by the suspension of the current
legislative fee for service arrangement applicable to commercial television
broadcasters.
25. The implementation of the temporary three-year surcharge scheme will
require amendments to the Television Licence Fees Act and the
BSA.
26. The Productivity Commission is in the process of conducting a
review of these two Acts as well as other broadcasting-related legislation. The
surcharge is expected to come within the scope of that review.
Clause 1 provides for the citation of the Television Licence Fees
Amendment Act 1999.
Clause 2 Commencement
Clause 2 of the Bill provides for the Act to commence on Royal Assent.
Clause 3 provides for the making of the amendments or repeal of the Acts
as set out in the Schedule to the Bill, and for any other item to have effect
according to its terms.
Item 1 Subsection 5(1)
Under subsection 5(1) of the
Television Licence Fees Act, annual licence fees (by way of taxation) are
payable to the Commonwealth by commercial television broadcasting licensees, in
accordance with sections 6 and 6A of that Act.
The fees are payable
each 31 December and the amounts are determined according to a series of
formulae and are based on the gross earnings of licensees during the previous
financial year, or other accounting period as permitted by the ABA (sections 6
and 6A of the Television Licence Fees Act).
This item amends subsection
5(1) of the Television Licence Fees Act so that it also refers to new section
6B, which imposes a requirement to pay an additional amount of annual licence
fees for 3 years.
The amendment made by this item will also ensure that
Part 14A of the BSA applies to the additional amount of licence fees that will
be payable under new section 6B. The provisions of Part 14A of the BSA relate
to the administration of licence fees, and deal with a range of matters,
including:
• requirements to keep and disclose accounts (section 205B);
• adoption of a different accounting period (ending on a date other than 30 June) (section 205B);
• manner of payment of licence fees (section 205C); and
• penalties for unpaid licence fees (section
205D).
Under section 205A of the BSA, “licence fee” is
defined for the purposes of Part 14A to include a fee imposed under section 5 of
the Television Licence Fees Act. As mentioned above, that section currently
refers to the fees payable in accordance with sections 6 and 6A, and this item
will amend that section so that it also refers to new section 6B.
This item adds new section 6B to the Television Licence Fees Act, which
will require each commercial television broadcasting licensee to pay an
additional amount of licence fee on each 31 December from 1999 to 2001 that will
be proportional to the amount of licence fees that it paid under existing
sections 6 and 6A on the previous 31 December. The total sum to be recovered in
1999-2000 and in 2000-2001 is $1.2 million, and the total sum to be recovered in
2001-2002 is $0.99 million.
New subsection 6B(1) requires each
commercial television broadcasting licensee to pay an additional fee on 31
December 1999 in accordance with the formula:
$1,210,000 x Licensee’s fee
Total licensees’ fees
where:
• “licensee’s fee” means the amount of fee payable by the licensee under existing section 6 or 6A on 31 December 1998; and
• “total licensees’ fees” means the sum of all fees payable under sections 6 and 6A on 31 December 1998.
New subsection 6B(2) requires each commercial television broadcasting
licensee to pay an additional fee on 31 December 2000 in accordance with the
formula:
$1,210,000 x Licensee’s fee
Total licensees’ fees
where:
• “licensee’s fee” means the amount of fee payable by the licensee under existing section 6 or 6A on 31 December 1999; and
• “total licensees’ fees” means the sum of all fees payable under sections 6 and 6A on 31 December 1999.
New subsection 6B(3) requires each commercial television broadcasting
licensee to pay an additional fee on 31 December 2001 in accordance with the
formula:
$990,000 x Licensee’s fee
Total licensees’ fees
where:
• “licensee’s fee” means the amount of fee payable by the licensee under existing section 6 or 6A on 31 December 2000; and
• “total licensees’ fees” means the sum of all fees payable under sections 6 and 6A on 31 December 2000.
New subsection 6B(4) makes it clear that a fee payable under new section
6B is in addition to a fee payable under section 6 or 6A.
Clause 1 provides for the citation of the Broadcasting Services
Amendment Act (No. 2) 1999.
Clause 2 Commencement
Clause 2 of the Bill provides for the Act to commence on Royal Assent.
Clause 3 provides for the making of the amendments or repeal of the Acts
as set out in the Schedule to the Bill, and for any other item to have effect
according to its terms.
Schedule 4 to the BSA deals with digital television broadcasting.
Paragraph 61(1)(a) of Schedule 4 currently allows the ABA to make determinations
fixing charges for any matter in relation to which expenses are incurred by the
ABA under the commercial television conversion scheme. The scheme, made by the
ABA, provides for the conversion of commercial television broadcasting services
from analog transmission to digital transmission over time.
This item
will amend clause 61 of Schedule 4 to the BSA so that the ABA may not make a
determination under paragraph 61(1)(a) in relation to expenses incurred by it
under the commercial television conversion scheme where the expenses are
incurred during the period starting on the day on which this item commences and
ending on 31 December 2001.
This item is consequential on the
imposition on commercial television broadcasting licensees of the requirement to
pay an additional amount of licence fee over the next 3 years.