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13701 Cat. No. 97 2829 5 ISBN 0644
518693
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, the Information Economy 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.
A Preamble to the Bill sets out the policy objectives for
the Bill and reaffirms the Parliament’s commitment to the comprehensive
community and regulatory safeguards recently enacted in the 1997
telecommunications legislation, including the universal service
obligations.
The Bill also amends the Telecommunications Act 1997
to enable the Australian Communications Authority to give remedial directions to
carriage service providers requiring them to take specific action to ensure that
they do not contravene Customer Service Guarantee performance
standards.
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 declined
below 50 per cent.
The foreign ownership provisions will be amended to
apply the 35% total and 5% individual limits in such a way that if 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.
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.
Amendments will
be made 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 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.
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
Costs and benefits from the sale are difficult to quantify at this stage.
However, 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 $40 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 and of the order of less than 2% of gross sale proceeds.
REGULATION IMPACT STATEMENT
Issue
There is no good public policy reason, nor market
failure reason, for the Australian Government to continue to own a
telecommunications carrier. It is Government policy that, if it receives a
mandate at the next Federal election, it will sell the remaining two-thirds of
the Commonwealth's equity in Telstra Corporation Ltd.
Objective
The objective of the legislation is to enable
the Commonwealth to sell its remaining two-thirds stake in Telstra. Key
community and regulatory safeguards are already set out in telecommunications
legislation. The proposed legislation also maintains Australian ownership and
control of Telstra - foreign ownership limits will continue to be applied, as
will requirements for Telstra’s base of operations, headquarters and
nationality of the Chairman and a majority of directors to be Australian.
Through enabling the further sale of Telstra, the legislation also aims to
provide revenue which can be used to retire government debt and deliver a social
bonus.
Options
To enable the Commonwealth to sell its
remaining two-thirds share in Telstra there must be an amendment to the Telstra
Corporation Act. Section 8AB of this Act currently 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. Design and management of the sale process will be the
responsibility of the Minister for Finance and Administration.
There is
no alternative option which would enable the Commonwealth to sell its remaining
two-thirds stake in Telstra.
Impact Analysis
It is intended
that the further privatisation of Telstra will enhance its competitiveness and
performance.
The proposed legislation will reduce the administrative
requirements placed on Telstra as a result of direct Government ownership.
These requirements relate to the governance of Telstra and include the
directions power for the Minister (Part 3) and reporting requirements on Telstra
and 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 is also to be inserted to enable changes to be
made by regulation to Telstra’s constitution to remove special privileges
enjoyed by the Commonwealth once the Commonwealth is no longer the majority
shareholder. The Government will continue to have in place 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
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; 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.
Amendment to the Telecommunications Act 1997 is also
proposed to strengthen the Customer Service Guarantee (CSG) scheme contained in
Part 9 of the Act. This will enable the ACA to give remedial directions to
carriage service providers where there are systemic problems arising in relation
to CSG performance standards.
It is intended to retain a number of
provisions in the existing legislation which require Telstra to effectively 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 if
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 Territory of Australia.
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 may be affected by the provision of opportunities to be
involved 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.
The scale of the proposed
capital raising will be significant relative to the scale 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.
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.
Costs and benefits from the sale are also difficult to
quantify at this stage. However, 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 $40 billion. The amount raised on the sale
would be dependent on the sale processes and market circumstances at the
time.
Administrative Simplicity, Economy and
Flexibility
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.
Review
No review is envisaged for this
legislation.
NOTES ON CLAUSES
Preamble
The Bill includes a Preamble which sets out the
policy objectives for the legislation and reaffirms the comprehensive community
and regulatory safeguards enacted in telecommunications and trade practices
legislation.
Clause 1 - Short title
This clause provides
that the Act may be cited as the Telstra (Transition to Full Private
Ownership) Act 1998.
Clause 2 - Commencement
This
clause provides for the commencement of the Act.
Royal
Assent
Clause 2(1) provides for the Act (subject to specific
commencement provisions outlined below) to commence upon Royal
Assent.
