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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TELECOMMUNICATIONS UNIVERSAL SERVICE MANAGEMENT AGENCY BILL
2011
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Broadband, Communications
and the Digital Economy, Senator the Hon. Stephen Conroy)
TELECOMMUNICATIONS UNIVERSAL SERVICE MANAGEMENT
AGENCY BILL 2011
OUTLINE
The Telecommunications Universal Service Management Agency Bill 2011 (the Bill)
forms part of a package of legislation to achieve continuity of key
telecommunications safeguards in the transition to the National Broadband Network
(NBN). The other Bills in the package are the Telecommunications Legislation
Amendment (Universal Service Reform) Bill 2011 (the Universal Service Reform
Bill) and the Telecommunications (Industry Levy Bill) 2011 (the Levy Bill).
The Bill:
� provides for the establishment of the Telecommunications Universal Service
Management Agency (TUSMA) as the statutory agency that will have the
responsibility for the effective implementation and administration of service
agreements or grants that deliver universal service and other public policy
telecommunications outcomes;
� sets out TUSMA's corporate governance structure and reporting and
accountability requirements;
� provides for the Minister, subject to the scrutiny of Parliament, to set the
standards, rules and minimum benchmarks for TUSMA's contracts and
grants; and
� sets out arrangements for consolidating the two current Universal Service
Obligation (USO) and National Relay Service (NRS) industry levy regimes
into a single regime to contribute funding towards TUSMA's costs.
The Universal Service Reform Bill introduces a framework under which, after an
initial commencement period for the new regime, the Minister may permit USO
regulatory obligations to be progressively lifted from Telstra subject to a number of
preconditions being met in relation to Telstra's contractual and regulatory compliance
and performance. Legislative responsibility will be placed on TUSMA to ensure the
service agreements or grants that it has in place effectively deliver public interest
policy objectives. Lifting of the regulated USO is linked to the rollout of the NBN and
the progressive structural separation of Telstra.
The Universal Service Reform Bill also includes a number of consequential
amendments to phase out the USO and NRS levies and to ensure that the Australian
Communications and Media Authority (ACMA) can effectively enforce the industry
levy arrangements in the Bill.
The Levy Bill imposes a levy that will provide for relevant industry participants to
contribute to the costs of TUSMA that are not met by dedicated Budget funding.
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Policy objectives
Current arrangements
Currently, the main public interest telecommunications services regulated under
telecommunications legislation are the USO (for standard telephone services and
payphones) and emergency call services. Telecommunications legislation also
provides for the Commonwealth to contract with the private sector for the provision of
the NRS.
The legislative arrangements for the USO are set out in the Telecommunications
(Consumer Protection and Service Standards) Act 1999 (the Consumer Protection
Act) and legislative instruments made under that Act. The USO requires Telstra as the
current primary universal service provider to ensure that standard telephone services
and payphones are reasonably accessible to all people in Australia on an equitable
basis, wherever they reside or carry on business. Under the Consumer Protection Act,
the telecommunications industry contributes funding towards the delivery of the USO
through levy arrangements.
The Consumer Protection Act also sets out the policy objectives for the NRS, which is
a service that provides voice equivalent services for people who are deaf or who have
a hearing and/or speech impairment. NRS services are delivered under contract with
the Commonwealth. Under current Commonwealth contract arrangements, the relay
service is delivered by Australian Communication Exchange Limited, and an outreach
service for the NRS is provided by WestWood Spice. Industry funds the cost of the
NRS contracts through levy arrangements similar to the USO scheme.
The arrangements for emergency call services in Australia are covered by the
Telecommunications Act 1997 (the Telecommunications Act) and the Consumer
Protection Act, and legislative instruments made under those Acts. The
telecommunications industry is required to provide access to the emergency call
service for standard telephone services free of charge. Currently, the national
providers of the emergency call service are Telstra and the NRS provider. The NRS
element is funded through the NRS levy, but Telstra's costs are not funded through
levy arrangements.
Need for change
The USO regulatory arrangements were designed for a market where there was a
vertically integrated operator of a national telecommunications network. The rollout
of the NBN will result in a fundamental change to the structure of the Australian
telecommunications market as Telstra's near ubiquitous national copper fixed line
network will be progressively decommissioned as NBN Co rolls out its next
generation fibre network nationally.
3
The NBN will be operated on a wholesale-only and equivalent basis. In an
environment where all retail service providers are able, via the NBN, to offer high
quality voice and high-speed broadband services nationally, it is appropriate that the
model for delivering universal service and other public policy telecommunications
outcomes be reformed to facilitate the competitive supply of universal service and
other public policy telecommunications outcomes. A regime that enables competitive
supply arrangements will be of benefit to consumers and industry as it promotes more
innovative, effective and efficient service delivery arrangements.
In this regard, the service delivery arrangements for the USO will transition to a
model that is similar to the current arrangements for the provision of the NRS, in that
the Government will contract with service providers for the supply of these important
services.
Telstra's role as the emergency call person also reflects its historical position as the
vertically integrated owner of a national telecommunications network. The
Government's intention is that, while the supplier of the emergency call service will
remain subject to direct regulation, the service will be delivered through contract with
the Commonwealth and for the telecommunications industry to contribute to the costs
of the emergency call service through levy arrangements. This will also enable the
provision of the emergency call service to be opened up through a competitive process
to alternative suppliers. While a competitive process will place a very high priority on
reliable and robust service arrangements, it also provides a mechanism to ensure that
the telecommunications services that the community expects continue to be delivered
effectively and efficiently.
The Government's NBN policy reflects the importance of high-speed broadband
services to Australia's economic and social future. However, the Government also
recognises that, at least during the transition to the network, some customers who may
be able to access a broadband fibre service may wish to retain a voice-only fixed-line
service. Some of these customers may require updated connectors/adaptors or internal
wiring so that they can continue to obtain a fixed-line voice-only service once their
existing copper line is disconnected from the Telstra network and their new service is
supplied over the NBN.
There will be a role for the Government in entering into contracts, or making grants
to, carriage service providers or other persons to facilitate the transition of voice-only
customers to the NBN. This could include arrangements to meet cabling installation
costs to enable voice-only customers who are currently connected to the Telstra
copper network to be connected to the NBN, or to provide information to voice-only
customers on their service options and the processes involved in migrating to the
NBN.
The Government has also indicated that research may be required into technological
solutions to facilitate the continuity of carriage of services to support traffic lights and
public alarms as Telstra's copper customer access network is progressively
decommissioned.
4
On 23 June 2011, following consultation with industry, the Government announced,
that it had entered into initial service agreements with Telstra to ensure continuity of
services during the transition to the NBN (the Telstra Agreement). Together with the
existing NRS contracts outlined above, the Telstra Agreement will ensure:
� that all Australians have reasonable access to a standard telephone service (the
USO for voice telephony services);
� that payphones are reasonably accessible to all Australians (the USO for
payphones);
� the ongoing delivery of the emergency call service by Telstra (calls to Triple
Zero `000' and `112');
� the ongoing delivery of the NRS;
� that appropriate safety net arrangements are in place that will assist the
migration of voice-only customers to a NBN fibre service as Telstra's copper
customer access network is progressively decommissioned; and
� technological solutions will be developed as necessary to support continuity of
other public interest services (i.e. public alarm systems and traffic lights).
As part of the reforms, a new statutory agency, TUSMA, will be established to
manage the Telstra Agreement and other public interest telecommunications contracts
and grants. The establishment of a statutory agency dedicated to the implementation
and effective administration of telecommunications service agreements and grants
will promote high quality and efficient contract and grant management to maximise
the benefit for consumers and manage risks appropriately, within a transparent and
accountable legislative framework.
As part of the transition to a single agency model for the administration of service
agreements and grants for the delivery of universal service and other public policy
telecommunications outcomes, the Bill provides for the consolidation of the two
existing telecommunications levy arrangements and for the determination of a new
single levy that takes into account the Government's historic commitment to provide
Budget funding towards the costs of TUSMA.
The consolidation of the USO and NRS levies, in concert with the recent decision by
the Government to implement a $25 million eligible revenue threshold before carriers
are required to contribute to levies, will significantly reduce red tape for the smaller
market participants as well as for firms that are required to make a contribution
towards the costs of the agreements administered by TUSMA.
Structure of the Bill
The Bill establishes TUSMA and sets out its key functions, including the policy
objectives for the contracts or grants it will administer. It also sets out arrangements
for collecting the industry levy and for determining market participants' funding
contributions.
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The Bill has four main elements:
(a) Part 2 covers the scope of contracts or grants that TUSMA will administer,
including setting the policy objectives that those contracts or grants must
achieve, providing for Ministerial contract standards, rules or minimum
benchmarks, and transitional arrangements in relation to the existing
agreement with Telstra and the NRS agreements;
(b) Part 3 sets out the structure and governance arrangements of TUSMA;
(c) Division 9 of Part 3, together with provisions in Part 2, set out TUSMA's
reporting obligations; and
(d) Parts 5 and 6 set out TUSMA's funding and the levy arrangements.
TUSMA contracts or grants
TUSMA's main role will be, on behalf of the Commonwealth, to enter into, and
administer, contracts or grants of financial assistance for the USO and other public
interest services. It will not have regulatory powers.
Division 1 of Part 2 of the Bill sets out policy objectives for TUSMA contracts. These
objectives are based on the current legislated objectives for the standard telephone
service and payphone components of the USO, the NRS and the emergency call
service, and also cover the provision of customer information programs, customer
cabling installation programs and carriage service development programs to support
the continuity of supply of carriage services during the transition to the NBN. The
provisions for the transition of carriage services to the NBN align with the
components of the Telstra Agreement that put in place a framework to assist with the
migration of voice-only customers and of public interest services (traffic lights and
public alarms) to the NBN. TUSMA will be required in performing its functions and
exercising its powers under Part 2 to take all reasonable steps to ensure that the policy
objectives are achieved.
There is provision for additional policy objectives to be set out in regulations where
these objectives relate to the supply of telecommunications carriage services. This is
intended to provide flexibility where there is a need for TUSMA contracts or grants to
cover future public interest requirements. Any regulations to broaden the purpose and
scope of TUSMA contracts will be subject to the public consultation and
Parliamentary scrutiny requirements in the Legislative Instruments Act 2003.
The Bill provides for the Minister, by legislative instrument, to make standards, rules
or minimum benchmarks that will be deemed to be conditions of the universal service
components of the agreement with Telstra and any future contracts and grants entered
into by TUSMA. Service providers with whom TUSMA has a contract will be
required, as a condition of contract, to comply with the standards, rules or
performance benchmarks set by the Minister.
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Existing USO safeguards made under the Consumer Protection Act already form part
of the Government's agreement with Telstra for the delivery of universal service and
other public interest telecommunications services. It is the Government's intention
that, as USO regulatory obligations are progressively lifted from Telstra under the
measures in the Universal Service Reform Bill, the existing USO safeguards will form
the basis of contract standards in relation to the provision of standard telephone
services and payphones. However, the Bill gives the Minister a broad power to make
contract standards, rules or performance benchmarks, to enable the Government to set
requirements in relation to all future TUSMA contracts or grants.
The Bill includes provisions requiring TUSMA to notify the Minister before it enters
into a contract or grant, or varies an existing contract or grant, where that action is
likely to result in an increase in funding contributions by the Commonwealth or
industry. These provisions will allow the Minister to be informed, and to consider the
merits of, any key changes proposed by TUSMA.
The Bill includes transitional provisions to ensure that TUSMA is responsible and
accountable for managing the Telstra Agreement and the existing NRS agreements.
TUSMA's structure and governance
The Bill provides that TUSMA will be established as a statutory agency under the
Financial Management and Accountability Act 1997 (the FMA Act). The
accompanying Universal Service Reform Bill makes provision for the Financial
Management and Accountability Regulations 1997 to be amended to prescribe
TUSMA as an agency subject to the FMA Act.
The principal functions of TUSMA will be conferred on the Chair and members of
TUSMA, who will be appointed on a part-time basis. The Chair and members will be
able to delegate responsibilities to the CEO and to the staff of TUSMA. The CEO will
be the person responsible for the day to day administration of the agency under the
FMA Act and the Public Service Act 1999 (the PS Act). TUSMA's staff will also be
appointed under the PS Act.
In appointing the TUSMA Chair and other members, the Minister will be required to
be satisfied that appointees have substantial experience or knowledge and standing in
one or more relevant fields (telecommunications industry operations, law, economics,
business or financial management and public administration). Given the breadth of the
expertise required and the significance of the agency's role in delivering fundamental
public policy outcomes, it is more appropriate for TUSMA's key operational
decisions to be made through collective decision-making.
The remuneration of the Chair and members, and of the CEO, will be determined by
the Remuneration Tribunal. The CEO and members must also disclose to the Minister
all interests that could conflict with the proper performance of their functions. The
Bill sets out provisions covering termination of appointment and delegation for the
CEO and members. Generally speaking, the arrangements for remuneration,
disclosure, and delegation reflect the standard approach under Commonwealth
legislation, such as set out in the Australian Communications and Media Authority
Act 2005.
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TUSMA will be able to form advisory committees to assist it in carrying out its
functions.
Oversight and accountability framework
Division 9 of Part 3 of the Bill sets out TUSMA's planning and reporting obligations.
The provisions in this Division are supplemented by the contract and grant reporting
and performance monitoring powers set out in proposed Divisions 3 and 4 of Part 2 of
this Bill. Together with the existing reporting requirements for statutory agencies
under the FMA Act, the provisions in the Bill establish a rigorous oversight and
accountability framework that reflects the importance for consumers of effective
arrangements being in place for the delivery of public interest telecommunications
services, and also the importance for industry and Government to have confidence
from appropriate accountability and transparency arrangements that funding is being
used efficiently, effectively and appropriately.
The ability for the Minister to set contract standards, rules or performance
benchmarks (see above), provides a flexible mechanism by which safeguards can be
built into TUSMA contracts and modified as appropriate. As noted above, Ministerial
determinations can be used to cover specific standards, rules or benchmarks that
currently apply to regulated USO services, but the provisions have been drafted more
broadly to enable the Minister to determine standards, rules or benchmarks in relation
to all future TUSMA contracts and grants.
Division 3 of Part 2 of the Bill provides for TUSMA to maintain registers of public
interest telecommunications contracts and grants. These registers will need to include
details identifying the party with whom TUSMA has a contract, or to whom it has
made a grant, the duration of the agreement, the total amount paid or to be paid by the
Commonwealth and the actions to be undertaken under the contract or grant. The
registers must be publicly available on TUSMA's website. These proposed registers
enable Parliament, industry and consumers alike to remain informed of TUSMA's
activities.
Division 4 of Part 2 of the Bill requires TUSMA to report, each financial year, to the
Minister on all significant matters relating to the performance of contractors and grant
recipients. The reports must cover any notifications of breaches, the action taken in
response to such breaches, and the outcomes of that action. The report must be
included in TUSMA's annual report tabled each year in Parliament. This provision
will provide additional assurance for the public that public interest
telecommunications services are continuing to be delivered in accordance with
contract or grant arrangements.
Division 9 of Part 3 of the Bill requires TUSMA to prepare and provide to the
Minister a corporate plan every three years and also to prepare an annual report on its
operations for tabling in Parliament. The corporate plan must include details of
TUSMA's objectives, as well as the strategies and policies to achieve those
objectives. If there are changes to the plan, or matters that might significantly affect
the achievement of the objectives set out in the plan, TUSMA must inform the
Minister.
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The annual report must include details of each amount paid by the Commonwealth
under a contract, and the amount of each grant, during the relevant financial year. It
must also cover details of any action taken by the Chair and members of TUSMA in
response to a Ministerial direction.
The Bill also enables the Minister to require TUSMA to provide reports or
information to the Minister on specified matters relating to the performance of
TUSMA's functions.
The Bill provides for a review before 1 January 2018 of the Act, any legislative
instruments made under the Act, as well as any provisions of the Telecommunications
Act that relate to the Bill. The review would need to consider (but would not be
limited to) the extent to which the policy objectives have been achieved, whether
there should be any changes to the functions of TUSMA, and whether there should be
any changes to arrangements for the provision of standard telephone services,
payphones, emergency call services and the NRS. The review must make provision
for public consultation and the report of the review must be tabled in both Houses of
the Parliament.
TUSMA funding and industry levy
On 23 June 2011, the Government announced that it would contribute Budget funding
to the costs of universal service outcomes. The Government will commit base funding
of $50 million over the two financial years 2012-13 and 2013-14, and $100 million
per annum after that. It will also supplement, during the financial years 2012-13 and
2013-14, its funding contribution to make up for any shortfall arising from the
industry's levy contributions. Taking into account Government funding, TUSMA's
residual funding requirements will be met through a consolidated industry levy
scheme which, from 1 July 2012, will replace the current USO and NRS levies and
cover future funding for TUSMA's other responsibilities.
Under the Bill, the Minister will need to prepare a written estimate before 1 July each
year of the amount that is likely to be paid by TUSMA, during the next financial year,
under contracts and by way of grants. The Minister must also determine an overall
industry levy target amount having regard to the Government's funding for TUSMA,
and estimate TUSMA's administrative costs for the financial year ahead.
The agreement with Telstra includes annual payments of $230 million for the delivery
of the STS, $40 million for payphones, and up to $20 million for the emergency call
service. There could also be further payments for voice-only migration or the
development of technological solutions for the migration of public interest services;
current estimates are that these could amount to up to $25 million per annum.
Currently, there are two NRS contracts, with a total annual expenditure of about
$17 million (GST inclusive). Consequently, on an annual basis TUSMA's liabilities
are likely to be around $340 million during the financial years 2012-13 and 2013-14,
reducing to $330 million per annum thereafter.
For the first two financial years of the new levy arrangements, transitional
mechanisms are proposed to cover the time lags involved in assessing levy liability
and collecting levy. The first eligible revenue period under the Bill will be based on
the 2011-12 eligible revenue period determined under the Consumer Protection Act.