First proclaimed day
Schedule 2 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. This repeal is not to take effect until after the first general
election for the House of Representatives after 15 March 1998 (the date of the
announcement of the Government’s decision to sell the remaining
Commonwealth interest in Telstra).
Clause 2(2) provides that
Schedule 2 commences on a day to be fixed by Proclamation.
Clause
2(3) prevents such a Proclamation being made before the return of writs for
the first general election of the members of the House of Representatives that
occurs after 15 March 1998.
Designated day
Schedule 3
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.
Clause 2(4) provides for Schedule 3 to commence on the
designated day.
The designated day is declared by the Minister under
clause 3 of the Bill 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.
Second proclaimed
day
Schedule 4 of 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 Schedule 4 to
provide for the repeal of the reporting requirements after the Commonwealth
ceases to hold a majority equity interest in Telstra.
Clause 2(5)
provides that Schedule 4 commences on a day to be fixed by
Proclamation.
Clause 2(6) 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
clause 2(8) to mean the first time after the commencement of Schedule 2
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.
First annual general
meeting of Telstra held after the second proclaimed day
Section 36 of
the Telstra Corporation Act requires the Auditor-General to be the auditor of
Telstra. Schedule 5 of the Bill provides for the repeal of this
requirement.
Clause 2(7) provides that Schedule 5 commences at the
end of the first annual general meeting of Telstra held after the commencement
of Schedule 4. This ensures that there will 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.
Clause 3 - Designated day for
Telstra
This clause 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.
Clause 3(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.
Clause 3(2) provides that the declaration has effect
accordingly.
Clause 3(3) requires a copy of the declaration to be
published in the Gazette within 21 days after the designated
day.
Clause 4 - Schedule(s)
Clause 3(1) provides 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.
Clause
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 - Amendments commencing on Royal Assent
Commonwealth Borrowing Levy Act 1987
Item 1 - Item 22 of the Schedule
This item repeals the
reference to ‘Telstra Corporation Ltd’ 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
This item is a transitional provision which
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.
Telecommunications Act 1997
Item 3 - After section 236
Part 9 of the
Telecommunications Act 1997 provides for the customer service guarantee.
Section 234 sets out performance standards in relation to customer service that
carriage service providers must comply with.
If a carriage service
provider (csp) contravenes a performance standard, it is liable to pay damages
to the customer for the contravention.
This item inserts a new section
236A in the Telecommunications Act which will give the Australian Communications
Authority (the ACA) a power to give a csp remedial directions about compliance
with performance standards. This power is intended to be used to address any
systemic problems that arise in a csp’s performance.
Systemic
problems may come to the attention of the ACA in a number of ways - the
Telecommunications Industry Ombudsman (the TIO) may advise the ACA that it is
receiving a large number of complaints about a particular csp’s
performance. The ACA may become aware of a csp’s declining performance
while carrying out its duty of monitoring performance under section 105 of the
Telecommunications Act.
New subsection 236A(1) provides that the
section applies if a csp is subject to a standard in force under section 234 of
the Telecommunications Act.
New subsection 236A(2) gives the ACA
the power to give the csp a direction requiring the csp to:
. take
specified action directed towards ensuring that the csp does not contravene, or
is unlikely to contravene the standard; or
. to take such action as will
ensure that the extent of the provider’s compliance reaches or exceeds a
specified goal or target.
New subsection 236A(3) gives examples of
the kinds of directions that can be given to a csp.
New subsection
236A(4) provides that, except in a case where the Minister directs the ACA
to make a direction, the ACA must consult the TIO.
New subsection
236A(5) provides that a csp must not contravene a direction. This provision
has the effect of applying the enforcement mechanisms in the Act. Section 98
and clause 1 of Schedule 2 to the Act make it a service provider rule that a
service provider must comply with the Act. Subsection 101(1) makes a
contravention of a service provider rule a civil penalty provision. Under
subsection 570(3), the maximum pecuniary penalty for a service provider
contravening subsection 101(1) is $10 million.
New subsection
236A(6) makes a direction a disallowable instrument which must be notified
in the Gazette and tabled in the Parliament and which is subject to disallowance
by either House of the Parliament.
Telstra Corporation Act 1991
Item 4 - Section 3
Section 3 of the Telstra Corporation Act
contains definitions of terms used in the Act. The Act uses the term
‘Minister for Finance’.
This item inserts a definition of
‘Minister for Finance’ which reflects the change in title of that
Minister to the Minister for Finance and Administration.
Item 5 -
Paragraph 8BC(b)
This item makes a minor technical amendment to
update certain terms reflecting revised terminology used in the
Telecommunications Act 1997.
Item 6 - Paragraph
8CC(b)
This item makes a minor technical amendment to update certain
terms reflecting revised terminology used in the Telecommunications Act
1997.
Schedule 2 - Amendments commencing on the first proclaimed day
Telstra Corporation Act 1991
Item 1 - Section 3 (definition of rights)
This item
amends the definition of the term ‘rights’ in section 3
consequential upon the repeal of Part 2C by item 47 of this
Schedule.
Item 2 - Section 8AA
This item amends the
simplified outline to Part 2 of the Telstra Corporation Act consequential upon
the repeal of Division 2 of Part 2 by the following item.
Item 3 -
Division 2 of Part 2
Division 2 of Part 2 of the Telstra Corporation
Act requires the Commonwealth to retain two-thirds of the equity interest in
Telstra.
This item repeals that Division to enable the Commonwealth to
sell its remaining equity interest in Telstra.
Item 4 - Subsection
8AJ(2)
Subsection 8AJ(2) of the Telstra Corporation Act defines the
term ‘Telstra Sale Scheme’ for the purposes of the Act.
This
item amends subsection 8AJ(2) to make a technical amendment consequential upon
the repeal of Division 2 of Part 2 by the preceding item. 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 5 - Subsection 8AJ(3)
This item repeals
subsection 8AJ(3) consequential upon the repeal of Division 2 of Part 2 by item
3 of this Schedule.
Item 6 - At the end of section
8AK
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 clarify that it is possible 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 7 - At the end of subsection 8AL(2)
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. Clause 8AL(2) gives examples of the costs and expenses
which are covered by subsection 8AL(1).
This item adds calls on
indemnities granted by the Commonwealth as a further example of the costs and
expenses covered by subsection 8AL(1).
Item 8 - Sections 8AM to 8AP
(inclusive)
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. This item provides for their repeal.
Item 9 - After subsection
8AQ(4)
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.
This item inserts new subsections (4A) and (4B) which allow
the Minister or the Minister for Finance to give directions to Telstra or a
member of the Board about giving assistance to the Commonwealth.
Item
10 - Subsection 8AQ(5)
This item makes a minor technical amendment
consequential to the amendment in the preceding item.
Item 11 -
Subsection 8AQ(5)
This item makes a minor technical amendment
consequential to the amendment in item 9.
Item 12 - After paragraph
8AQ(5)(a)
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.
This item inserts a
new paragraph 8AQ(5)(ab) to also 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 14
and related definitions in section 8AY and the Corporations Law, this exemption
only applies in relation to local Australian securities
exchanges.
Item 13 - Subsection 8AQ(6)
This item makes a
minor technical amendment consequential to the amendment in item
9.
Item 14 - At the end of section 8AQ
This item inserts
definitions of the terms ‘listing rules’ and ‘securities
exchange’ in section 8AQ consequential to the insertion of a new paragraph
8AQ(5)(ab) by item 12.
Item 15 - Paragraph
8AS(1)(b)
Section 8AS of the Telstra Corporation Act enables the
Minister for Finance 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.
This item repeals paragraph 8AS(1)(b) which otherwise limits the
kinds of assistance in relation to which payment can be made under section
8AS.
Item 16 - Paragraph 8AS(1)(c)
This item makes a minor
technical amendment consequential to the repeal in the preceding
item.
Item 17 - At the end of section 8AS
This item 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 the member of the
Board.