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Furthermore, during the first two eligible levy periods the levy amount will be
calculated based on an overall levy cap amount, to be determined, by legislative
instrument, by the Minister. This scheme is modelled on the current requirement,
under the Consumer Protection Act, for the Minister to determine the USO subsidy
amount each year and is intended to transition levy participants to the new
arrangements. The Bill provides for all participating persons to be subject to the same
criteria for determining their levy amounts, but also enables the Minister (in the first
two years only of TUSMA's operation) to set-off a part or whole of the levy amount
as against part or the whole of any money payable by the Commonwealth to that
person.
The Government made a commitment, when it announced the TUSMA arrangements
in June 2011, to review the levy arrangements and the need for any additional Budget
funding, over and above the Government's committed base funding, during the course
of the first two financial years of TUSMA's operation.
The accompanying Levy Bill imposes an obligation on industry members to pay the
levy. The Bill covers arrangements for collecting the levy and determining liability.
The amount each telecommunications provider has to pay towards the levy will be
based, as is currently the case for the USO and NRS levies, on its eligible revenue as
assessed by the ACMA. The ACMA will remain responsible for collecting the levy
and assessing the levy amount. As is currently the case, telecommunications carriers
will be subject to the levy, and the Minister may, by legislative instrument, require
carriage service providers to contribute. The Minister for Broadband,
Communications and the Digital Economy recently set a revenue threshold of $25
million for contributions to the USO and NRS levies, and the Government's policy is
that this key red tape reform will continue under the new levy arrangements.
Levies will be paid into the Telecommunications Universal Service Special Account,
which is established under Part 5 of the Bill. TUSMA must report on its expenditure
from this Special Account in accordance with the FMA Act, the FMA Regulations
and the Finance Minister's Orders. The purposes of the Special Account include
paying amounts payable by the Commonwealth under a contract, to make grants, to
pay TUSMA's administrative costs and to make distributions and refunds where
applicable. In the event that there is a balance standing to the credit of the Special
Account after all payments payable by TUSMA have been paid, TUSMA may
distribute the balance to persons who are or were participating persons.
Financial Impact Statement
The Government will provide dedicated funding to TUSMA of $50 million per annum
for the years 2012-13 and 2013-14, and then $100 million per annum thereafter.
The Government's agreement to provide this additional funding recognises that the
migration of traffic over time to the new fibre network has economic implications for
the continuation of Telstra's existing copper network and other infrastructure Telstra
currently uses to supply USO services. The Government has therefore agreed to
provide this additional funding to help support the maintenance and operation of the
existing copper network and other USO infrastructure outside fibre coverage areas.
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The proposed telecommunications industry levy will also have a financial impact on
industry. The levy is designed to recover from service providers the total of
TUSMA's costs, expenses and other obligations that are not covered by
Commonwealth funding. The total amount to be collected in any eligible levy period
will depend on the total residual amounts to be collected. The current contracts for the
NRS are about $17 million per annum and the agreement with Telstra provides for
annual payments to Telstra of $290 million to cover the provision of standard
telephone services, payphones and the emergency call service. Other amounts may be
required to cover contracts or grants to support the transition of carriage services to
the NBN. The Government has estimated that TUSMA's total annual liabilities are
likely to be in the region of $330-$340 million.
The relative contributions of participating persons will depend on each person's share
of total eligible revenue. The share provides the basis on which total costs are
apportioned to each person. Thus a person earning 50 per cent of total eligible revenue
would be liable to fund 50 per cent of the levy.
Regulatory Impact Statement
1. Issues which give rise to the need for action
Background
Universal Service Obligation
The Universal Service Obligation (USO) is the obligation placed on universal service
providers (currently just Telstra) to ensure that standard telephone services,
payphones and prescribed carriage services are reasonably accessible to all people in
Australia on an equitable basis, wherever they reside or carry on business.
Provision of the USO is funded by the telecommunications industry. Currently this
includes all licensed telecommunications carriers. The Minister may expand the
contributor base to include carriage service providers, however this has not occurred
to date.
The USO subsidy amount (USO levy) is determined by the Minister based on advice
from the Australian Communications and Media Authority (ACMA). These
determinations may be made up to three years in advance. The USO levy is currently
set at $145 million, comprising $131.2 million for the standard telephone service and
$13.8 million for payphones (there have been no additional carriage services that have
been prescribed).
To determine each carrier's contribution to the USO levy, the ACMA uses the
concept of `eligible revenue'. Eligible revenue is the formal expression of the
telecommunications earnings of a carrier and its related parties. Carriers are required
to lodge their eligible revenue returns (ERRs) to the ACMA for each year they hold a
telecommunications carrier licence. The ACMA then assesses the ERRs and advises
carriers of their eligible revenues for each financial year.
In June this year, the Minister set a $25 million threshold for contributions to the USO
levy. This means that from the 2011-12 financial year onwards carriers must have
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earned at least $25 million in eligible revenue before they need to contribute to the
USO levy.
The ACMA uses the eligible revenue to determine each carrier's contributions to the
USO subsidy. The contributions are based on the proportion of a carrier's eligible
revenue, compared with the total eligible revenue of all the carriers. Carriers are
required to pay the USO levy to the ACMA on an annual basis.
Telstra as the regulated Primary Universal Service Provider was assessed by the
ACMA as being entitled to a levy subsidy of $145 million for the 2009-10 claim year
(under current legislated arrangements, Telstra must also contribute to the cost of the
USO, but as it receives the USO subsidy it receives a credit for the amount it would
otherwise have to pay).
Figure 1: USO contributions (FY2009-10)
Contributor USO Percentage
payment of eligible
revenue
Telstra $91.5m 63.1%
Optus $28.9m 19.9%
Vodafone Hutchison Australia $14.1m 9.7%
(VHA)
Other $10.5m 7.3%
TOTAL $145m 100%
National Relay Service
The National Relay Service (NRS) allows people who are deaf or have a hearing or
speech impairment to use the telephone. The NRS is a national telephone service
available to everyone at no additional cost.
The NRS has two separate components:
1. a call centre providing the Relay Service; and
2. an Outreach Service.
The Relay Service is provided by Australian Communication Exchange, and the
Outreach Service is provided by WestWood Spice both under contract to the
Australian Government.
Provision of the NRS is funded by telecommunications carriers with eligible revenue
of $10 million or greater. In June this year the Minister raised this threshold to $25
million. The amount that each participating carrier contributes to the levy is based on
their share of eligible revenue, as shown in the eligible revenue assessment for the
relevant financial year. Carriers are required to pay the NRS levy to the ACMA on a
quarterly basis. During 2009-10, the ACMA collected about $15.5 million for the
NRS levy on a GST exclusive basis (when GST is added, the total contract amounts
were about $17.1 million).
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Figure 2: NRS contributions (FY2009-10)
Contributor NRS Percentage
payment of eligible
revenue
Telstra $10.1m 65.2%
Optus $3.1m 20.0%
VHA $1.4m 9.0%
Other $0.9m 5.8%
TOTAL $15.5m 100%
Figure 3: Combined USO and NRS key contributors (FY2009-10)
Contributor Combined Overall
USO and percentage
NRS of eligible
revenue
Telstra $101.6m 63.3%
Optus $32.0m 19.9%
VHA $15.5m 9.7%
Other $11.4m 7.1%
TOTAL $160.5m 100%
Public Policy Reforms to support the National Broadband Network
On 20 June 2010, Telstra and NBN Co announced a non-binding Head of Financial
Agreement to support the rollout of the NBN. This Agreement provides for:
� the reuse of suitable Telstra infrastructure, including pits, ducts and backhaul
fibre, by NBN Co as it starts to rollout its new network avoiding unnecessary
infrastructure duplication, and
� the progressive migration of customers from Telstra's copper and pay-TV cable
networks to the new wholesale-only fibre network to be built and operated by
NBN Co.
In support of this Agreement, the Australian Government announced it would
progress public policy reforms to support the transition to the NBN.1
The reforms include establishing a new entity, the Telecommunications Universal
Service Management Agency (TUSMA), which will commence operations in July
2012 and will, over time, become the entity with the statutory responsibility for
delivering the Government's public policy objectives in the telecommunications
sector, including:
� ensuring all Australians have reasonable access to a standard telephone service
(the Universal Service Obligation for voice telephony services)
1
For more information see:
� USO framework policy statement:
www.dbcde.gov.au/broadband/national_broadband_network/nbn_policy_statements
� USO reform media release: www.minister.dbcde.gov.au/media/media_releases/2010/060
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� ensuring that payphones are reasonably accessible to all Australians (the Universal
Service Obligation for payphones)
� emergency call handling (Triple Zero `000' and `112')
� the National Relay Service
� migration of voice-only customers to a fibre-based service as Telstra's copper
lines are disconnected, and
� the development of technological solutions for continuity of public interest
services (public alarm systems and traffic lights).
As part of this initiative the Australian Government announced its intention to
contribute, for the first time, towards the cost of delivering the USO by providing
funding to TUSMA of $50 million in FY2012-13 and FY2013-14, increasing to
$100 million per annum thereafter. The Government also announced that the residual
costs incurred by TUSMA would be met through a revised industry levy scheme
which will replace the current USO and NRS levy schemes.
On 23 June 2011 the Government announced that it had signed an agreement with
Telstra that will ensure basic universal telecommunication service outcomes during
and after the roll out of the National Broadband Network. Under the new USO
arrangements the total annual costs for TUSMA are estimated to be $340 million per
annum for the first two financial years, reducing to $330 million thereafter.
Figure 4: TUSMA's expected liabilities
TUSMA liabilities FY2012-13 FY2013-14 FY2014-15
USO voice $230m $230m $230m
USO payphones $40m $40m $40m
Emergency Call Handling $20m $20m $20m
National Relay Service ~$17.1m ~$20m ~$20m
Voice-only migration ~$15m ~$15m ~$15m
Public interest services ~$10m ~$10m $0
TUSMA administration costs ~$5m ~$5m ~$5m
Total ~$340m ~$340m ~$330m
Transition to the new USO arrangements
It is expected that TUSMA will commence operations by 1 July 2012 and from this
date it will have responsibility for delivering, through contracts or grants, universal
service outcomes, emergency calls, the NRS, migration of voice-only customers and
the development of any necessary technological solutions for continuity of public
interest services.
The legislated responsibility for providing standard telephone services to premises
within NBN fibre coverage areas will remain with Telstra until the NBN fibre
network has been rolled out in the relevant area. Once the NBN fibre network has
been rolled out in an area, responsibility for ensuring the delivery of standard
telephone services will fall to TUSMA. In areas outside of the NBN fibre footprint,
14
Telstra will remain the regulated provider of standard telephone services for a period
of two years after TUSMA commences operations. From approximately 1 July 2014,
subject to consideration by the Minister, this responsibility will transfer to TUSMA.
TUSMA will deliver the standard telephone service through service agreements with
Telstra. Telstra will remain the regulated provider of payphone services for a period
of two years after TUSMA commences operations. From approximately 1 July 2014
onwards, subject to consideration by the Minister, TUSMA will have responsibility
for delivering payphone services. TUSMA will deliver these services through
contractual means.
Issues
Funding TUSMA
The amount collected through the existing USO and NRS levies has stayed relatively
stable at $160.5 million per annum for the past few years, with contributions from
individual carriers determined on the basis of eligible revenue. Telstra contributes
approximately $101.5 million and non-Telstra carriers contribute the remaining
$60 million (see figure 3 above).
Under the new arrangements, the amount to be collected from industry will need to
cover TUSMA's costs (less the amount of Government funding contributions).
TUSMA's costs will comprise:
� USO voice - An annual payment of $230 million to Telstra. This base amount is
subject to variations (upwards and downwards) if Telstra's costs are altered as a
consequence of changes in the relevant Government policy. The term of the
agreement is up to 20 years.
� USO payphones - An annual payment of $40 million to Telstra. This base
amount is subject to variations (upwards and downwards) if Telstra's costs are
altered as a consequence of changes in the relevant Government policy. The term
of the agreement is up to 20 years.
� Emergency Call Handling - An annual capped payment of up to $20 million to
Telstra. The term of the agreement is up to 20 years. TUSMA will also pay
Telstra's costs for any major upgrades that are reasonably required to ensure the
continued provision of emergency services.
� National Relay Service - TUSMA will take over administration of the existing
NRS contract which has a current annual payment level of about $17.1 million
(including GST) until the end of the 2012-13 financial year.2 There is also an
additional estimated allowance to cover the possibility of the NRS providers
having to undertake additional functions as a result of the NRS review (which is
currently underway).
� Voice-only migration - This estimate of $15 million per annum is based on
analysis of the number of voice-only customers likely to require migration
assistance and the costs to provide this migration assistance (i.e. targeted customer
assistance and funding to undertake basic rewiring tasks). Funding of these
activities is only required until the end of the NBN rollout.
2
The NRS contracts were recently extended until 30 June 2013; see ACMA media release 59/2011 of
24 June 2011, `National Relay Service contracts extended', at
www.acma.gov.au/WEB/STANDARD/pc=PC_410058.
.
15
� Public interest services - This estimate of $15 million per annum is based on
analysis of the numbers and types of services that may need solutions developed.
Under the contract with Telstra, funding is only available until 2015.
� TUSMA administration costs - The expected annual operating costs of
TUSMA. These costs are ongoing.
While the existing eligible revenue principles are an effective mechanism for
collecting the current USO and NRS levies, this model may not be the most suitable
and sustainable model under the new USO arrangements. The purpose of this
Regulation Impact Statement is to explore the different funding options that could be
implemented.
Expanding the Contributor Base
With the transition to the NBN and the likelihood that the majority of fixed line
services in Australia will be delivered over this network over time, there will be many
existing (and new) telecommunications providers that may not need to hold a carrier
licence because they will not need to operate any network elements of their own to
offer services. While there will always be providers offering services on the NBN that
will continue to operate networks separate to the NBN (e.g. providers with their own
backhaul networks and mobile, wireless and satellite providers), the number of
carriers in Australia may reduce as providers begin offering services on the NBN.
If the contributor base is not broadened to include telecommunications service
providers, it may encourage service providers to cease being carriers so that they are
not subject to the USO levy, which would lead to an additional burden on remaining
carriers and could discourage investment in future network construction.
2. Objective
The Government's objective is to ensure its public policy objectives in the
telecommunications sector are delivered as efficiently and effectively as possible.
TUSMA's funding arrangements should also be as transparent, accountable and
equitable as possible and able to be efficiently implemented and managed.
3. Options (regulatory and/or non-regulatory) that may constitute viable
means for achieving the desired objective(s)
The Government has decided to deliver its public policy objectives in the
telecommunications sector through the establishment of TUSMA. Broadly, there are
three mechanisms that could be used, separately or in combination, to fund TUSMA:
1. Government funding
2. Industry funding
3. Broader based non-Government funding
As noted above, the Government has already announced that it will provide base
funding to TUSMA of $50 million in FY2012-13 and FY2013-14, with
supplementary funding during those two financial years, increasing to $100 million
per annum thereafter, with TUSMA's residual costs to be met through non-
Government contributions (i.e. industry funding or consumer funding).
In order to determine the most effective model for funding, a number of different
options for funding TUSMA's residual costs have been considered:
16
� Option A: Telecommunications Industry Levy only
� Option B: Combined Telecommunications Industry Levy and additional
direct Australian Government funding
� Option C: Combined Telecommunications Industry Levy and increased
Annual Numbering Charge
� Option D: Broad-based levy
All these options involve contributions from industry or a broader base. As a result,
there will need to be clear transparency mechanisms in place so that industry and the
public can have a clear picture of the efficiency and effectiveness of TUSMA's
actions in expending funds.
Option A: Telecommunications Industry Levy only
Noting the Government's base funding of $50 million during the first two financial
years and $100 million each year thereafter, under this option telecommunications
service providers (not just carriers) would contribute to TUSMA's residual costs
based on eligible revenue principles similar to existing arrangements for the USO and
NRS levies. It is estimated that Telstra's contribution would increase to $182 million
in the first two years, and then fall to $144 million (currently $102 million). Likewise,
it is estimated that non-Telstra contributions would increase to $108 million in the
first two years, and then fall to $86 million (currently $60 million).
This option has previously been supported by the Government in its initial
consideration of the new USO arrangements.
How is the amount collected by each contributor calculated?
To determine the required contribution from each contributor, the ACMA would
continue to use the concept of `eligible revenue'.
The ACMA would use eligible revenue to determine each carrier's contributions to
the Telecommunications Industry Levy. The contributions are based on the proportion
of a contributor's eligible revenue, compared with the total eligible revenue of all
contributors. Contributors would be required to pay the Telecommunications Industry
Levy to the ACMA on an annual basis.
Who must contribute?
All telecommunications carriers and carriage service providers with eligible revenues
of $25 million or more would be expected to contribute to the Telecommunications
Industry Levy.
What impact is there on industry?
� From a regulatory/compliance perspective there is a very limited impact on
carriers because the collection mechanism is consistent with the existing USO
and NRS levies. While there are likely to be some initial costs involved in
transitioning to the new arrangements, these are expected to be offset by the
benefits of only having to comply with a single levy mechanism instead of two
levy arrangements.
17
� By increasing the contributor base to include carriage service providers there
will be new compliance costs for those providers who are not carriers as well.
However, smaller providers will not be impacted because of the $25 million
eligible revenue threshold. It is not expected that the compliance costs for the
larger providers will be significant relative to their size and resources.
� For example, in the ACMA's 2008-09 eligible revenue assessment, there were
a total of 194 carriers, including only 24 carriers with eligible revenue of
greater than $25 million who would be required to contribute to the levy.
� The actual increased costs to industry are significant. It is expected that in the
short term the share of eligible revenues will remain consistent with the
current levels, which would mean Telstra's contribution towards the
Telecommunications Industry Levy would be $182 million (an increase of
$80 million compared to its current payments of $102 million under the USO
and NRS levies) and the rest of industry contribution would be $108 million
(an increase of $48 million compared to their current payments of $60 million
under the USO and NRS levies).
� This option treats all contributors on an equitable basis and does not impose an
administrative burden on smaller telecommunications providers.
How is it adjusted?
� The levy would be subject to annual (or less frequent) adjustment by the
Minister.