Item 18 - After section 8AU
This item 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 articles, 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 articles.
New section 8AUA - Alteration of
Telstra’s constitution after the minority-interest sale
time
New 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 Minister 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).
New subsection
8AUA(2) requires the Minister to consult the members of the Board of Telstra
before making such an instrument.
New subsection 8AUA(3) makes the
instrument a disallowable instrument which must be notified in the Gazette and
tabled in the Parliament and which is subject to disallowance by either House of
the Parliament.
New 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.
New 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.
New 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 19 - After
paragraph 8AW(5)(a)
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.
This item 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 21 and related
definitions in section 8AY and the Corporations Law, this exemption only applies
in relation to local Australian securities exchanges.
Item 20 -
Subsection 8AW(6)
This item inserts a definition of the term
‘listing rules’ in subsection 8AW(6) consequential to the insertion
of new paragraph 8AW(5)(ab) by the preceding item.
Item 21 -
Subsection 8AW(6)
This item inserts a definition of the term
‘securities exchange’ in subsection 8AW(6) consequential to the
insertion of new paragraph 8AW(5)(ab) by item 19.
Item 22 - At the end
of paragraph 8BB(1)(b)
This item makes a minor technical amendment
consequential to the amendment in the following item.
Item 23 - After
paragraph 8BB(1)(b)
This item amends a delegation provision to enable
the Minister to delegate powers under the Part to the Chief Executive, Office of
Asset Sales and IT Outsourcing.
Item 24 - At the end of paragraph
8BB(2)(b)
This item makes a minor technical amendment consequential
to the amendment in the following item.
Item 25 - After paragraph
8BB(2)(b)
This item 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 26 -
Section 8BE (after note 2)
This item inserts a Note 2A as a
consequence of the amendment to clause 12 of the Schedule to the Telstra
Corporation Act made by item 57 of this Schedule.
Item 27 - Paragraph
8BG(a)
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.
This item changes the maximum aggregate foreign ownership
allowed in Telstra to 35%. Due to the amendment of clause 12 of the Schedule to
the Telstra Corporation Act made by item 57, aggregate foreign ownership is only
measured in relation to shares held by persons other than the Commonwealth.
This ensures that if 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.
Item 28 - Paragraph
8BG(b)
Section 8BG of the Telstra Corporation Act sets out the
foreign ownership limits which apply in relation to Telstra.
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.
This item 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 57, individual foreign ownership is
only measured in relation to shares held by persons other than the Commonwealth.
This ensures that if 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 29 - Section 8BG (notes 1, 2
and 3)
This item repeals notes 1, 2 and 3 at the end of section 8BG
as a consequence of the amendments in the preceding two items and the repeal of
Division 5 of Part 2A (see item 34).
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 57 of this Schedule.
Item 30 - Section
8BG (note 4)
This item makes a minor technical amendment
consequential to the amendment in the preceding item.
Item 31 -
Subparagraph 8BH(b)(ii)
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.
This item amends
subparagraph 8BH(b)(ii) to reflect the change to the maximum aggregate foreign
ownership allowed in Telstra from 11.6667% to 35%.
Item 32 -
Subparagraph 8BH(b)(iii)
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.
This item amends
subparagraph 8BH(a)(iii) to reflect the change to the maximum individual foreign
ownership allowed in Telstra from 1.6667% to 5%.
Item 33 - Section 8BH
(notes 1, 2 and 3)
This item repeals notes 1, 2 and 3 at the end of
section 8BH as a consequence of the amendments in the preceding two items and
the repeal of Division 5 of Part 2A (see item 34).
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 57 of this Schedule.
Item 34
- Division 5 of Part 2A
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.
This item
repeals this Division as a consequence of the amendment to clause 12 of the
Schedule to the Telstra Corporation Act made by item 57 of this Schedule. The
amendment to clause 12 provides for foreign ownership to be measured only in
relation to shares held by persons other than the Commonwealth. This ensures
that if 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 35 - Subsection
8BS(1)
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.