� The Minister would set the amount to be collected after consulting with
TUSMA, which would provide advice based on its liabilities for the relevant
period.
What are the benefits?
� The benefit for industry is that the levy arrangements are consolidated into a
single arrangement.
What issues may arise?
� While implementation of this option will result in some changes to accounting
and billing systems, it is not expected to raise significant issues as the
approach is broadly consistent with current arrangements.
Option B: Combined Telecommunications Industry Levy and additional direct
Australian Government funding
Under this option, TUSMA's residual annual costs would be met through two separate
funding sources:
� a revised Telecommunications Industry Levy which has been broadened to
require all telecommunications service providers (not just carriers) with
eligible revenue of $25 million or greater to contribute based on eligible
revenue principles; and
� additional direct Australian Government funding during the financial years
2012-13 and 2013-14, with a review prior to 30 June 2014 to allow further
consideration as to what are the most appropriate long-term arrangements.
18
Who must contribute?
� All telecommunications carriers and service providers with eligible revenues
of $25 million or more would be expected to contribute to the
Telecommunications Industry Levy component.
� The Australian Government, through direct funding from the Budget, during
the 2012-13 and 2013-14 financial years.
How is the amount collected by each contributor calculated?
The Minister would set the amount to be collected by industry after consulting with
TUSMA, which would provide advice based on its liabilities for the relevant period. It
would be necessary to determine the relative contributions of the Telecommunications
Industry Levy and direct Government funding to the total funding of TUSMA's
residual costs. ACMA would set the contribution amounts for each provider in
accordance with eligible revenue principles. Government would supplement its
funding in the first two financial years so that contributors to the industry levy, with
the exception of Telstra, will not face an increase to their aggregate funding
contribution.
What impact is there on industry?
� The regulatory/compliance impact of the Telecommunications Industry Levy
component is similar to Option A. There is very limited additional compliance
burden on carriers because the collection mechanism is consistent with the
existing USO and NRS levies. While there are likely to be some initial costs
involved in transitioning to the new arrangements, these are expected to be
offset by the benefits of only having to comply with a single levy mechanism
instead of two levy arrangements.
� By increasing the contributor base to include telecommunications service
providers there will be new compliance costs for those providers who are not
carriers as well. However, smaller providers will not be impacted because of
the $25 million eligible revenue threshold. It is not expected that the
compliance costs for the larger providers will be significant relative to their
size and resources.
� Under this approach, to facilitate a smooth transition to the new arrangements,
the Government, in addition to its base funding of $50 million per annum for
the financial years 2012-13 and 2013-14 and $100 million per annum
thereafter, would supplement its funding so that contributors to the industry
levy, with the exception of Telstra, will not face an increase to their aggregate
funding contribution. The arrangements would be reviewed before
30 June 2014, but in the absence of a Government decision to continue
supplementary funding after that date, the levy arrangements would default to
Option A.
How is it adjusted?
� The levy would be subject to annual adjustment by the Minister.
� The Minister would set the amount to be collected by the levy after consulting
with TUSMA, which would provide advice based on its liabilities for the
relevant period. In the first two financial years, the amount of additional direct
Government funding would be set so that contributors to the industry levy,
with the exception of Telstra, will not face an increase to their aggregate
funding contribution.
19
What benefits are there?
� This option consolidates the current USO and NRS levies. The funding
arrangement is well-understood by industry and provides for an appropriate
contribution to TUSMA's operational costs in accordance with `industry pays'
principles.
� The option provides a smooth transition for industry to the new arrangements.
� A review prior to 30 June 2014 allows for detailed analysis of the
arrangements and of other funding options.
What issues may arise?
� While implementation of this option will result in some changes to accounting
and billing systems, it is not expected to raise significant issues as the
approach is broadly consistent with current arrangements.
Option C: Combined Telecommunications Industry Levy and increased Annual
Numbering Charge
Under this option, it is proposed TUSMA's residual annual costs be met through two
separate levy arrangements:
� A revised Telecommunications Industry Levy which has been expanded to
require all telecommunications service providers (not just carriers) to
contribute based on eligible revenue principles; and
� Increasing the Annual Numbering Charge and expanding the base to include
geographic numbers.
Under this option carriers could contribute to the Telecommunication Industry Levy
component at the current amount of the combined USO and NRS levies
(approximately $160.5 million), with the residual $129.5 million funded through an
increase to the Annual Numbering Charge and an extension of the Charge to cover
geographic numbers.
� The existing arrangements for the Annual Numbering Charge, currently
collected from carriage service providers by the ACMA, would be retained.
� The charge is currently set at $60 million per annum through the Budget and
funds collected are paid into the Consolidated Revenue Fund.
� The charge would be extended to include geographic (fixed line) numbers. As
a base estimate, if each of the 90.9 million local service numbers attracted the
current 10-digit number charge of $0.696 this would raise an additional
$63.3 million.
� This option would result in the Annual Numbering Charge having to be
doubled to raise the additional $129.5 million in residual costs for the
universal service reforms.
While this option may be relatively easy to implement, it would be limited to carriage
service providers that hold telephone numbers, for example internet service providers
would not be captured by the arrangements. The Annual Numbering Charge, as a tax
whose revenues can be appropriated for any purpose, would provide less transparency
to industry and end-users. The ACMA's current review of numbering arrangements
may result in changes to the Annual Numbering Charge.
20
What is it?
� Under this option the Annual Numbering Charge, which is imposed on
carriage service providers for the quantity of numbers held, would be
increased to collect additional funds for the USO policy reforms.
Arrangements would be made to enable the Annual Numbering Charge to
extend to geographic (landline) numbers.
Who must contribute?
� Carriage service providers that hold digital mobile, free phone (1800), local
rate (1300), or premium rate (1900) telephone numbers currently contribute to
the Annual Numbering Charge.
� It is anticipated that the current arrangements would be maintained, but with
the inclusion of geographic numbers. Internet service providers would not be
included in this charge.
What impact is there on industry?
� Given the Annual Numbering Charge would need to collect an additional
$129.5 million, there is potentially a doubling of contributions from industry.
� Providers with geographic (fixed line) numbers currently do not contribute to
the charge but under this option they would.
How is it set?
� The existing mechanism would be utilised for the charge. The Annual
Numbering Charge is set through the Budget, with the 2011 target set at
$60 million. The funds raised through the charge go to the Consolidated
Revenue Fund, with the Government determining what the funds should be
attributed to.
How is it collected?
� The charges would be collected by the ACMA, consistent with the current
arrangements and paid into the Consolidated Revenue Fund. The additional
amount would then be appropriated to meet the residual USO costs, which
would effectively increase the Budget contribution.
� The charges would only be collected from providers of voice services.
How is it adjusted?
� The target for the charge is set annually through the Budget. The target would
be set after consulting with TUSMA, which would provide advice based on its
liabilities for the relevant period.
What benefits are there?
� This option would be relatively simple to implement as it utilises an existing
funding mechanism, noting that legislative amendments would be needed to
extend the Annual Numbering Charge to include geographic numbers.
� Funding through the Annual Numbering Charge may provide more flexibility
than a levy scheme as funding may be used for other purposes.
What issues may arise?
� The Annual Numbering Charge is paid directly into consolidated revenue so
there is potential for funds to be used for purposes other than those for which
21
they were collected. Additionally, the scope of numbering is not as broad as a
charge based on services in operation.
� This arrangement would only apply to carriage service providers that hold
numbers and would not apply to providers of internet services.
� While the other options being considered target all of industry and/or all
telecommunications customers, this option only targets users/providers of
basic services (i.e. voice services). It is likely that the cost of basic
telecommunications services would increase by more under this option than
under the other options.
� The number of phone numbers being allocated may reduce over time if users
abandon fixed line voice services in favour of using mobile services for their
voice needs. This could lead to the Annual Numbering Charging being
unsustainable for funding TUSMA in the long term.
Option D: Broad-based levy
Under this option, TUSMA's residual costs would be met through the introduction of
a broader based levy. The OECD3 has considered a number of options for funding the
delivery of universal service, and has noted that, in addition to Government funding,
one option could be to impose a direct levy on all consumers of communications
services (for example, a fixed amount that appears directly on a customer's bill).
In the United States of America, a universal service levy has been imposed on
communications providers that is passed on to consumers. The levy is imposed as a
charge on all long-distance calls.
Further work would be required to determine which approach would best meet the
Australian circumstances. Under the first two approaches identified by the OECD,
however, service providers would collect the levy from their customers. Each
customer would contribute to the levy based on the number of services they receive.
A variation of this option could be a combined broad-based levy and
Telecommunications Industry Levy, which would require telecommunications service
providers to also contribute to TUSMA's residual costs based on the revised eligible
revenue principles. Effectively, this would result in a joint `industry-and-consumer
pays' funding model. The relative contributions of industry and consumers would
need to be determined, along with the timeframe on which customers would be
required to contribute (for example, on a yearly or monthly basis).
For the purpose of the broad-based levy, what is a service?
There would need to be a public consultation process to determine which services
would be captured by the levy. The actual mechanism for collecting the levy would
also be considered under this process, and would take into account such issues as what
is the most appropriate mechanism to capture certain prepaid accounts. There are
approximately 46 million services in Australia (taken from the ACMA 2009-10
Communications Report), which are composed of:
� Fixed voice services: 10.6 million
� Mobile services: 26 million
� Broadband services (fixed and wireless): 9.5 million
3
OECD (2006), Rethinking Universal Service for a Next Generation Network Environment,
OECD Digital Economy Papers, No. 113, http://dx.doi.org/10.1787/231528858833.
22
Figure 5: Estimated breakdown by provider of existing Services in Operation
Fixed Mobile Total % of
Contributor Voice Broadband Voice/handset Broadband SIOs SIOs
Telstra 6,600,000 2,924,000 8,900,000 1,662,000 20,086,000 43.6%
Optus 1,600,000 980,000 7,679,000 994,000 11,253,000 24.4%
VHA ~ ~ 6,652,000 782,000 7,434,000 16.1%
Other 2,400,000 2,086,000 2,769,000 22,000 7,277,000 15.9%
TOTAL 10,600,000 5,990,000 26,000,000 3,460,000 46,050,000 100%
Note: This information is broadly based on figures taken from the ACMA's 2009-10 Communications
Report and the annual reports of Telstra, Optus and VHA.
Under a broad-based levy each end-user would contribute to the levy based on the
number of services they acquire. For example, if the levy was set at $0.50 per month,
an end-user with a home phone, a mobile phone and a home broadband connection
would pay a levy for each service (i.e. a total of $1.50 per month), whereas an end-
user with only a mobile phone would pay a levy for their single service (i.e. $0.50 per
month).
Who could contribute?
� All consumers with a fixed, mobile, wireless or satellite voice or broadband
service. All telecommunications carriers and service providers would be
required to collect the levy from each of their customers.
� If the Telecommunications Industry Levy variation to the funding model is
adopted, all telecommunications carriers and service providers with eligible
revenues of $25 million or more would be required to contribute. This would
reduce the amount of the levy to be collected from end-users, but the relative
contributions of industry and consumers would need to be determined.
Imposing mandatory pass through of the levy
There are two options for collecting a broad-based levy: the Government could make
it mandatory for all service providers to pass on the levy directly to customers, or it
could make it discretionary for all service providers to pass on the levy directly to
customers.
If the Government imposes mandatory pass through requirements on service providers
then any levy would provide much greater clarity for consumers because the amount
they contribute towards the costs of TUSMA would be clearly stated on each bill.
If the Government does not impose mandatory pass through requirements on service
providers then it is possible that some service providers would choose to pass on the
levy transparently to customers (i.e. add it as a line item on the bill) and others would
choose to include the levy in their cost of providing a service (i.e. the levy is used as
an input in determining the price of a service), which may lead to confusion among
consumers.
23
What impact is there on industry?
� By expanding the contributor base to include all telecommunications carriers
and service providers there will be new compliance costs for those providers
who are not carriers as well.
� This option would be equitable to all contributors.
� With the introduction of the levy all service providers would need to modify
their accounting and billing systems to collect the levy. The cost to each
service provider of changing their accounting and billing system is difficult to
quantify because most systems are customised for the individual providers.
However, it is expected that these costs would not be significant given that
providers of standard telephone services are required under law to provide
customers with itemised bills and all providers of telecommunications services
(fixed and mobile telephone services, internet and other data services) are
subject to the Telecommunications Consumer Protections Code, which
includes a range of billing requirements, such as minimum standards for the
content and presentation of bills, customer access to billing information, and
verification and itemisation of billed charges.
� If the Telecommunications Industry Levy variation to the funding model is
adopted, service providers and carriers with revenues over $25 million will be
affected. However, the financial impact will be lessened in comparison to
Option A, as the industry levy will only be required to partly fund TUSMA's
residual costs.
How is it adjusted?
� The levy would be subject to annual (or less frequent) adjustment by the
Minister.
� The Minister would set the amount to be collected by the levy after consulting
with TUSMA, which would provide advice based on its liabilities for the
relevant period.
� If the variation is adopted, it will be necessary to determine the relative
contributions of the levy and the Telecommunications Industry Levy to the
funding of TUSMA's residual costs. The Minister would set the contribution
percentage amounts for both Levies, with service providers and carriers being
required to contribute to the Telecommunications Industry Levy component in
accordance with eligible revenue principles.
What benefits are there?
� The broad-based levy option acts as a broad-based funding model that
provides for growth in telecommunications and broadband activity to
automatically generate necessary TUSMA funding. In addition, it would
provide greater transparency for consumers.
� Funding the residual amounts through a single levy may be more cost-
effective than having a hybrid funding mechanism, as administrative and
compliance costs would be reduced.
What issues may arise?
� Introducing a levy is likely to impose transitional costs on industry to modify
their accounting and billing systems, but these costs are not expected to be
significant.
24
� Carriers already pass on the costs of the USO and NRS levies to consumers.
Consumers would see a small increase to bills if a broad-based levy were to be
adopted, but if mandatory pass-through were required the increase would be
transparent to consumers.
� The ACMA would need to put in place formal structures for collecting the
levy from all telecommunications service providers.
� Including a Telecommunications Industry Levy in addition to a broad-based
levy would not impose any additional regulatory burden on industry as it is
currently subject to levy payment requirements for existing USO funding.
� Further work would need to be undertaken to determine the level at which a
levy should be set, to ensure that it did not recover more than TUSMA's costs,
and to determine the timeframe for payment.
4. Other Options for Consideration
Increasing the USO Levy contributor base
The Telecommunications (Consumer Protection and Service Standards) Act 1999
allows the Minister to require telecommunications service providers that are not
carriers to contribute, but to date this power has not been used.
With the transition to the NBN and the likelihood that the majority of fixed line
services in Australia will be delivered over this network over time, there will be many
existing (and new) telecommunications providers that may not need to hold a carrier
licence because they will not need to operate any network elements of their own to
offer services. While there will always be providers offering services on the NBN that
will continue to operate networks separate to the NBN (e.g. providers with their own
backhaul networks and mobile, wireless and satellite providers), the number of
carriers in Australia may reduce as providers begin offering services on the NBN.
If the contributor base is not broadened to include telecommunications service
providers, it may encourage service providers to cease being carriers so that they are
not subject to the USO levy, which would lead to an additional burden on remaining
carriers and could discourage investment in future network construction.
According to the ACMA 2008-09 eligible revenue assessment, there were a total of
194 carriers, of which 24 (or 12.4 per cent) had eligible revenue of $25 million or
more. The Australian Bureau of Statistics (ABS) Internet Activity Survey for
December 2010 identified 104 retail service providers with more than 1,000 active
subscribers.4 There is limited information available on the revenue of retail service
providers that are not also carriers, however, if we assume that the revenues earned
are comparable to carriers then there are likely to be approximately 13 providers that
would have eligible revenue of $25 million or more and be required to contribute to
the Telecommunications Industry Levy.
4
The ABS defines active subscribers as subscribers that have an internet connection with an internet
retail service provider on the last day of the reference period (see the ABS Internet Activity Survey
December 2010: www.abs.gov.au/ausstats/abs@.nsf/mf/8153.0)
25
The cost to the new contributors of having to submit their annual ERRs to the ACMA
is not expected to be significant. The process of submitting the ERR involves filling in
a template with information that should be readily available to telecommunications
providers (i.e. the amount of revenue they earned in the previous financial year). The
main cost to retail service providers would be the cost of having their eligible revenue
return audited before it is submitted.
5. Impact assessment
This section discusses the advantages and disadvantages of the options identified
above in terms of the objectives discussed in section 2 and their impact on
stakeholders, including:
� TUSMA (once established);
� carriers;
� carriage service providers;
� the ACMA; and
� consumers.
The following criteria are considered in analysing the options outlined in section 3:
� action required and likely compliance costs
� ability of TUSMA to fulfil its functions
� impact on industry
� impact on consumers
� competitive impacts
� benefits
� regulatory efficiency
The merits of each option against the identified criteria are presented in the table
below:
� Option A: Telecommunications Industry Levy only
� Option B: Combined Telecommunications Industry Levy and additional direct
Government funding
� Option C: Combined Telecommunications Industry Levy and increased annual
numbering charge
� Option D: Broad-based non-Government levy only
26
Option A - Telecommunications Option B - Combined Option C - Combined Option D - Broad-based Levy
Assessment criteria Industry Levy only Telecommunications Industry Telecommunications Industry (with possible variation to include
Levy and additional direct Levy and increased Annual Telecommunications Industry
Australian Government funding in Numbering Charge Levy)
the short term
Action required and likely � No additional compliance costs � The existing regulatory approach � No additional compliance costs � Telecommunications service
compliance costs for current contributors to the to the USO levy would be for current contributors to the providers would need to modify
USO and NRS levies (although adopted. USO and NRS levies for the their accounting and billing
actual costs for providers would Telecommunications Industry systems to collect the levy. The
increase in line with the higher � Telecommunications service Levy component. cost is not expected to be
levy). providers with eligible revenue significant, but the Government
of $25 million or greater would � No additional compliance costs would need to work out the finer
� Telecommunications service now be included in the for providers who hold detail of the scheme.
providers with eligible revenue Telecommunications Industry telephone numbers.
of $25 million or greater would Levy scheme as eligible � If the variation is adopted,
now be included in the contributors (previously it was compliance costs on service
Telecommunications Industry only carriers who contributed). providers are likely to be low
Levy scheme as eligible because the regulatory
contributors (previously it was � Minimal administrative impact arrangements would be
only carriers who contributed). on the ACMA because existing modelled on current
levy processes are followed. arrangements.
Government would provide
additional funding in the first
two financial years to provide a
smooth transition to new levy
arrangements for non-Telstra
providers.
� Allocation of additional
appropriation required through
Budget process.
Ability of TUSMA to fulfil its � This option would provide � This option would provide � This option would provide � This option would provide
functions sufficient funding to enable sufficient funding to enable sufficient funding to enable sufficient funding to enable
TUSMA to fulfil its functions. TUSMA to fulfil its functions. TUSMA to fulfil its functions in TUSMA to fulfil its functions.
the short-term.
� However, it is likely that the
number of phone numbers being
27
allocated could reduce over time
if users abandon fixed line voice
service in favour of using mobile
services for their voice needs.
This could lead to the Annual
Numbering Charging being
unsustainable for funding
TUSMA in the long term.
Impact on industry � In FY2012-13 and 2013-14, the � In FY2012-13 and 2013-14, the � Industry participants currently � Industry participants do not have
new USO arrangements would majority of the increase in the contributing to the Annual to provide any direct funding to
collect approximately levy will be met by Telstra, Numbering Charge may see a the levy, but there may be some
$290 million, which would be an because non-Telstra providers doubling of their contributions. administrative burden if industry
approximately 80 per cent will not face an increase to their is required to collect the levy
increase on the amount being aggregate funding contribution from consumers.
collected under the current USO (due to additional Budget
and NRS levies. funding). The overall amount of � If variation adopted, there would
levy to be collected from Telstra be regulatory impacts on service
� Carriers and CSPs with eligible will be controlled, however, as it providers equivalent to Option
revenue of less than $25 million cannot be higher than TUSMA's A, i.e. subject to
would not have to contribute to costs (less Government funding Telecommunications Industry
the levy. for TUSMA). Levy. However, carriers and
CSPs with eligible revenue of
� Carriers and CSPs with eligible less than $25 million would not
revenue of less than $25 million have to contribute to the levy.
would not have to contribute to
the levy.
� Any impacts after 30 June 2014
would depend on the outcomes
of a review.
Impact on consumers � It is likely that providers will � It is likely that providers will � With the Annual Numbering � Consumers will see a small
pass on the levy directly to pass on the Telecommunications Charge being extended to increase to bills because their
customers but it is unlikely that Industry Levy to customers. geographic numbers, CSPs are bills will include the broad-
they will pass it on in a Consumer bills would likely to pass this cost onto their based levy. However, the
transparent manner experience no or minimal customers. increases to the bills will be
increase because of the totally transparent to consumers.
� Due to expanding the � This option is only targeted at
28
contributor base to include additional Government funding. users/providers of voice services � If variation adopted, impacts on
telecommunications service whereas all of the other options consumers would be reduced
providers there will be are targeted at users/providers of because the
additional customers who may all telecommunications services. Telecommunications Industry
see their costs increased. This option is likely to lead to a Levy would reduce the amount
higher cost for voice services to be collected by the broad-
� While the costs are increasing than the other options. based levy.
compared to the existing USO
and NRS levies, the amount
passed onto customers is not
expected to be significant (i.e.
~$4/year extra, assuming an
additional $130m needs to be
raised and there are ~30million
accounts)
Competitive impacts � This option is equitable to all � This option is equitable to all � This option is equitable for all � This option is equitable to all
contributors. contributors. providers of traditional voice contributors.
services.
� While not all � While not all � If variation is adopted, all
telecommunications service telecommunications service � However, it may place providers providers of substantial scale
providers are required to pay the providers are required to pay the of traditional voice services at a would contribute to the levy.
levy (due to the eligible revenue levy (due to the eligible revenue disadvantage to providers who
threshold), all providers of threshold), all providers of offer no voice services or
substantial scale will contribute substantial scale will contribute internet based voice services.
to the levy. to the levy.
Benefits � Relatively simple to implement � Relatively simple to implement � Relatively simple to implement � Provides greater transparency to
as it utilises existing funding as it utilises existing as utilises existing funding customers on their contribution
mechanism and carriers are arrangements and carriers are mechanism and CSPs are to the cost of providing universal
familiar with the concept. familiar with the concept. comfortable with concept. service and public interest
services.
� Additional direct Government
funding provides a smooth � If variation adopted, additional
transition for industry and funding meets equity principles
certainty of outcomes for from spreading TUSMA residual
consumers. operating costs across industry
as well as consumers in
29
� A review allows detailed accordance with `industry-and-
analysis of funding options to consumer pays' principles.
take place before 30 June 2014.
Regulatory efficiency � This option is based on existing � This option is based on the � Utilises existing regulatory � Funding the residual amounts
regulatory arrangements, so it is existing regulatory mechanism. through a single levy may be
efficient to implement. arrangements, so it is efficient to more cost-effective than having
implement. a hybrid funding mechanism, as
� Funding the residual amounts administrative and compliance
through a single levy may be costs would be reduced.
more cost-effective than having
a hybrid funding mechanism, as � The ACMA will need to put in
administrative and compliance place formal structures for
costs would be reduced. collecting the levy from all
telecommunications service
providers.
� Marginal negative impacts on
regulatory efficiency as service
providers are familiar with, and
have internal processes aligned
to, payment of the
Telecommunications Industry
Levy.
� This option would need further
work to implement, especially to
work out the timeframe for
collecting the levy and the actual
amount to be levied to ensure
that the levy does not recover
more than TUSMA's costs.
30
6. Consultation
Previous consultation
In the October 2010 discussion paper on implementing the USO policy in the transition to the
NBN, industry views were sought on other options for funding TUSMA, including
alternatives to the consolidated levy. Although the majority of respondents argued against the
need for payments to Telstra (and, thus, the need for a levy), the consultations did not provide
constructive assistance in working through additional options, such as a levy on customer
accounts, services or telephone numbers either to replace or supplement the existing
arrangements.
A summary of the main responses to the 2010 discussion paper is set out below:
1. Future funding arrangements for TUSMA:
a. the preference is for Government funding of TUSMA, with the industry
exempt from providing any additional funding to cover the functions of
TUSMA.
b. the costs associated with the voice services component of the USO should be
entirely borne by Telstra, and that such costs will reduce significantly over
time as the copper network is decommissioned.
c. contributions towards the additional functions of TUSMA (Emergency Call
Handling, voice migration and funding for public interest services) should not
be recovered from industry.
d. there is some support for broadening the base of contributors to the levy
arrangements.
2. Institutional arrangements for TUSMA:
a. TUSMA needs to be structured in such a way that it is fully accountable to
Government and its operations transparent to industry and consumers.
b. TUSMA should operate in such a way that it delivers benefits to industry and
be structured to avoid duplicating existing capabilities within Government.
c. industry should have an advisory role in relation to the exercise of TUSMA's
functions.
3. Some respondents suggested a review of the USO in light of changes to the structure
of the industry, changes in consumer preferences, technological advances and the
advent of the NBN (e.g. VHA suggested a review by the Productivity Commission).
4. Reconsider the Government's policy regarding the length of the agreement with
Telstra for the maintenance of copper lines in non-fibre service areas.
Telstra consultation
As part of negotiations of the USO agreement the Government consulted with Telstra on
options A, B and D and Telstra indicated that it could support these options.
7. Conclusion
On balance it is recommended that Option B be preferred. Although it imposes an additional
cost on industry, this cost is largely placed on Telstra. In the first two financial years,
Government would provide base funding of at least $50 million, plus additional Budget
31
funding so that contributors to the industry levy, with the exception of Telstra, will not face
an increase to their aggregate funding contribution. Telstra itself is compensated by the
addition of base Government funding and the greater certainty it will have of receiving
funding that better reflects the costs of providing universal service and other public interest
services. The overall cost impact on Telstra is also controlled as the levy will be set to cover
TUSMA's costs. The option provides a smooth transition for industry and also provides it
with greater certainty of the obligations and funding requirements that will be placed upon it.
Finally, holding a review before 30 June 2014 will allow the Government to consider all
options in further detail.
Option A would place a greater funding burden on industry, and especially non-Telstra
contributors, although again the overall impact is controlled and the option does also provide
industry with certainty. However, it imposes a more abrupt transition to the new
arrangements. Option C does not provide certainty that it can cover TUSMA's costs on an
ongoing basis. Option D does have the merit of being broadly-based, with only marginal
impacts overall on consumers, but it would need further work to determine the impacts on
industry and consumer behaviour, timeframes for collection and the actual amount of any
levy.
8. Implementation and review of the preferred option
Option B can be implemented with limited impacts on industry or consumers. The
Telecommunications Industry Levy component of the contribution requires only the
application of the new eligible revenue return principles to establish the $25 million eligible
revenue threshold.
The Government has already announced its initial contribution to TUSMA's operations of
$50 million in FY2012-13 and FY2013-14, increasing to $100 million per annum thereafter.
Accordingly, any further Budget funding under Option B will be provided through the
Budget appropriation process.
Given that Option B will impose some higher costs on industry, a review of the adequacy and
efficacy of funding arrangements will be undertaken before July 2014.
32
ABBREVIATIONS
The following abbreviations are used in this explanatory memorandum:
ACCC: Australian Competition and Consumer Commission
ACMA: Australian Communications and Media Authority
ACMA Act: Australian Communications and Media Authority Act 2005
AIA: Acts Interpretation Act 1901
Bill: Telecommunications Universal Service Management Agency
Bill 2011
CCA: Competition and Consumer Act 2010 (formerly the Trade
Practices Act 1974)
Consumer Protection Act: Telecommunications (Consumer Protection and Service
Standards) Act 1999
FMA Act: Financial Management and Accountability Act 1997
FMA Regulations: Financial Management and Accountability Regulations 1997
Minister: Minister for Broadband, Communications and the Digital
Economy
NBN: National Broadband Network
NBN Co: NBN Co Limited
NRS: National Relay Service
Special Account: Telecommunications Universal Service Special Account
STS: standard telephone service
Telecommunications Act: Telecommunications Act 1997
Telstra: Telstra Corporation Limited
TUSMA: Telecommunications Universal Service Management Agency
USO: universal service obligation
33
NOTES ON CLAUSES
TELECOMMUNICATIONS UNIVERSAL SERVICE MANAGEMENT
AGENCY BILL 2011
Part 1-- Preliminary
Clause 1 - Short title
Clause 1 provides that the Bill, when enacted, may be cited as the Telecommunications
Universal Service Management Agency Act 2011.
Clause 2 - Commencement
Clause 2 provides for the commencement of the Bill. It is intended to ensure that the
establishment of TUSMA does not commence until Telstra is legally committed to the
structural separation of its copper network as that network is progressively decommissioned
in fibre network areas through a structural separation undertaking that is in force. For this
reason, the commencement of clauses 3 to 125 is tied to the acceptance by the ACCC of
voluntary structural separation undertakings and related commitments given by Telstra.
Clauses 1 and 2 of the Bill, and any other provisions not covered in the table provided at
subclause 2(1), will commence on the day on which the Bill receives the Royal Assent.
Clauses 3 to 125 of the Bill will commence on a single day to be fixed by proclamation. That
day must not occur before the latest of the following events:
� when a structural separation undertaking given by Telstra comes into force;
� if Telstra's structural separation undertaking requires Telstra to give the ACCC a draft
migration plan, when the ACCC approves that draft migration plan;
� if the extended spectrum regime applies to Telstra, when an undertaking given by
Telstra about hybrid fibre-coaxial networks comes into force (unless the Minister has
exempted Telstra from that undertaking); and
� if the extended spectrum regime applies to Telstra, when an undertaking given by
Telstra about subscription television broadcasting licences comes into force (unless
the Minister has exempted Telstra from that undertaking).
If there is no proclamation within six months after the latest of the events listed above,
clauses 3 to 125 of the Bill will commence on the day after the end of that six month period.
Clause 3 - Simplified Outline
Clause 3 contains a simplified outline of the Bill to assist readers.
Clause 4 - Definitions
Clause 4 sets out definitions of key terms used in the Bill. In many cases, the definitions in
clause 4 refer to terms contained in the Telecommunications Act or the Consumer Protection
Act. It is not intended that the TUSMA legislative scheme will affect the way that key
components of Australia's telecommunications legislative framework are defined.
34
Consequently, where the Bill refers to terms such as carrier, carriage service, carriage
service provider, customer cabling, emergency call service, line, national broadband
network, payphone and standard telephone service, the meaning of those terms will be the
same as the applicable definitions in the Telecommunications Act and the Consumer
Protection Act.
To ensure consistency with existing telecommunications legislation, the definition of
Australia has the same meaning that it has under the Telecommunications Act, that is, the
term will include the Territories of Christmas Island and the Cocos (Keeling) Islands as well
as any other external Territory prescribed under section 10 of that Act.
The definition of National Relay Service is consistent with the description of that term in
subsection 95(1) of the Consumer Protection Act. This definition does not prescribe a
particular technological solution through which the service is provided. The definition leaves
open the possibility that as technology advances, new features may be added to the NRS to
better provide access to a standard telephone service.
Clause 5 - Vacancy in the office of a TUSMA member
Clause 5 provides that for the purposes of a reference in the Bill to a vacancy in the office of
a member of TUSMA there are taken to be four offices of members in addition to the Chair.
This enables the number of offices which are vacant to be determined at any one time, despite
the fluctuations in the number of members who may be appointed. Clause 37 of the Bill
provides for at least four members and up to six members. For example, if there were two
persons, other than the Chair, appointed as members of TUSMA, clause 5 would deem there
to be two vacancies in the membership. Consequently, the Minister would be able to appoint
two acting members in accordance with subclause 40(2).
Clause 5 also provides that, for the purposes of a reference in the AIA to a vacancy in the
membership of a body, there are taken to be four offices of members in addition to the Chair.
Clause 6 - Standard telephone service
This clause replicates section 8BA of the Consumer Protection Act.
Subclause 6(1) provides that a reference to a STS includes the meaning that is provided for
under section 6 of the Consumer Protection Act that has any characteristics that have been
specified by the Minister under a subclause 6(2) instrument.
Subclause 6(2) replicates subsection 8BA(2) of the Consumer Protection Act. It enables the
Minister, by legislative instrument, to determine specified characteristics for the purposes of
subclause 6(1). This mechanism could be used, for example, to set specific voice quality
requirements as part of the STS.
35
Clause 7 - Supply of standard telephone services
Clause 7 defines what is included in a reference in this Bill to the supply of a standard
telephone service. This provision replicates section 9E of the Consumer Protection Act.
Clause 7 ensures that a reference to the supply of a STS includes, at a minimum, a telephone
that does not have switching functions and the equivalent customer equipment for a person
with a disability in order to comply with the Disability Discrimination Act 1992.
Subclause 7(1) provides that a reference in the Bill to the supply of a standard telephone
service includes a reference to the supply of:
� if the regulations prescribe customer equipment - that customer equipment or customer
equipment supplied instead of that first-mentioned customer equipment in order to
comply with the Disability Discrimination Act 1992; and
� if the regulations do not prescribe customer equipment - a telephone handset that does
not have switching functions or such other customer equipment supplied instead of
such a handset in order to comply with the Disability Discrimination Act 1992; and
� other goods and services of a kind specified in the regulations,
where the equipment, goods or services, as the case may be, are for use in connection with
the standard telephone service.
Subclause 7(2) provides that a reference in the Bill to the supply of a standard telephone
service includes a reference to the supply, to a person with a disability, of customer
equipment and other goods and services of a kind specified in the regulations where the
equipment, goods or services, as the case may be, are for use in connection with the standard
telephone service. The term `disability' is taken to have the same meaning as in the Disability
Discrimination Act 1992.
Subclause 7(3) provides that the term `supply' in relation to customer equipment or other
goods, includes supply by way of hire.
The provisions in clause 7 give the Government flexibility in relation to the types of customer
equipment and other goods and services that may be required under a TUSMA contract or
grant which covers the supply of a STS. For instance, this may include: upgrades in the types
of customer equipment, such as a telephone handset that has switching functions; specifying
other goods, such as service manuals; or specifying other services, such as customer help
lines.
It is important to note the prerequisite in clause 7 that the supply of the customer equipment
must be for use in connection with the standard telephone service. Equipment and other
goods and services not for use in connection with the standard telephone service cannot be
prescribed in the regulations under this provision.
Clause 8 - Crown to be bound
Subclause 8(1) provides that the Bill binds the Crown in each of its capacities.
Subclause 8(2) provides that the Crown is not liable to a pecuniary penalty or to be
prosecuted for an offence. This protection does not apply to an authority of the Crown
(subclause 8(3)).
36
Clause 9 - Extension to external territories
Clause 9 provides that this Bill extends to the Territories of Christmas Island and Cocos
(Keeling) Islands and any other external Territories prescribed by regulations made for the
purposes of paragraph 10(c) of the Telecommunications Act. This extension is consistent
with paragraph 7(c) of the Consumer Protection Act.
Clause 10 - Continuity of partnerships
Clause 10 provides that for the purpose of this Bill, a change in the composition of a
partnership does not affect the continuity of the partnership. This means, for example, that if
one partner leaves a partnership, any obligations or rights of the remaining partners are not
affected.
Part 2-- Public interest telecommunications services
Division 1--Policy objectives
Clause 11 - Policy objectives
Clause 11 sets out the policy objectives of Part 2 of the Bill, which essentially define the
limits of TUSMA's contract and grant-related functions as conferred under the Bill. Under
clause 13 of the Bill, TUSMA may only carry out its core function of entering into contracts,
or making a grant of financial assistance, if that contract or grant is for a purpose relating to
the achievement of one or more of the policy objectives set out in paragraphs (a) to (f) of this
clause.