This item 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.
Item 36 - Section 8BV
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.
This item accordingly provides for its repeal.
Item 37 - At the end of
paragraph 8CB(1)(b)
This item makes a minor technical amendment
consequential to the amendment in the following item.
Item 38 - After
paragraph 8CB(1)(b)
This item amends a delegation provision to enable
the Minister to delegate powers under the Part to the Chief Executive, Office of
Asset Sales and IT Outsourcing.
Item 39 - At the end of paragraph
8CB(2)(b)
This item makes a minor technical amendment consequential
to the amendment in the following item.
Item 40 - After paragraph
8CB(2)(b)
This item 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 41 -
After Part 2A
This item 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,
the requirements for its head office and base of operations to be in Australia
and the price-cap regime in Part 6 of the Act.
Part 2AA -
Anti-avoidance
New section 8CCA - Anti-avoidance
New
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.
New
subsection 8CCA(2) makes a contravention of new subsection (1) a ground for
obtaining an injunction under Division 1 of Part 2B of the Act.
New
subsection 8CCA(3) provides that a contravention of new subsection (1) does
not affect the validity of any transaction.
New subsection 8CCA(4)
provides a definition of the term ‘scheme’ for the purposes of the
section.
Item 42 - Part 2B (heading)
Part
2B - Remedial provisions relating to Telstra
The following
item 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 the preceding item.
This item
amends the heading to Part 2B consequential to the amendment in the following
item.
Item 43 - Subsection 8CD(1)
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.
This item amends subsection 8CD(1) to enable the Federal Court to
also grant a restraining injunction for a contravention of new Part 2AA of the
Act to be inserted by item 41.
Item 44 - Sections 8CI, 8CJ and
8CK
This item makes minor technical amendments consequential to the
repeal of Division 2 of Part 2 by item 3 of this Schedule.
Item 45 -
Subsections 8CI(6) and 8CJ(6)
This item makes minor technical
amendments consequential to the repeal of Division 2 of Part 2 by item 3 of this
Schedule.
Item 46 - Section 8CL
This item makes a minor
technical amendment consequential to the repeal of Division 2 of Part 2 by item
3 of this Schedule.
Item 47 - Part 2C
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.
It is proposed to repeal Part 2C given that it is now out of
date. The preamble to the Bill reaffirms the Parliament’s commitment to
the comprehensive community and regulatory safeguards enacted in the
Telecommunications Act 1997, Part 6 of the Telstra Corporation Act and
Parts XIB and XIC of the Trade Practices Act 1974. Specific reference is
made to the universal service obligation in paragraph (a) in the Preamble in
replacement for the existing reaffirmation of the universal service obligation
in the Telstra Corporation Act 1991.
Item 48 - Section
32
This item makes a minor technical amendment consequential to the
amendment to section 8BS(1) of the Telstra Corporation Act made by item 35 of
this Schedule.
Item 49 - Subsections 36(3) and (4)
This
item makes minor technical amendments consequential to the amendment to section
8BS(1) of the Telstra Corporation Act made by item 35 of this
Schedule.
Item 50 - After subsection 36(3)
Section 36 of
the Telstra Corporation Act requires the Auditor-General to be the auditor of
Telstra. Item 1 of Schedule 5 provides for the repeal of this requirement at
the end of the first annual general meeting of Telstra held after the
commencement of Schedule 4. This ensures that there will 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.
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.
This item inserts a
new subsection 36(3A) which enables the Board to appoint an additional auditor
of Telstra. The Corporations Law will have effect as if the additional auditor
had been appointed to a vacancy. The Board is required to consult with the
Auditor-General before making such an appointment.
Item 51 -
Subsection 36(4)
This item amends subsection 36(4) consequential to
the amendment in the preceding item.
Item 52 - At the end of section
36
This item 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
53 - Subsection 41(1)
This item makes a minor technical amendment
consequential to the repeal of Part 2C of the Telstra Corporation Act made by
item 47 of this Schedule.