STS and Payphones
The policy objectives in paragraphs 11(a) and (b) set out the fundamental principles that
standard telephone services and payphones be reasonably accessible to all people in Australia
on an equitable basis, wherever they reside or carry on business, and that standard telephone
services be supplied to people in Australia on request and payphones be supplied, installed
and maintained in Australia. The meanings of `standard telephone service' and `payphones'
are contained in, respectively, sections 6 and 9C of the Consumer Protection Act.
These two objectives are the same as the broad objectives of the USO currently established in
section 9 of the Consumer Protection Act. Upon the removal of the STS universal service
obligation in `designated STS areas' (following the making of a declaration under proposed
section 8H of that Act), and/or following the Minister declaring that there are satisfactory
alternative contractual arrangements relating to payphones under proposed section 8K of that
Act, it is intended that the policy objectives in paragraphs (a) and (b) of this clause ensure
that the contracts and grants under clause 13 do not alter in substance the scope of the USO
currently imposed on the universal service provider. The removal of legislated obligations
with respect to the provision of STS and payphones services (e.g. the shift from obligations
being directly imposed on a service provider to a model whereby service providers provide
services under contracts/grants) is not intended to diminish the safeguard that the USO has so
far provided with respect to these important telecommunications services.
37
Subparagraph 11(a)(ii) requires that the supply of a STS be `on request', as it is not
considered appropriate for a contractor to supply standard telephone services to a customer
that does not want those services. This policy objective replicates subsection 9(2) of the
Consumer Protection Act.
Emergency call service
Under paragraph 11(c), it is a policy objective that the end-users of standard telephone
services in Australia are to have access, free of charge, to an emergency call service. The
wording of this policy objective is essentially the same as the emergency call service
objective that the ACMA must currently have regard to under subsection 147(2) of the
Consumer Protection Act, as it is intended that there will be no change to the nature of the
emergency call service obligation.
Telstra is currently the regulated Emergency Call Person (ECP) as set out in the
Telecommunications (Emergency Call Persons) Determination 1999. The service is further
regulated by provisions in the Telecommunications Act and the Consumer Protection Act and
the Telecommunications (Emergency Call Service) Determination 2009 (the ECS
Determination). Under the ECS Determination, carriers and carriage service providers are
required to give end-users access to the emergency call service operated by the ECP and
provide this service free of charge. Telstra as the ECP must not charge an emergency service
organisation, directly or indirectly, for receiving and handling calls to an emergency service
number, transferring such calls to an emergency service organisation, and giving information
in relation to an emergency service organisation. Given this regulated framework, contracts
or grants entered into by TUSMA under clause 13 are expected to relate primarily to
supporting activities required to be undertaken by the ECP,
Pursuant to the Government's agreement with Telstra announced on 23 June 2011 (which
under clause 24 will be taken to have been entered into by TUSMA under clause 13), Telstra
will continue to be the ECP. Consequently, Telstra will be funded to continue to operate and
maintain the technology platforms and systems required to receive calls to the emergency call
numbers 000 and 112, and to transfer calls to the relevant State or Territory emergency
service organisation. Under the agreement with Telstra, however, the provision of emergency
call handling services will be put to tender within five years. In the event that no tenders are
submitted, or none of the tenders that are submitted are acceptable to TUSMA, Telstra will
remain the ECP.
Any emergency call service provider that is a contractor or grant recipient under the Bill,
whether that provider is Telstra or not, will continue to be subject to the emergency call
regulatory obligations set out in Part 8 of the Consumer Protection Act.
National Relay Service
It is a policy objective under paragraph 11(d) that the NRS be reasonably accessible to all
persons in Australia who are deaf, or who have a hearing and/or speech impairment,
wherever they reside or carry on business. This policy objective is also currently contained in
section 95 of the Consumer Protection Act with respect to NRS contracts entered into under
that section.
38
Since 1 July 1998, the NRS has, under Part 3 of the Consumer Protection Act, been provided
by a person under a contract with the Commonwealth that includes an NRS Service Plan
outlining how the services are to be provided. The current relay service contract is managed
by Australian Communication Exchange Limited, with WestWood Spice managing the
outreach services for the NRS. From 1 July 2012, the Commonwealth will not be able to
enter into a NRS contract under the Consumer Protection Act (see proposed
subsection 95(1A) of that Act). Instead, TUSMA will, on behalf of the Commonwealth, be
responsible for entering into a NRS contract or grant agreement, with any existing NRS
contracts entered into under the Consumer Protection Act being taken to have been entered
into by TUSMA pursuant to clause 25.
The NRS policy objective is intended to ensure that, despite the changed arrangements
regarding the authorisation and management of NRS contracts, there is no change to the
nature of the obligation to provide a NRS.
Programs and measures to facilitate the transition to the national broadband network
The policy objective in paragraph 11(e) enables TUSMA to enter into contracts or make
grants under clause 13 so that there are arrangements as are necessary to support the
continuity of supply of carriage services during the transition to the NBN, including customer
information, cabling installation and carriage service development programs.
This objective enables TUSMA to provide assistance related to the migration of public
interest services currently reliant on the existing copper-based network to the NBN, thereby
providing a safety net for the continued operation of these services. Such support could
include arrangements to meet cabling installation costs that will enable voice-only customers
to be connected to the NBN, or the provision of information to voice-only customers
regarding their service options and the processes involved in migrating to the NBN. The
policy objective would also allow for research into technological solutions to facilitate the
carriage of services to support, for example, traffic lights and public alarms over alternative
networks.
To ensure that there is flexibility in allowing for the continued operation of other carriage
services, the regulations may specify other measures to support the continuity of supply of
carriage services during the transition to the NBN.
Other measures
Paragraph 11(f) allows for the regulations to specify other policy objectives, providing that
those objectives relate to the supply of carriage services. As noted earlier, the core function of
TUSMA to enter into contracts or to make grants of financial assistance is limited to such
contracts or grants that relate to achieving any or all of a policy objective. This regulation-
making power in paragraph 11(f) recognises that, in the future, the Government may decide
to confer additional responsibilities on TUSMA that are not captured by the policy objectives
in paragraphs (a) to (e). The rollout of the NBN will be a dynamic process that may require
TUSMA to enter into contracts or to grant financial assistance, for example, to provide
information to carriage service customers about any changes to the operation of their carriage
service, or to preserve the public's reasonable access to public interest telecommunications
services in a way that is not otherwise dealt with in this clause 11.
39
The Government is mindful that any increase in TUSMA's overall responsibilities may result
in an increase to a participating person's levy contributions. Consequently, any additional
policy objectives will be restricted to those `relating to the supply of carriage services',
thereby limiting the scope of new policy objectives. Furthermore, requiring any additional
policy objectives to be prescribed in regulations will ensure that such objectives will be
subject to consultation, parliamentary scrutiny and possible disallowance in accordance with
standard requirements under the Legislative Instruments Act 2003.
Clause 12 - Achievement of policy objectives
This clause requires TUSMA, in performing its functions and exercising its powers, to take
all reasonable steps to ensure that the policy objectives listed in clause 11 are achieved. The
obligation imposed on TUSMA in this clause seeks to ensure, that in phasing out and
replacing the USO from the Consumer Protection Act, the same or similar objects will be
required to be achieved under contractual arrangements provided for in this Bill. TUSMA is
required to take `all reasonable steps' to ensure the policy objectives are achieved in
recognition that the actions of other parties contribute to achieving these objectives. For
example, the Minister has a role in determining service standards and performance
benchmarks, which also contribute to achieving the objectives.
Division 2--Contracts and grants
Subdivision A--General
Clause 13 - Contracts and grants
It is a core function of TUSMA that it manages the delivery of standard telephone services,
payphones, emergency call handling services, and the transition of current copper-based
services to the NBN through contracts and grants. Subclause 13(1) enables TUSMA to
achieve this function by providing it with the power to enter into a contract or make a grant of
financial assistance for the achievement or one or more of the policy objectives set out in
clause 11. Under clauses 22 to 26, specified existing contracts with Telstra and other
providers for the provision of such services will be taken to have been entered into under
clause 13.
Subclause 13(2) clarifies that if a person enters into a contract with a person under
subclause 13(1), the person is a `contractor' for the purposes of the Bill. Where a grant of
financial assistance is to a person under that subclause, that person will be a `grant recipient'.
The terms `contract' and `grant recipient' for the purposes of the Bill have their ordinary
meaning. An agreement entered into by TUSMA that is a contractual agreement at common
law will not be excluded because it is not specifically described by one or more of the parties
as a `contract for services'. Likewise, where an agreement grants financial assistance to a
person, it does not have to identify itself specifically as a `grant agreement' for it to fall under
clause 13.
Clause 14 - Terms and conditions of grants
Subclauses 14(1) and (2) require that grants entered into by TUSMA under clause 13 be set
out in writing between the Commonwealth and the grant recipient, and that the terms and
conditions on which that financial assistance is to be provided be set out in that written
40
agreement. Any such agreement would be entered into by TUSMA on behalf of the
Commonwealth (subclause 14(3)).
The requirement to set out the terms and conditions of grants of financial assistance as
written agreements will not apply with respect to the condition that the grant recipient comply
with a Ministerial determination made under clause 15.
Clause 15 - Condition about compliance with Ministerial determination
Subclause 15(2) provides the Minister with the power to make, by legislative instrument,
determinations that set out standards, rules and minimum benchmarks to apply in relation to
contracts or grants entered into under clause 13 of the Bill, except as so far as the contract (or
a part of a contract) falls within the definition of `designated transitional contracts' - see
clause 16. Under subclause 15(1), it will be a condition of those contracts or grants that the
contractor or grant recipient, as the case may be, complies with all Ministerial determinations
so far as the determination applies to those contracts or grants. Subclause 15(11) also imposes
an obligation on TUSMA to take all reasonable steps to ensure that a contractor or grant
recipient complies with a Ministerial determination in so far as the determination applies by,
for example, varying an existing contract to include a term requiring compliance with the
determination.
The power set out in clause 15 is framed broadly to require contractors and grant recipients to
have to comply with standards, rules or benchmarks made under this provision. The
Government's intention is that, for example, legislative instruments made under the
Consumer Protection Act relating to payphones and the requirements and circumstances
under which the USO does not apply, would be reproduced as contract standards, rules or
benchmarks under clause 15. In the absence of such a power, for example, following the
removal of the payphones USO obligation from Telstra (after the making of a declaration
under proposed section 8K of the Consumer Protection Act), Telstra would not be required to
meet standards and benchmarks, in relation to its USO payphones, if they have not been
detailed in the clause 13 contract.
The main differences between the regulatory approach currently provided for in the
Consumer Protection Act and the TUSMA arrangements are that with the TUSMA
arrangements, Ministerial determinations will be enforceable through contract law, and not
through regulatory enforcement action by the ACMA, and that variations to the contractors'
service responsibilities may give rise to changes in the payment made by TUSMA.
Under subclause 15(3), a Ministerial determination may apply generally or be of limited
application as provided for in the determination. However, that does not limit the effect of
subsection 33(3) of the AIA, which provides that where a power to make an instrument is,
like a determination under subclause 15(2), conferred with respect to specified matters, that
power includes the power with respect to only some of the matters set out in relation to that
power. Consequently, a Ministerial determination does not need to set out all the standards,
rules and benchmarks potentially applying to contractors or grant recipients, and may deal
specifically with, for example, the matter of payphones performance standards only.
Examples of the type of determinations that may be made under subclause 15(2) are set out
below. However, these examples are intended to be illustrative, and should not be taken to be
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an exhaustive list of the type of determinations that may be made or otherwise limit
subclause 15(2).
For example, Ministerial determinations that may be made under subclause 15(2) include:
� performance standards or minimum performance benchmarks in relation to:
o the supply of standard telephone services, payphones, the emergency call service
or the NRS (other than for designated transitional contracts); or
o the characteristics of such services; or
� rules concerning the requirements for customer equipment used for supplying a
standard telephone service; or
� rules about the location or removal of payphones, including rules concerning public
consultation and complaint resolution processes; or
� rules in relation to the standard telephone service concerning interim and alternative
services and priority services;
� rules in relation to the preparation and publication of:
o service plans;
o policy statements; or
o standard marketing plans; or
� rules in relation to the provision of information or documents to TUSMA, including
the making of copies of documents, where the information or documents is relevant to
a contract or grant under clause 13; or
� rules in relation to the keeping and retention of records relevant to a contract or grant
under clause 13.
The requirement to comply with Ministerial determinations made under subclause 15(2) will
not limit the terms and conditions of a contract entered into under clause 13 or an agreement
to provide a grant of financial assistance under clause 14.
Exceptions to compliance with Ministerial determinations
Where there is an inconsistency between a Ministerial determination and an existing term or
condition in a contract or grant agreement, the existing term or condition will have no effect
to the extent of that inconsistency (subclause 15(6)). Subclauses 15(7) to 15(10) set out
exceptions to this rule.
First, a determination will have no effect to the extent that it overrides a term or condition of
a contract entered into under clause 13 or set out in a grant agreement under clause 14 that
gives the contractor or grant recipient the right to adjust the amount payable under that
agreement as a result of a change in the services, facilities or customer equipment to be
supplied pursuant to the contract or grant. This exception is intended to clarify that the power
to make standards, rules or minimum benchmarks does not include the power to take away
any negotiated right for payment in relation to a change in the scope of the contract or grant;
this will include whether the same services are required to be supplied at a different standard
as well as where new services are required. If such a clause is included in a contract or grant,
it is a contractual matter between the parties whether or not the Commonwealth may have to
pay for any increase to the change to the scope of the services to be provided under the
contract or agreement. (Subclauses 15(7) and 15(9)).
Second, a determination will have no effect to the extent that it specifies either the price of
any services, facilities or customer or equipment to be supplied under a contract or grant
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entered into under clause 13, or the method of ascertaining such a price. This exception
clarifies that the power to make a Ministerial determination made under subclause 15(2) is
not intended to be exercised as a power to set price controls with respect to TUSMA contracts
or grant agreements, or to override existing negotiated service prices previously agreed to by
TUSMA, on behalf of the Commonwealth, with respect to contracts or grants entered into
under clause 13. It is a contractual matter between TUSMA and each prospective contractor
or grant recipient to agree on the price for services, facilities or customer equipment.
Clause 16 - Exemption of designated transitional contracts from Ministerial
determination
This clause exempts `designated transitional contracts' from any determination made by the
Minister under subclause 15(2).
`Designated transitional contracts' are defined in paragraphs 24(d), 25(d) and 26(d)
respectively. In short, they are the whole or part of the following transitional contracts:
� in relation to the provision of the NRS, a relay service contract with Australian
Communication Exchange Limited, and an outreach service contract with WestWood
Spice;
� those parts only of the agreement between the Commonwealth and Telstra, announced
on 23 June 2011 (Telstra Agreement), that relate to achievement of the policy
objective in paragraph 11(c), regarding the emergency call service and the policy
objective in paragraph 11(e), regarding specified programs necessary to support the
continuity of the supply of carriage services during the transition to the NBN.
In respect of the two NRS-related `designated transitional contracts', it was considered
appropriate to exempt these contracts from future Ministerial determinations given these are
long standing contracts, the scope of services for these contracts has previously been agreed
between the Commonwealth and contract providers, and it is not anticipated that these
services will substantially change prior to the expiry of the contracts in mid 2013.
In relation to the Commonwealth's agreement with Telstra for the supply of an emergency
call service, the Telecommunications Act, the Consumer Protection Act, and legislative
instruments made under those Acts currently set out the responsibilities and obligations of
Telstra regarding the provision of that service, and it was not considered necessary for the
time being for Ministerial determinations under clause 15 to apply to that agreement.
In respect to the scope and obligations in the Telstra Agreement regarding the specified
programs concerning the transition to the NBN, it was considered more effective for the
details in respect of these matters to be resolved contractually between the parties rather than
through Ministerial determination.
Clause 17 - TUSMA has powers etc. of the Commonwealth
Consistent with TUSMA's proposed legal status as a statutory agency subject to the FMA
Act, subclause 17(1) confirms that TUSMA, on behalf of the Commonwealth, has all the
rights, responsibilities, duties and power of the Commonwealth relating to the
Commonwealth's capacity as a party to a contract or the grantor of a grant under clause 13.
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An amount payable by the Commonwealth under a clause 13 contract or grant is to be paid
by TUSMA on behalf of the Commonwealth. An amount payable to the Commonwealth
under a clause 13 contract or by way of a repayment of the whole or part of a clause 13 grant
is to be paid to TUSMA on behalf of the Commonwealth. Paragraph 17(2)(e) makes clear
that TUSMA may commence any action or proceeding on behalf of the Commonwealth in
relation to a matter that concerns a clause 13 contract or grant, for example, an action to seek
repayment of money paid to a grant recipient.
Clause 18 - Conferral of powers on TUSMA
Clause 18 confirms that TUSMA, on behalf of the Commonwealth, may exercise any power
conferred on it by a contract or grant agreement entered into under clause 13 or clause 14.
Clause 19 - TUSMA to notify the Minister about entering into contracts or making
grants
Clause 20 - TUSMA to notify Minister about variations of contracts
Clause 21 - TUSMA to notify Minister about variations of grants
Clauses 19 to 21 together enable the Minister to be informed at an early stage about any
proposed contractual or grant arrangements to be entered into by TUSMA, or variations of
such contracts and grants, that are likely to increase the amounts payable by the
Commonwealth for clause 13 contracts or grants. TUSMA must notify the Minister of any
proposal before it informs the public or a prospective contractor or grant recipient. In this
context, it is intended that a proposal would include any information or document that could
give rise to a contract, agreement or arrangement with an external party (such as a request for
quote, issue of a request for tender, issue of grant guidelines, or a call for applications under a
grant arrangement). The notice to the Minister from TUSMA must detail the likely impact, if
any, on the amount of levy that may be paid by participating persons for the particular
eligible levy period.
Entering into contracts or grant agreements
Under clause 19, TUSMA must provide the Minister with a written statement about any
proposed contract or grant, that is likely to increase the amount that may be debited from the
Special Account, before the contract has been entered into or grant made, and before either
the public or the prospective contract or grant recipient have been informed by TUSMA
about the proposal. That written statement must include:
� details about the proposal;
� a statement whether the proposal is consistent with TUSMA's corporate plan under
clause 74; and
� the likely impact of the proposal on TUSMA's financial position and the amount of
levy payable by participating persons for the relevant eligible levy period.