Item 54 - Clause 2 of the Schedule
(paragraph (b) of the definition of foreign person)
This item
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 55 - Clause 2 of the Schedule (paragraph (c) of the
definition of foreign person)
This item makes a 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 foreigners
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 56 - Subparagraphs (b)(iii) and (iv)
of clause 3 of the Schedule
This item makes a minor technical
amendment to subparagraphs (b)(iii) and (iv) of the Schedule to the Telstra
Corporation Act to remove unnecessary references to New Zealand
citizens.
Item 57 - After subclause 12(4) of the
Schedule
This item amends clause 12 of the Schedule to the Telstra
Corporation Act, which deals with the determination of the direct control
interest that a person holds in Telstra. Clause 11 of the Schedule provides for
the calculation of a stake a person holds in a company for the purposes of the
foreign ownership restrictions on Telstra, by reference to the direct control
interests that the person and the person’s associates hold in the
company.
This item inserts a new clause 12(4A) which provides 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 the shares
held by persons other than the Commonwealth.
New clause 12(4B) provides
that for the purpose of subclause 12(4A), a ‘share’ does not include
an interest in a share. Clause 8 of the Schedule contains a definition of the
term ‘interest in a share’ for the purposes of the ownership
provisions. New clause 12(4B) displaces this definition, so that clause 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 58 - Subclause 12(5) of the
Schedule
This item makes a minor technical amendment consequential to
the amendment made by the following item.
Item 59 - At the end of
clause 12 of the Schedule
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.
Clause 12(5) of the Schedule 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).
This item inserts new clauses 12(6) and (7) which have the
effect of ensuring that this form of double counting does not occur.
Schedule 3 - Amendments commencing on the designated day
Long Service Leave (Commonwealth Employees) Regulations
Item 1 - Schedule 1A (item 4)
This item repeals item 4 in
Schedule 1A of 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 10 of this Schedule 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 2 - Schedule 2A (item 2)
This item repeals item 2 in
Schedule 2A of 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 10 of
this Schedule 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 3 - Schedule
This item 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 10 of
this Schedule inserts a new section 9S in the Telstra Corporation Act which is a
related transitional provision.
Telstra Corporation Act 1991
Item 4 - Section 3
Section 3 of this Bill provides a
mechanism for the Minister to declare a designated day for Telstra.
This
item inserts a definition of the term ‘designated day’ for the
purposes of the new Part 3A inserted by item 10 of this Schedule.
Item
5 - Section 3
This item inserts a definition of the term
‘employee’ in section 3 consequential upon the inclusion of a new
Part 3A containing various employee benefit savings provisions (see item 10 of
this Schedule).
Item 6 - Section 3
This item inserts a
definition of the term ‘Long Service Leave Act’ in section 3 of the
Telstra Corporation Act consequential upon the inclusion of a new Part 3A
containing employee benefit savings provisions relating to long service
leave.
Item 7 - Section 3
This item inserts a definition of
the term ‘Maternity Leave Act’ in section 3 of the Telstra
Corporation Act consequential upon the inclusion of a new Part 3A containing
employee benefit savings provisions relating to maternity leave.
Item
8 - Section 3
This item inserts a definition of the term ‘SRC
Act’ in section 3 of the Telstra Corporation Act consequential upon the
inclusion of a transitional provision relating to safety, rehabilitation and
compensation by item 10 of this Schedule.
Item 9 - Section
3
This item inserts a definition of the term ‘Telstra
body’ in section 3 of the Telstra Corporation Act.
‘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 10 - Before Part 4
This item 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’. Clause 3 of 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 under that new section.
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).
New section 9A
– Interpretation
This clause provides for the definition of
terms used in this Division.
New 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
new 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.
New section 9B
– 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 until his or her combined service period is at least 10 years,
a Telstra body may grant the employee long service leave.
New
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 clause is to be taken so as to expire
immediately before the employee retires or is retrenched (new section
9B(7)).
New subsection 9B(6) allows for a Telstra body to
grant long service leave on half pay.
New 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 (new
section 9E).