Varying contracts or grants
Clauses 20 and 21 provide that if a proposed agreement to vary an existing contract or grant
of financial assistance will either:
� materially change the services, facilities or customer equipment to be supplied by the
contractor or grant recipient pursuant to that contract or grant; or
� increase the amount that may be debited from the Special Account,
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TUSMA must provide the Minister with a written statement about that `variation agreement'
before it is entered into. Like the written statements under clause 19, that statement should set
out details of the proposal, whether the variation agreement is consistent with the corporate
plan, and the likely impact of the proposed variation on the levy payable by participating
persons in relation to the particular eligible levy period.
Subdivision B--Transitional
Clause 22 - Transitional--standard telephone services
Clause 23 - Transitional--payphones
Clause 24 - Transitional--emergency call service
Clause 25 - Transitional--National Relay Service
Clause 26 - Transitional--continuity of supply of carriage services during the transition
to the national broadband network
Clauses 22 to 26 set out the transitional arrangements applying to contracts that have been
entered into by the Commonwealth with Telstra and other companies prior to the
commencement of the Bill. In the case of each contract, these clauses provide that, so long as
that contract is in force, it will be deemed to have been entered into by TUSMA, on behalf of
the Commonwealth, under clause 13 of the Bill provided that it has been entered into for a
purpose relating to the achievement of one or more of the policy objectives set out in
clause 11.
It is intended that these transitional provisions will apply in particular to:
� a Telecommunications Universal Service Management Agency Agreement between
the Commonwealth and Telstra, announced on 23 June 2011, for the provision of
standard telephone services, payphones, an emergency call service, and to support the
transition of copper-based services to the NBN Co fibre network (clauses 22, 23, 24
and 26);
� in relation to the provision of the NRS:
o a relay service contract with Australian Communication Exchange Limited; and
o an outreach service contract with WestWood Spice (clause 25); and
� any contracts entered into with any persons before commencement of the Bill relating
to the achievement of the policy objective that there are to be such customer
information, customer cabling installation and carriage service development programs
that are necessary to support the continuity of the supply of carriage services during
the transition to the NBN (clause 26).
The purposes of these transitional provisions are threefold. First, they enable TUSMA to
manage the contracts and exercise any of its functions and powers in relation to the contracts.
Second, since the transitional contracts will be deemed to be clause 13 contracts this will
mean that it will be a condition of these contracts that the contractor must comply with any
relevant Ministerial determinations made under clause 15. Third, since each of these contracts
are substantive agreements relating to the delivery of public interest telecommunication
services, the provisions ensure that the transparency and accountability requirements under
the Bill, for example, the requirement to disclose key details of the contracts on a public
register and the requirement for TUSMA to monitor and report to the Minister on the
performance of contractors, will apply to these transitioned contracts.
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Contracts taken to have been entered into by TUSMA under clauses 24 to 26 are defined in
those clauses as `designated transitional contracts', and will consequently be exempt from a
Ministerial determination made under clause 15. However, a designated transitional contract
will only have this status so far as it relates to an emergency call service, the NRS and/or
other transitional objectives referred to in clauses 24 to 26. The Telstra agreement described
above, for instance, will not be a designated transitional contract so far as the contract relates
to the supply of standard telephone services or to the supply, installation and maintenance of
payphones.
Division 3--Registers
Clause 27 - Register of Public Interest Telecommunications Contracts
Clause 27 requires TUSMA to maintain a Register of Public Interest Telecommunications
Contracts (the Contracts Register) that identifies, describes and summarises each contract
entered into clause 13 that is in force. The Contracts Register is intended to ensure
transparency and accountability by providing the public with information on the key aspects
of the clause 13 contracts entered into by TUSMA.
The Contracts Register must be made publicly available on a website maintained by TUSMA.
Under subclause 27(1), the Contracts Register must identify each contractor, specify the
duration of the contract, describe the services, facilities or customer equipment to be supplied
under the contract and summarise any actions to be undertaken by the contractor. The total
amount to be paid to the contractor or an estimate of that amount or the method of calculating
the amount to be paid must also be included on the Contracts Register.
To assist readers, subclause 27(4) confirms that the Contracts Register is not a legislative
instrument, as it is administrative in character, and therefore does not fall within the meaning
of section 5 of the Legislative Instruments Act 2003.
Clause 28 - Register of Public Interest Telecommunications Grants
Clause 28 requires TUSMA to maintain a Register of Public Interest Telecommunications
Grants (the Grants Register). Like the Contracts Register under clause 27, the Grants Register
must be published on a website maintained by TUSMA. The Grants Register must identify
each grant recipient, summarise the terms and conditions of the grant that require action to be
undertaken by the grant recipient, describe the services, facilities or customer equipment to
be provided pursuant to the grant, and either specify the amount to be paid to the grant
recipient or the method for working out such an amount.
To assist readers, subclause 28(4) confirms that the Grants Register, like the Contracts
Register, is not a legislative instrument, as it is administrative in character, and therefore does
not fall within the meaning of section 5 of the Legislative Instruments Act 2003.
Division 4--Monitoring of performance
Clause 29 - Monitoring of performance
To enhance transparency and accountability with respect to TUSMA contract and grant
arrangements, and in recognition of the public interest nature of the services and
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arrangements covered by TUSMA's functions, subclause 29(1) requires that TUSMA
monitor and report on all significant matters relating to the performance of contractors and
grant recipients each financial year. The report prepared by TUSMA under clause 29 must
then be included in its annual report prepared under clause 75.
Subclause 29(2) requires that the report set out details of the following matters:
� the adequacy of each contractor or grant recipient's compliance with the terms and
conditions of a clause 13 contract or grant (as the case may be);
� any notice of breach by a contractor or grant recipient with the terms and conditions
of a clause 13 contract or grant (as the case may be);
� any remedial action taken by TUSMA during that year in response to such a breach;
and
� the result of any such remedial action.
The requirement to include the above matters in the report does not limit TUSMA from
including other significant matters relating to the performance of contractors and grant
recipients in the report.
Division 5--Miscellaneous
Clause 30 - Executive power of the Commonwealth
Clause 30 clarifies that Commonwealth functions relating to telecommunications may
continue to be performed outside the Bill (for example, by someone other than the Minister or
TUSMA or the CEO), by providing that Part 2 of the Bill does not, by implication, limit the
executive power of the Commonwealth.
Part 3-- Telecommunications Universal Service Management Agency
The provisions in Part 3 of the Bill are predominantly based on standard provisions in
Commonwealth legislation dealing with the establishment, functions and powers of statutory
agencies and the terms and conditions for members and staff of agencies with collective
decision-making bodies.
Division 1 - TUSMA's establishment, functions, powers and liabilities
Clause 31 - Establishment of the Telecommunications Universal Service Management
Agency
This clause provides that the Telecommunications Universal Service Management Agency is
established.
The proposed name for TUSMA reflects the role of the entity in managing the delivery of
contracted services, rather than being a service provider in its own right or a regulatory
authority such as the ACMA. The name of the entity includes `agency' to reflect that it is
established as a statutory agency subject to the FMA Act, rather than as a statutory
corporation or a Commonwealth company.
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Clause 32 - Functions of TUSMA
This clause sets out the functions of TUSMA. It provides that TUSMA is to have the
functions that are conferred on it by this Bill, regulations or any other law of the
Commonwealth. In addition, TUSMA has the function to do anything incidental to or
conducive to the performance of any of its other functions referred to above.
Under the provisions of the Bill, TUSMA's conferred functions are essentially to enter into,
and administer, contracts or grants for the purpose of achieving the policy objectives set out
in clause 11.
Clause 33 - Powers of TUSMA
Clause 33 sets out the powers of TUSMA.
Subclause 33(1) provides that TUSMA has power to do all things necessary or convenient to
be done for or in connection with the performance of its functions.
Subclause 33(2) provides that the powers of TUSMA include, but are not limited to, the
power to enter into contracts. The note beneath this provision brings to the attention of the
reader that the CEO may also enter into contracts on behalf of the Commonwealth. This
power is in addition to the power of TUSMA to enter into clause 13 contracts. Clause 13
contracts may only be for a purpose relating to the achievement of a policy objective.
Subclause 33(2) will enable TUSMA to enter into other contracts relating to the
administration of TUSMA, for example, contracts relating to the supply of equipment or
office leases. Any contract entered into by TUSMA is to be entered into on behalf of the
Commonwealth (subclause 33(3)).
Subclause 33(4) provides that any real or personal property held by TUSMA is held for and
on behalf of the Commonwealth. Similarly, any money received by TUSMA is received for
and on behalf of the Commonwealth (subclause 33(5)). Subclause 33(7) makes clear that a
right to sue is not taken to be personal property for the purposes of subclause 33(4).
Subclause 33(6) provides that TUSMA cannot hold real or personal property, or money, on
trust for a person other than the Commonwealth.
The provisions in clause 33 are consistent with the intention that TUSMA will operate as a
statutory agency under the FMA Act.
Clause 34 - TUSMA's liabilities are Commonwealth liabilities
Subclause 34(1) provides that any financial liabilities of TUSMA are taken to be liabilities of
the Commonwealth. This is consistent with the intention that TUSMA will be a prescribed
agency under the FMA Act.
Subclause 34(2) defines `financial liability' to mean a liability to pay a person an amount,
where the amount, or the method for working out the amount, has been determined.
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Clause 35 - TUSMA has privileges and immunities of the Crown
Clause 35 provides that TUSMA has the privileges and immunities of the Crown in right of
the Commonwealth. Again, this is consistent with the intention that TUSMA will be a
statutory agency under the FMA Act.
Division 2 - Constitution and membership of TUSMA etc.
Subdivision A - Constitution of TUSMA
Clause 36 - Constitution of TUSMA
Subclause 36(1) provides that TUSMA is a body corporate, with perpetual succession (that is,
a change in membership does not affect the existence of TUSMA) and it must have a seal.
TUSMA may acquire, hold and dispose of real and personal property and may sue and be
sued in its own corporate name.
Subclause 36(2) provides that the seal of TUSMA is to be kept in such custody as TUSMA
directs and must not be used except as authorised by TUSMA.
Subclause 36(3) provides that all courts, judges and persons acting judicially will be required
to take judicial notice of the imprint of the seal of TUSMA appearing on a document and
must presume that the document was duly sealed.
Clause 36 is a standard clause in Commonwealth legislation dealing with the establishment of
a statutory agency.
Subdivision B - TUSMA members
Clause 37 - Membership of TUSMA
Clause 37 sets the parameters for the membership of TUSMA. It provides that TUSMA will
consist of a Chair, with no fewer than four, and no more than six, other members. The
number of members is set at a level that will ensure that a range of expertise is available to
better equip TUSMA in the exercise of its powers and performance of its functions.
Clause 38 - Appointment of TUSMA members
Subclause 38(1) provides that each TUSMA member is to be appointed by the Minister by
written instrument.
Subclause 38(2) sets out the matters of which the Minister must be satisfied in order for a
person to be eligible for appointment as a TUSMA member. Those matters include that the
person have substantial experience or knowledge and significant standing in at least one of
five fields, namely: the operation of a sector of the telecommunications industry; economics;
business or financial management; law; or public administration. The five fields identified
will ensure that an appropriate breadth of skills and expertise is available when the members
are required to make decisions in relation to the implementation and administration of
TUSMA's contracts or grants.
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Subclause 38(3) requires that the Minister must ensure (to the extent that it is reasonably
practicable to do so) that TUSMA members collectively possess an appropriate balance of
experience and knowledge in each of the fields covered by subclause (2). This means that
when considering the appointment of a TUSMA member, the Minister would have regard to
the experience, knowledge and standing in the five identified fields of the other members
already appointed as TUSMA members, and of any other persons concurrently being
considered for appointment as TUSMA members, to ensure an appropriate balance is
achieved.
Subclause 38(4) makes it clear that a person will not be eligible for appointment as a TUSMA
member if the person is a director of, or is concerned in, or takes part in, the management of a
carrier or carriage service provider. This requirement makes it less likely that conflict might
arise in the proper performance of a member's duties.
TUSMA members are to hold office on a part-time basis. Subclause 38(6) provides the CEO
is not able to be a member. This is consistent with the intention that the CEO will be
responsible for the day-to-day administration of the agency, whereas TUSMA members will
make decisions in relation to contracts or grants entered into, or to be entered into by
TUSMA.
Clause 39 - Period of appointment for TUSMA members
A TUSMA member will under clause 39 hold office for the period specified in the instrument
of appointment, which must not exceed five years. A person appointed as a TUSMA member
by the Minister is only eligible for one reappointment.
The limitation on reappointment is to ensure that TUSMA benefits from the input of fresh
knowledge and experience that new members can bring to a collective decision-making body,
given the rapidly changing and highly specialised telecommunications industry.
Clause 40 - Acting TUSMA members
Clause 40 is a standard clause in Commonwealth legislation dealing with the functions of
statutory agencies subject to the FMA Act.
Subclause 40(1) empowers the Minister to appoint a person to act as the Chair of TUSMA
during a vacancy in the office of the Chair or during any period, or during all periods, when
the Chair is absent from duty or Australia or is, for any reason, unable to perform the duties
of the office.
Similarly, subclause 40(2) empowers the Minister to appoint a person to act as a TUSMA
member (other than the Chair). Subclause 40(3) makes clear that a person is not eligible to
act as the Chair or a member unless the person is eligible for appointment as a TUSMA
member.
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Division 3 - Terms and conditions for TUSMA members
Clause 41 - Remuneration
Subclause 41(1) provides that a TUSMA member is to be paid the remuneration determined
by the Remuneration Tribunal. In the event that the Tribunal has not made such a
determination, the member is to be paid the remuneration that is prescribed by the
regulations.
A TUSMA member is also to be paid the allowances (if any) that are prescribed by the
regulations. For example, these allowances may include items such as travel and
accommodation expenditure where appropriate.
Clause 41 has effect subject to the Remuneration Tribunal Act 1973, which enables the
Remuneration Tribunal to conduct inquiries and make determinations regarding the
remuneration of certain office holders.
Clause 42 - Disclosure of interests to the Minister
Clause 42 requires a TUSMA member to give written notice to the Minister of all interests
that the member has or acquires during his or her time as a member and that conflict or have
the potential to conflict with the proper performance of the member's functions. This
obligation will apply irrespective of whether the interest is pecuniary or otherwise, and
whether the interest was acquired before or after the member's appointment. The purpose of
this clause is to promote ethical conduct and ensure the integrity of TUSMA's decisions.
Clause 43 - Disclosure of interests to TUSMA
Subclause 43(1) requires a TUSMA member who has an interest, pecuniary or otherwise, in a
matter that is currently under consideration or will soon be the subject of consideration by
TUSMA, to disclose the nature and extent of that interest to a meeting of TUSMA.
Subclause 43(2) requires the TUSMA member to make the disclosure to TUSMA as soon as
possible after the relevant facts have come to the knowledge of the member. The disclosure
of the interest is required to be recorded in the minutes of the meeting of TUSMA
(subclause 43(3)).
Subclause 43(4) excludes the member with the interest from being present while the rest of
the TUSMA members deliberate on the matter, or from having any involvement in the
decision-making process in resolution of the matter, unless TUSMA decides that the member
can in fact be present during the process.
Subclause 43(5) excludes the TUSMA member from being present during this initial
deliberative period. TUSMA must first decide, in the absence of the member disclosing an
interest, whether that member can be present during the deliberation and resolution of the
matter. Only then and only where TUSMA decides in the affirmative can the member be
present in deliberating and resolving the matter. In effect, subclause 43(4) can only operate
after subclause 43(5) has been determined.
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Subclause 43(6) requires that any determination made under subclause 43(4), to exclude or
include the member in the deliberation and resolution of the matter, must be recorded in the
minutes of the meeting of TUSMA.
Clause 44 - Outside employment
As TUSMA's members will be appointed on a part-time basis, the members will not be
restricted from undertaking paid employment outside their duties as a member of TUSMA.
However, clause 44 prohibits a TUSMA member from engaging in any paid employment
(other than their duties as a member of TUSMA) that conflicts or may conflict with the
proper performance of the member's duties. In the event that the TUSMA member believes a
potential conflict may arise, they must disclose the conflict to the Minister under
subclause 42 and to TUSMA under subclause 43.
Clause 45 - Leave of absence
Clause 45 enables the Chair to grant a leave of absence to a TUSMA member on any terms
and conditions that the Chair may see fit.
Clause 46 - Resignation
Clause 46 allows for a TUSMA member to resign his or her appointment by giving the
Minister notice in writing. The resignation is deemed to take effect on the day it is received
by the Minister, or if a later date is specified in the letter of resignation, on that later day.
Clause 47 - Termination of appointment
Subclause 47(1) provides that the Minister may terminate the appointment of a member of
TUSMA for misbehaviour or physical or mental incapacity. Subclause 47(2) further provides
that the Minister may terminate the appointment of a TUSMA member if the member:
� becomes bankrupt or the like (as described in subparagraphs (ii) to (iv));
� engages in paid employment that conflicts or may conflict with the proper
performance of the member's duties;
� fails without reasonable excuse to comply with clauses 42 or 43 (relating to the
disclosure of the member's interests); or
� is absent, except on leave of absence, from three consecutive TUSMA meetings.
Subclause 47(3) enables the Minister to also terminate the appointment of a TUSMA member
if the Minister is of the opinion that the performance of the member has been unsatisfactory.
It is a matter for the Minister to decide, in exercising his or her discretion, whether or not the
member's appointment should be terminated due to unsatisfactory conduct.
Clause 48 - Other terms and conditions
Clause 48 enables the Minister to determine the terms and conditions of TUSMA members
that are not otherwise covered in the Bill.
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Division 4 - Decision-making by TUSMA
Clause 49 - Holding of meetings
Clause 49 provides that TUSMA may hold any meetings as are necessary for it to carry out
its statutory functions. The Chair is able to convene a meeting at any time.