New section 9C – Payments in lieu of long service
leave for employees with less than 10 years service
New section 9C
provides that a Telstra body must, in certain circumstances, pay an amount to an
employee in lieu of the employee taking long service leave (new subsection
9C(1)). For new 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 (new
subsection 9C(2)).
New 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 (new 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 (new 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 (new subsection 9C(5));
or
. because of ill health (new 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 new subsection 9E(2).
New 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.
New
section 9D – Payments on the death of an employee
New section
9D requires payment to a deceased employee’s dependant (or dependants) of
the amount that would have been payable to the employee under new 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.
New section 9E – Employee’s long
service leave credit for the purposes of sections 9B and 9C
New
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 new section 9C, the long service
leave credit is reduced by any amount of leave already taken under new section
9B.
New section 9F – Division not to affect an employee’s
post-sale long
service leave rights
New 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.
New section 9G – Saving –
Long Service Leave Act
New 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
New section 9H -
Operation of section 128A of the SRC Act
New section 9H provides that
a Telstra body 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
New section 9J - Deferred benefits under the
Defence Force Retirement and Death Benefits Act 1973
This new
section 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.
New 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.
New section 9K
– Period of eligible employment for the purposes of Division 3 of Part IX
of the Defence Force Retirement and Death Benefits Act
1973
This new section 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.
New
section 9L – Application of the Superannuation Act
1976
This new section provides that if an employee of a Telstra
body 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
New section 9M – 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.
This new section 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.
New section 9N – Telstra employees on maternity leave on
the designated day
This new section preserves the existing rights of
those employees who are on maternity leave on the designated day.
New
section 9P – 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 that would or
might constitute corruption offences, where those acts or omissions occur on or
after the designated day.
New 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.
New 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.
New 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.
New 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.
New
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.
New section 9Q – Saving
– Director of Public Prosecutions Act 1983
This new
section 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.
New section 9R - Avoidance
of doubt - cessation of mobility rights
This provision 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.
New section 9S - Refund
of contribution paid under the Occupational Health and Safety (Commonwealth
Employment) Act 1991
Item 3 of this Schedule 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.
This new
section 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.
Schedule 4 - Amendments commencing on the second proclaimed day
Telstra Corporation Act 1991
Item 1 - Section 8AA
This item makes a minor amendment to
the simplified outline of Part 2 of the Telstra Corporation Act consequential
upon the amendment made by the following item.
Item 2 - Division 3 of
Part 2
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, this item provides for the repeal of Division 3 of
Part 2.
Item 3 - Subsection 8AW(1)
This clause makes a
minor technical amendment to subsection 8AW(1) of the Telstra Corporation Act
consequential upon the repeal of Division 3 of Part 2 by the preceding
item.
Item 4 - Paragraph 8AX(1)(a)
This clause makes a
minor technical amendment to paragraph 8AX(1)(a) of the Telstra Corporation Act
consequential upon the repeal of Division 3 of Part 2 by item 2.
Item
5 - Subsection 8AY(1)
This clause makes a minor technical amendment
to subsection 8AY(1) of the Telstra Corporation Act consequential upon the
repeal of Division 3 of Part 2 by item 2.
Item 6 - Part
3
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.
This item 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 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. 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.
Schedule 5 - Amendment commencing at the end of the first annual general meeting of Telstra held after the second proclaimed day
Telstra Corporation Act 1991
Item 1 - Section 36
Section 36 of the Telstra
Corporation Act requires the Auditor-General to be the auditor of Telstra. This
item provides for the repeal of this requirement.
Clause 2(7) provides
that Schedule 5 commences at the end of the first annual general meeting of
Telstra held after the commencement of Schedule 4. This ensures that there will
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.
Item 2 - Transitional - cessation of Auditor-General’s
appointment as Telstra’s auditor
This item is a transitional
provision which ensures that a replacement auditor for the Auditor-General may
be appointed at the first annual general meeting of Telstra held after the
commencement of Schedule 4 as if a vacancy in the office of auditor had arisen
at the start of the meeting.