Clause 50 - Presiding at meetings
Clause 50 provides for the Chair to preside at all TUSMA meetings where he or she is
present. However, if the Chair is not present at a meeting, the other TUSMA members
present at that meeting will be required to appoint one of themselves to preside.
Clause 51 - Quorum
Clause 51 sets out the quorum rules for meetings of TUSMA. If the total number of TUSMA
members (including the Chair) is five (which is the minimum number of members required
by clause 37) - three TUSMA members are required to constitute a quorum. Where,
however, there are six or seven TUSMA members (including the Chair), four members will
constitute a quorum.
Clause 52 - Voting at meetings etc.
The procedures for voting at TUSMA meetings are set out in clause 52, which provides that
questions at the meeting will be decided by a majority of the votes of the TUSMA members
that are present and voting at that meeting. In the event that the votes at a meeting are equal,
the person presiding at the meeting, irrespective of whether that person is the Chair or a
nominated member, will have both a deliberative vote and a casting vote.
Clause 53 - Conduct of meetings
Clause 53 permits TUSMA to regulate the conduct of its meetings as it considers appropriate,
subject to any requirements set out in the Bill, for example, the quorum and voting
requirements set out in clauses 51 and 52. The note beneath this provision brings to the
attention of the reader section 33B of the AIA which provides for participation in meetings
by telephone, closed-circuit television or any other means of communication.
Clause 54 - Minutes
Under clause 54, TUSMA must keep minutes of all of its meetings.
Division 5 - Delegation
Clause 55 - Delegation by TUSMA
Clause 55 permits TUSMA to delegate, in writing, any or all of its statutory functions and
powers to the CEO, a TUSMA member, or a staff member of TUSMA that is a Senior
Executive Service (SES) employee, an acting SES employee or an APS employee employed
in an Executive Level 2 or equivalent position. The terms `APS employee', `SES employee'
and `acting SES employee' have the meanings set out in section 17AA of the AIA.
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As TUSMA is intended to be a small agency, the limit that has been placed on the delegation
of functions and powers is that staff members must be either be Executive Level 2
employees, or SES or acting SES employees. The number of SES officers to be employed by
TUSMA is anticipated to be small, and therefore a provision limiting delegation to only the
CEO or SES officers would be too restrictive for the agency.
Under subclause 55(2), a delegate of TUSMA will be required to comply with TUSMA's
written directions (if any).
Division 6 - Committees
Clause 56 - Committees
Clause 56 provides TUSMA with the power to establish committees to provide advice or
assistance to TUSMA in the performance of its functions. Under subclause 56(2), the
membership of a committee may comprise TUSMA members, non-members or a mixture of
both.
The ability for TUSMA to create a committee enables the agency to receive advice from a
range of appropriate expert sources to assist it in carrying out its functions effectively with
respect to specialised subject areas. For example, TUSMA may consider it appropriate to
establish a specific committee to deal with the provision of an emergency call service, which
may have different membership from another committee which deals with, for example, the
NRS. The clause also permits TUSMA to create mechanisms for a meaningful engagement
with key stakeholders and interest groups, including stakeholders within the
telecommunications industry.
Subclause 56(3) enables TUSMA to determine in writing the terms of reference, the terms
and conditions of appointment, and the procedures to be followed, in relation to each
committee that TUSMA establishes. Subclause 56(4) establishes that a determination under
subclause 56(3) is not a legislative instrument. A determination under subclause 56(3) will
not determine the law or alter the content of a law. It is therefore not a legislative instrument
for the purposes of section 5 of the Legislative Instruments Act 2003.
Subclause 56(5) provides that an appointment to a committee established under
subclause 56(1) will not be a public office within the meaning of the Remuneration Tribunal
Act 1973. The Tribunal will not have any role in determining the remuneration (if any) that is
to be paid to an appointee to such a committee. Subclause 56(6) provides TUSMA with the
discretion to reimburse committee members for any expenses reasonably incurred.
Clause 57 - TUSMA may assist committees
Clause 57 provides that TUSMA may assist a committee established under clause 56 in the
performance of any of the committee's functions. Under subclause 57(2), this assistance may
include (without limiting the type of assistance that may be provided) the provision of
information to the committee, or making TUSMA resources and facilities (including
secretarial and clerical assistance) available to the committee.
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Division 7 - Chief Executive Officer of TUSMA
Clause 58 - Chief Executive Officer of TUSMA
Clause 58 provides that there is to be a Chief Executive Officer of TUSMA. The note at the
end of the clause assists the reader by clarifying that `CEO' means the Chief Executive
Officer of TUSMA.
Clause 59 - Role
Clause 59 sets out the role of the CEO in relation to TUSMA. The CEO, as the head of a
statutory agency under the Public Service Act 1999, is responsible for the day-to-day
administration of TUSMA and has the power to do all things necessary or convenient to be
done for, or in connection with, the performance of his or her duties. The CEO must act in
accordance with any policies determined by TUSMA, or directions given by TUSMA in
writing.
Clause 60 - Appointment of the CEO
Under subclause 60(1), TUSMA appoints the CEO by written instrument. Before making the
appointment, TUSMA is required to consult the Minister about that appointment
(subclause 60(4)).
An instrument of appointment under subclause 60(1) would not be a legislative instrument as
a result of the existing exemption under item 9 of Part 1 of Schedule 1 to the Legislative
Instrument Regulations 2004.
The CEO holds office on a full-time basis, and must not be a TUSMA member.
Clause 61 - Period of appointment of the CEO
The CEO holds office for the period specified in the instrument of appointment, which must
not exceed five years. The CEO is eligible for reappointment; there is no limit to the number
of reappointments the CEO is eligible for and nor is there any limit to the length of time in
total for which the CEO may hold office. Given the appointment will be made by TUSMA, it
is considered that the collective decision-making body of TUSMA is best placed to decide
whether it is appropriate to reappoint the CEO.
Clause 62 - Acting CEO
Subclause 62(1) enables TUSMA to appoint a person to act as the CEO during a vacancy in
the office of CEO or when the CEO is absent from duty, is overseas or is unable (for
whatever reasons) to perform the duties of the office. The appointment of an acting CEO
must be made by written instrument, but is not a legislative instrument because of the existing
exemption under item 9 of Part 1 of Schedule 1 to the Legislative Instrument Regulations
2004.
It is anticipated that this provision may be utilised to cover short term acting periods for the
CEO whilst, for example, he or she is on holidays, as well as situations where a CEO ceases
to be able to perform his duties and a longer term acting arrangement is required.
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Clause 63 - Remuneration
Under subclause 63(1), the CEO is to be paid such remuneration as is determined by the
Remuneration Tribunal. If no determination of that remuneration is in operation, the CEO is
to be paid such remuneration as is prescribed in the regulations. The CEO is to be paid such
allowances as are prescribed in the regulations.
Clause 63 has effect subject to the Remuneration Tribunal Act 1973, and should be read in
the context of that Act and the means by which the Remuneration Tribunal sets remuneration.
Clause 64 - Disclosure of interests to TUSMA
Clause 64 provides that the CEO must disclose to TUSMA all interests, pecuniary or
otherwise, that the CEO has or acquires and that could conflict with the proper performance
of his or her functions. Such conflicting interests could include, for example, a financial
interest in a telecommunications corporation or a grant recipient of TUSMA.
Clause 65 - Outside employment
To minimise the risk of a conflict of interest, clause 65 prevents the CEO from engaging in
paid employment outside the duties of his or her office without the approval of the Chair of
TUSMA. The Chair must notify the Minister of any approval the Chair has given regarding
the CEO's outside employment.
Clause 66 - Leave of absence
Under clause 66, the recreation leave entitlements of the CEO will be determined by the
Remuneration Tribunal. The Chair of TUSMA may grant the CEO leave of absence, other
than recreation leave, on the terms and conditions determined by the Chair on remuneration
or other matters. Under subclause 66(3), the Chair is required to notify the Minister in writing
if the Chair grants to the CEO leave of absence for a period of more than two months.
Clause 67 - Resignation
Under clause 67, the CEO may resign his or her appointment by giving the Chair a written
notice of resignation. The resignation takes effect on the day it is received by the Chair (or a
later day if specified in the notice of resignation). If the CEO resigns, the Chair is required to
notify the Minister of the resignation.
Clause 68 - Termination of appointment
Clause 68 sets out the grounds upon which TUSMA may terminate the appointment of the
CEO. These are the same grounds upon which the Minister may terminate a member's
appointment.
The grounds for termination include: for misbehaviour or physical or mental incapacity;
bankruptcy; absence without leave for extended periods; or a failure to comply with the
disclosure of interest and outside employment requirements set out in clauses 64 and 65 of
the Bill. TUSMA may also terminate the appointment of the CEO if it is of the opinion that
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the CEO's performance has been unsatisfactory. TUSMA will have broad discretion to
decide what `unsatisfactory' is in this context. For example, the CEO's performance may be
considered unsatisfactory if he or she has failed to prepare material required for TUSMA to
complete its corporate plan or annual report.
None of the reasons set out in clause 68 imposes a requirement for TUSMA to terminate the
appointment of the CEO. In the case of each ground listed in this clause, it is a matter for
TUSMA to determine whether the termination of the appointment is the appropriate recourse.
Clause 69 - Other terms and conditions
Clause 69 provides that the CEO holds office subject to any terms and conditions determined
by TUSMA where those terms and conditions do not relate to matters covered in the Bill.
Clause 70 - CEO not subject to direction by TUSMA on certain matters
Clause 70 clarifies that the CEO, as the head of a statutory agency, must not be subject to
direction from TUSMA concerning the CEO's performance of functions, or the exercise of
the CEO's powers, in relation to TUSMA, under either the FMA Act or the Public Service
Act 1999.
Division 8 - Staff of TUSMA etc.
Clause 71 - Staff of TUSMA
Clause 71 provides that the staff of TUSMA are to be engaged under the Public Service Act
1999. For the purposes of that Act, the CEO and the staff of TUSMA together constitute a
statutory agency, and the CEO is the head of the statutory agency.
Clause 72 - Consultants
Clause 72 confirms that TUSMA may engage consultants with suitable qualifications and
experience to perform services for the agency. The consultants are to be engaged on the terms
and conditions that TUSMA determines in writing.
Clause 73 - Persons assisting TUSMA
Clause 73 provides that TUSMA may also be assisted in connection with the performance of
its functions by officers and employees of any of the following bodies:
� agencies (within the meaning of the Public Service Act 1999);
� authorities of the Commonwealth;
� a State or Territory; or
� authorities of a State or Territory.
As a small agency, TUSMA may at times require the experience and expertise of persons
from other Commonwealth, State or Territory bodies. In these circumstances, clause 73
would allow, for example, Commonwealth agency employees to be seconded to work for
TUSMA.
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Division 9 - Planning and reporting obligations of TUSMA
Clause 74 - Corporate plan
Clause 74 requires TUSMA to prepare a corporate plan that sets out TUSMA's objectives, as
well as the strategies and policies that TUSMA is to follow in achieving those objectives,
plus any other matters required by the Minister.
TUSMA will be required to prepare a corporate plan at least once each three year period. The
plan must cover that three year period and be given to the Minister. Subclause 74(7) will
require TUSMA to prepare its first corporate plan within 12 months of the commencement of
this clause.
Under subclause 74(4), the Chair of TUSMA is required to keep the Minister informed about
any changes to the corporate plan and any matters that may significantly affect the
achievement of the objectives described in the plan.
Subclause 74(5) enables the Minister to give the Chair written guidelines to assist the Chair
in deciding the matters to be included in the plan, or in determining what matters might
significantly affect the achievement of the objectives set out in the plan. For the avoidance of
doubt, subclause 74(6) provides that such guidelines will not be a legislative instrument.
Clause 75 - Annual report
Clause 75 requires that TUSMA prepare and give to the Minister, as soon as practicable after
the end of each financial year (which must be within six months, pursuant to section 34C of
the AIA), a report on its operations during that year. If the Bill commences after the
beginning of the financial year, TUSMA will be required to provide an annual report for the
period of the financial year during which TUSMA was a statutory agency.
The annual report must include details of the amounts paid by the Commonwealth to
contractors and grant recipients during that financial year, details of any action taken by
TUSMA in that year in response to a direction given by the Minister under clause 77, as well
as TUSMA's performance monitoring report for the year.
Clause 76 - Minister may require TUSMA to prepare reports or give information
Subclause 76(1) provides that the Minister may require TUSMA, by written notice, to
prepare a report about one or more specified matters relating to the performance of TUSMA's
functions. Subclause 76(2) enables the Minister, by written notice, to require TUSMA to
prepare a document setting out specified information relating to the performance of
TUSMA's functions. For example, this document may have to contain certain statistics,
account information or other raw data. A copy of a report or a document prepared under this
clause must be given to the Minister within the period specified in the written notice.
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Division 10 - Ministerial directions
Clause 77 - Minister may give directions to TUSMA
Clause 77 provides the Minister with the power to give directions to TUSMA in relation to
the performance of its functions. TUSMA will be required to comply with any such
directions.
This is a broad power and enables the Minister to give directions to TUSMA that are both of
a general and a specific nature.
Directions given by the Minister under clause 77 will be legislative instruments. However,
provisions in the Legislative Instruments Act 2003 relating to disallowance and sunsetting of
instruments will not apply to Ministerial directions given under this clause under
sections 44 and 54 of that Act.
Part 4--Access to information or documents held by an NBN corporation
Clause 78 - Access to information or documents held by an NBN corporation
Clause 78 applies to an NBN corporation if the Minister believes on reasonable grounds that
the NBN corporation has information or documents relevant to the performance or exercise
of any of TUSMA's functions or powers (see clauses 32 and 33).
Subclause 78(2) enables the Minister to give written notice to the NBN corporation requiring
it to give TUSMA any such information or documents, including copies, within the period
and in the manner and form specified in that notice. Subclause 78(3) provides that for the
purposes of subclause 78(2) the period specified in such a written notice must not be less than
14 days after the notice is given.
Subclause 78(4) requires an NBN corporation to comply with such a requirement to the
extent that it is capable of doing so.
Subclause 78(5) provides that an NBN corporation commits an offence if it receives a notice
under subclause 78(2) and the NBN corporation engages in conduct which contravenes a
requirement in the notice. The penalty for contravention of this subclause is 50 penalty units.
An NBN corporation has the same meaning as in the National Broadband Network
Companies Act 2011, that is, the Minister may require information or documents under this
clause from NBN Co, NBN Tasmania and any other company over which NBN Co is in a
position to exercise control.
Clause 79 - Copying documents--compensation
Clause 79 provides for an NBN corporation to be paid reasonable compensation by TUSMA
for complying with a requirement covered by paragraph 78(2)(c) to make copies of
documents and produce them to TUSMA.
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Clause 80 - Copies of documents
Clause 80 enables TUSMA to inspect a document or copy produced under subclause 78(2), to
make copies or extracts from those documents, and to retain possession of copies of such
documents.
Clause 81 - TUSMA may retain documents
Clause 81 allows TUSMA to take and retain possession of a document produced under
subclause 78(2) for as long as is necessary.
Subclause 81(2) provides for the NBN corporation otherwise entitled to possession of the
document to be supplied a certified true copy of the document by TUSMA as soon as is
practicable. Subclause 81(3) provides that the certified copy must be received in all courts
and tribunals as evidence as if it were the original.
Subclause 81(4) provides for TUSMA, where it determines appropriate, to permit the NBN
corporation otherwise entitled to possession of the document, or another NBN corporation
authorised on their behalf, to inspect, make copies, or take extracts from the document until a
certified copy is supplied.
Clause 82 - Law relating to legal professional privilege not affected
Clause 82 makes clear that none of the provisions in Part 4 of the Bill will affect the law
relating to legal professional privilege.
Clause 83 - Severability
Clause 83 provides for the continued operation of the provisions in Part 4 of the Bill in the
event of a successful constitutional challenge. It sets out the `corporations power' and the
`communications power' as possible constitutional heads of power upon which the Part can
draw if its operation is expressly confined to only one of those constitutional powers. For
example, if it were found that Part 4 was not supported by the communications powers in
section 51(v) of the Constitution, subclause 83(2) would give the provisions of Part 4 the
effect they would have if they applied only to an NBN corporation that was a constitutional
corporation to which the corporations power in section 51(xx) of the Constitution applied.
Part 5--Telecommunications Universal Service Special Account
Clause 84 - Telecommunications Universal Service Special Account
Clause 84 establishes the Telecommunications Universal Service Special Account, to be
administered by TUSMA as a `Special Account' for the purposes of the FMA Act.
Clause 85 - Credits to the Account
Clause 85 sets out the amounts that must be credited to the Special Account as follows:
(a) amounts equal to those paid to the Commonwealth by way of the levy payable by
participating persons under clause 105 of the Bill. The amounts that participating
persons will be required to contribute will be assessed by the ACMA, on behalf of the
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Commonwealth, under clause 100. Although the levy will be collected by the ACMA,
the amount of that levy will be paid into the Special Account as administered by
TUSMA; and
(b) amounts equal to those paid to Commonwealth, either pursuant to a contract under
clause 13 (including payments of damages or compensation for a breach of contract),
or by way of the repayment of funds provided through a grant under that clause.
These payments would be paid to TUSMA, on behalf of the Commonwealth. In
paragraph 85(c), a reference to `damages' refers to damages for breach of contract at
common law, and would not include the payment of exemplary or punitive damages.
Clause 86 - Purposes of the Account
Clause 86 sets out the purposes for which money in the Special Account may be expended,
which are as follows:
� to make payments payable by the Commonwealth under a contract entered into under
clause 13 (including contracts taken to have been entered into under clauses 22 to 26);
� to make grants of financial assistance under clause 13;
� to pay TUSMA's administrative costs (as defined in clause 4);
� to redistribute the remaining balance of the Special Account in accordance with
clause 87; and
� to refund levy overpayments under clause 111.
The note to this clause draws the reader's attention to section 21 of the FMA Act, which
outlines the circumstances in which funds in a Special Account may be expended.
Clause 87 - Distribution of remaining balance of the Account
Clause 87 provides that once all amounts payable by or on behalf of the Commonwealth in
relation to an eligible levy period have been paid, TUSMA may distribute the remaining
balance of the Special Account to persons who are or were participating persons (as defined
in clause 92 of the Bill). Under subclause 87(2), the Minister may, by legislative instrument,
determine the rules for making distributions and the ACMA must comply with those rules.
This power gives TUSMA the flexibility of being able to distribute the balance of the Special
Account to participating persons once all payments from that Account are made for the
eligible levy period, rather than, for example, requiring either the ACMA to recalculate levy
payments for current or past participating persons or for the amounts to be carried over and
included in the overall levy target amount for a new levy period.
Part 6 - Assessment, collection and recovery of levy
Outline
Part 6 of the Bill sets out the provisions for the assessment, collection and recovery of an
industry levy to be imposed under the Telecommunications (Industry Levy) Bill 2011. It is
intended that, from 1 July 2012, this levy will replace the existing universal service and NRS
levies that currently apply to carriers. The proceeds of the new levy will be used to pay
contractors and grant recipients under clause 13 and to meet TUSMA's administrative costs.
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The levy provisions in Part 6 are broadly based on the existing legislative provisions for the
assessment and collection of the universal service levy in Part 2 of the Consumer Protection
Act, and will operate in a similar way. Under the new levy scheme, eligible revenue returns
will continue to be lodged by participating persons with the ACMA. The ACMA will assess
each person's eligible revenue and collect levy payments based on that assessment.
The assessment of levy payable under Part 6 will need to be made with respect to each
successive `eligible levy period', commencing with the financial year 2012-13. The
assessment is based on the eligible revenue of participating persons for the preceding
financial year, the `eligible revenue period'. The eligible revenue is used to determine each
participating person's portion of industry revenue for that year (`levy contribution factor').
This factor is multiplied by the overall levy target amount to calculate each person's levy
amount.
Assessment of levy for the first eligible levy period
For the first eligible levy period of the new levy scheme, that is, the 2012-13 financial year,
the levy assessment will need to rely on the eligible revenue assessed by the ACMA in
accordance with the Consumer Protection Act (see subclause 93(7) of the TUSMA Bill). This
is necessary because an eligible revenue period is the year prior to an eligible levy period,
and given the 2012-13 financial year will be the commencement of the new scheme there
will have been no assessment of eligible revenue under the new scheme for financial year
2011-12. While the first eligible revenue period under the new scheme will be deemed to be
2011-12, the calculations of eligible revenue for this period will be made under the
Consumer Protection Act.
This approach will minimise the impacts on carriers in transitioning to the new levy scheme
under Part 6 of the Bill since they will be required to undertake the same actions in lodging
an eligible revenue return and later paying the levy as they are currently required to do under
the Consumer Protection Act.
Levy contributions in the first two eligible levy periods
For the first two financial years of the new levy scheme, the levy amount under clause 99 will
be worked out by applying the levy contribution factor to an `overall levy cap amount' in a
legislative instrument made by the Minister in writing under subclause 99(4) of the Bill,
instead of an overall levy target amount in clause 88. The different arrangements for these
initial two years of the new levy scheme arise because TUSMA's liabilities in the first year of
its operation are substantially less than that which would ordinarily apply for a levy period
due to the deferral of substantive clause 13 contract payments to early in the following
financial year. If the new scheme was to rely on the overall levy target amount for that first
year, the levy collected would be insufficient to meet those substantive payments. From the
2014-15 eligible levy period onwards, the new levy scheme will operate in full.
Division 1 - Overall levy target amount
Clause 88 - Overall levy target amount
Clause 88 defines the `overall levy target amount'. Under clause 89 the Minister is required
to prepare and publish a written estimate of this amount prior to the beginning of each
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eligible levy period and under clause 90 prepare and publish an actual statement of this
amount within three months of ending an eligible levy period.
The overall levy target amount for an eligible levy period is the sum of:
� all payments made by TUSMA pursuant to clause 13 contracts;
� all payments made by TUSMA by way of grants of financial assistance made under
clause 13; and
� the total amount of TUSMA's administrative costs incurred during that period;
reduced by the total amount of money appropriated by any Appropriation Acts during that
period for the purposes of meeting TUSMA's administrative costs, or making payments
under clause 13 contracts or grants. These appropriated amounts are intended to include the
Government's dedicated Budget funding to TUSMA of $50 million in each of the first two
financial years of its operation, and $100 million per annum funding in subsequent financial
years.
The administrative costs of TUSMA are defined in clause 4 to mean: remuneration and
allowances of TUSMA members and the CEO; remuneration, and other employment-related
costs and expenses, in respect of staff of TUSMA; and any other costs, expenses and other
obligations incurred by TUSMA in connection with the performance of TUSMA's functions
or the exercise of TUSMA's powers. It does not include payments for contracts or grants of
financial assistance under clause 13.
The overall levy target amount is multiplied by each person's levy contribution factor (as set
out in clause 98) to determine the person's levy amount.
First two eligible levy periods (2012-13, 2013-14)
As part of the transitional arrangements relating to the calculation of levy payments during
the first two eligible levy periods from commencement, the levy amounts payable by
participating persons will be assessed by reference to an `overall levy cap amount' (as
defined in clause 99) rather than the `overall levy target amount' worked out under clause 88.
Consequently, whilst the Minister will continue to estimate and determine the overall levy
target amount for the first two financial years for the purposes of transparency, these amounts
will not be used to calculate levy amounts.
Clause 89 - Statement of estimate of overall levy target amount
Clause 90 - Statement of overall levy target amount
Clause 89 requires the Minister to prepare a written estimate of the overall levy target amount
for each eligible levy period before the start of that period. Clause 90 requires the Minister to
prepare a statement setting out the actual overall levy target amount.
Under subclauses 89(5) and 90(5), the Minister must consult with TUSMA in preparing the
clause 89 and 90 statements. The statements are to include a breakdown of the different
components that make up the overall levy target amount, namely:
� the amounts paid or to be paid under a contract made under clause 13;
� the amounts paid or to be paid under a grant made under clause 13; and
� the administrative costs incurred by TUSMA together with a breakdown of these costs
into categories (if any) specified in the regulations.
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The estimate and the subsequent statement of the overall levy amount are required to be
published on the websites of both TUSMA and the ACMA. This requirement enhances the
transparency and accountability of TUSMA's levy arrangements. Providing for an estimate
enables participating persons to estimate in advance their levy amounts for the period. Since
the actual statement of the overall levy target amount made under clause 90 is made after the
eligible levy period, this means the calculations of levy amounts will be based on exact
figures and so should reduce the need for adjustments later on.
Subclauses 89(8) and 90(8) confirm that neither the estimate of the overall levy target amount
nor the statement of the actual overall target levy amount are legislative instruments. Neither
are legislative in character, and therefore do not fall within the meaning of section 5 of the
Legislative Instruments Act 2003.
Division 2 - Eligible revenue of participating persons
Clause 91 - Participating person must lodge return of eligible revenue
Clause 91 requires each participating person for an eligible revenue period (other than the
first eligible revenue period) to provide the ACMA with a written return of their eligible
revenue for that period in a form approved in writing by the ACMA, and within a time period
specified in writing by the ACMA (any specification of this time period by the ACMA will
be a legislative instrument). Under clause 120, the failure of a person to submit an eligible
return is an offence of strict liability.
Each participating person's return must set out their eligible revenue amount, details on how
that amount of revenue was worked out, and any other information required by the approved
ACMA form, including, if required, a verification of the eligible amount by statutory
declaration. The information submitted to the ACMA under this clause will, once provided,
be used by the ACMA in its assessments under clauses 96 (each participating person's
eligible revenue) and 98 (each participating person's levy contribution factor).
What constitutes a `participating person' and `eligible revenue' for the purposes of this
section is covered in clauses 92 and 93 respectively.
For the first eligible revenue period (financial year 2011-12), a participating person's
obligation to lodge an eligible revenue return arises under the Consumer Protection Act rather
than the Bill. Under that Act, the ACMA has specified four months from the end of the
eligible revenue period as being the time by which the returns must be lodged (see the
Telecommunications (Period for Providing Return of Eligible Revenue) Specification 2010).
Clause 92 - Participating person
Clause 92 defines a `participating person' for an eligible revenue period as being any:
� carrier (i.e. the holder of a carrier licence under the Telecommunications Act) for that
eligible revenue period; or
� carriage service provider, if the Minister determines by legislative instrument that
carriage service providers are participating persons.
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However, under subclause 92(2), the Minister may determine by legislative instrument that
specified persons are exempt from being participating persons under Part 6 of the Bill. This
could be done by reference to a class of persons, for example, an exemption from being a
participating person that applies to all carriers or carriage service providers with eligible
revenues below a specified revenue amount.
The provision for determining a participating person in this Bill is effectively the same as that
provided for in section 20A of the Consumer Protection Act. Under that Act, the Minister has
determined that participating persons with either an eligible revenue, initial sales revenue or
gross telecommunications sales revenue below the threshold amount of $25 million are
exempt from being participating persons (see the Telecommunications (Participating
Persons) Determination (No.1) 2011).
A participating person for an eligible revenue period is liable to pay the levy for the
subsequent financial year, i.e. the eligible levy period. See clause 105 of the Bill.
Clause 93 - Eligible revenue
Subclause 93(1) defines `eligible revenue' of a person for an eligible revenue period (other
than the first eligible revenue period) as the amount ascertained in accordance with a written
determination made by the ACMA. This determination will be a legislative instrument.
Subclause 93(5) clarifies that a determination made under subclause (1) must not include in
the calculation of a participating person's eligible revenue any amount payable under a
contract entered into (or taken to have been entered into), or any grant moneys received,
pursuant to clause 13.
Subclause 93(4) clarifies that the ACMA determination under subclause (1) may in working
out that revenue, refer to revenue of other persons; that is, the determination of eligible
revenue may count the revenue of another person as if it were the revenue of a participating
person. This may be necessary to allow for particular industry groupings to be adequately
covered, or to deal with any levy avoidance strategies.
Subclause 93(3) applies a `threshold amount' of eligible revenue for participating persons, as
determined by the Minister by legislative instrument. Under this clause the Minister is able to
reduce the eligible revenue of participating persons with respect to an eligible revenue period
(other than the first eligible revenue period) by the threshold amount.
If a participating person's eligible revenue falls below a threshold amount determined by the
Minister (if any), the person is taken to have eligible revenue of zero dollars. If the
participating person's revenue is at or above a determined threshold amount, the person's
eligible revenue will be reduced by the threshold amount. The purpose of allowing the
Minister to set a threshold under subclause 93(3) is to provide the Minister with the ability to
minimise the impact on those participating persons that may be just above any threshold
amount determined by the Minister. By ensuring there is minimal impact for being above the
revenue threshold, the incentive for carriers or carriage service providers to structure their
revenues to stay below that amount is reduced.
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First eligible revenue period
The definition of `eligible revenue' in subclause 93(1) does not apply to the `first eligible
revenue period' (the 2011-12 financial year). Instead, subclause 93(7) provides that for this
period, the `eligible revenue' of a person will be the amount of eligible revenue that is
assessed by the ACMA under section 20F of the Consumer Protection Act. In accordance
with subsection 20B(1) of that Act, the ACMA has made an eligible revenue determination
being the Telecommunications Universal Service Obligation (Eligible Revenue)
Determination 2003, and so for the first eligible revenue period, eligible revenue will be
calculated in accordance with this Determination.
Clause 94 - Audit report to accompany eligible revenue return
Subclause 94(1) provides that eligible revenue returns lodged under clause 91 must be
accompanied by a report prepared by an approved auditor in a form that is approved in
writing by the ACMA. This auditing requirement is intended to provide another check on the
appropriateness of returns and place the onus on participating carriers to ensure that their
returns are correct.
The report prepared under this clause must state that the approved auditor has audited the
return and include a determination of the auditor's opinion (in the terms that the ACMA has
set out in its approved form). The report must also state that the auditor has had sufficient
access to the person's records in order to audit the claim, and include any other statements
and information as required by the ACMA.
Subclause 94(2) permits the ACMA by written notice to exempt a person from the
requirements of subclause 94(1) and mirrors subsection 20D(3) of the Consumer Protection
Act. This provision is intended to provide the ACMA with administrative flexibility to waive
audit report requirements in appropriate circumstances. For example, where a carrier was
only a participating person for a brief period during the eligible revenue period, it may be
appropriate for the ACMA to exempt that carrier from the requirement to submit an audit
report.
An exemption notice made by the ACMA would be administrative in character and would
therefore not be a legislative instrument for the purposes of section 5 of the Legislative
Instruments Act 2003.
Under subclause 94(4), the ACMA may, by legislative instrument, determine that a specified
person will be an `approved auditor' for the purposes of this clause. A note at the end of this
subclause assists readers by referring to subsection 13(3) of the Legislative Instruments Act
2003, which provides that where an instrument requires identification of matters or things,
the rule-maker may identify those matters or things by class. An `approved auditor' could
therefore be identified, for example, by referring to all persons registered as an auditor under
the Corporations Act 2001. A similar determination has been made under the Consumer
Protection Act (see the Telecommunications (Approved Auditor) Determination 2010).
For the first eligible levy period, participating persons must also ensure that an eligible
revenue return is accompanied by an approved audit report. However, this requirement will
arise under section 20D of the Consumer Protection Act.
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Clause 95 - ACMA may inquire into correctness of return
This clause enables the ACMA to make whatever inquiries it thinks necessary or desirable to
assess whether a participating person's eligible revenue return has correctly stated that
person's eligible revenue for an eligible revenue period. Information and documents obtained
as a result of such inquiries may be used by the ACMA in making its assessment of eligible
revenue under clause 96 of the Bill.
The ACMA also has the power to require information from service providers who are not
participating persons in accordance with section 521 of the Telecommunications Act.
Clause 96 - ACMA to assess eligible revenue
Subclause 96(1) requires the ACMA to make a written assessment of each participating
person's eligible revenue for an eligible revenue period (other than for the first eligible
revenue period). The ACMA must provide a participating person with a copy of ACMA's
assessment of their eligible revenue (subclause 96(4)). A note provided to assist the reader
clarifies that multiple assessments of eligible revenue under this clause may under clause 104
be included in the same document.
Under subclause 96(2), the ACMA's assessment must be based on:
� the eligible revenue return lodged by the participating person under clause 91;
� any information or document obtained by the ACMA through its inquiries into the
correctness of that return under clause 95; and
� any other information or documents the ACMA has that it thinks is relevant to
making the assessment.
The ACMA is not required to rely solely on the information provided to it in claims and
returns to make its assessment. Subclause 96(2) gives the ACMA the discretion to take into
account the findings of its inquiries and other relevant matters in making its assessment.
Subclause 96(5) confirms that the ACMA's assessment of eligible revenue is not a legislative
instrument, as it is administrative in character, and therefore does not fall within the meaning
of section 5 of the Legislative Instruments Act 2003.
First eligible revenue period
In accordance with the transitional arrangements, the ACMA's assessment of each
participating person's eligible revenue with respect to the first eligible revenue period, that is
the 2011-12 financial year, will be carried out under section 20F of the Consumer Protection
Act.
Clause 97 - Assessment based on estimate of eligible revenue
Clause 97 sets out how a participating person's eligible revenue may be assessed under
clause 96 if the person fails to lodge an eligible revenue return with the ACMA. This clause
enables the ACMA to estimate a person's eligible revenue for the eligible revenue period,
and make a written assessment of the person's eligible revenue based on that estimate. If the
ACMA did not have the power to make this estimate it could not determine the total eligible
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revenue for all participating persons and nor calculate each person's levy contribution factor.
The failure to lodge an eligible revenue return is an offence under clause 120 of the Bill.
Under subclause 97(2), the ACMA must give at least 14 days written notice to a person who
has not lodged a return of both the amount of the eligible revenue proposed to be assessed
and the ACMA's proposal to make the assessment based on that estimate.
If the ACMA receives an eligible return from a person that previously failed to provide a
return within the required period, it will no longer be able to make an estimate under this
clause. If, however, the ACMA has already made an assessment of such a person's eligible
revenue, it will not be required to change it if that person subsequently gives the ACMA its
own eligible revenue return (subclause 97(4)).
First eligible revenue period
If a participating person fails to lodge an eligible revenue return with respect to the first
eligible revenue period, the estimate of that person's eligible revenue under section 20F of
the Consumer Protection Act will be made in accordance with the provisions of section 20G
of that Act.
Clause 98 - Levy contribution factor
Once the ACMA has assessed the eligible revenue of participating persons under clause 96,
subclause 98(2) requires the ACMA to work out the `levy contribution factor' for those
participating persons for the `eligible levy period' starting immediately after the eligible
revenue period.
As provided in a note under that subclause, this levy contribution factor is then used by the
ACMA to work out the levy amount of a participating person under clause 99.
Subclause 98(3) provides that the formula for the calculation of a person's levy contribution
factor for an eligible revenue period will be the person's `individual eligible revenue' divided
by the `total eligible revenue'.
In this context, `individual eligible revenue' refers to the eligible revenue of the participating
person for the eligible revenue period as assessed by the ACMA under clause 96. The `total
eligible revenue' is the total assessed amount of eligible revenue of all participating persons
in relation to the eligible revenue period. The levy contribution factor for each participating
person will therefore represent the participating person's proportion of the total eligible
revenue amount.
Division 3 - Levy amount
Clause 99 - Levy amount of a participating person
This clause sets out the mechanisms by which the ACMA is to assess the levy amount of a
participating person under clause 100.
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Levy amount - general rule
Subclause 99(1) provides that the levy amount will be calculated for each participating
person for an eligible levy period by multiplying each person's `levy contribution factor' by
the `overall levy target amount'.
The `levy contribution factor' refers to the contribution factor for the eligible levy period
worked out under clause 98. The `overall levy target amount' is the amount of money to be
paid, or incurred as administrative costs, by TUSMA with respect to the same eligible levy
period as provided for in clause 88. As the note beneath subclause (1) advises, the resulting
`levy amount' worked out under this clause will be the levy imposed on participating persons
under the Telecommunications (Industry Levy) Bill 2011.
Levy amount - first or second eligible revenue period
Subclause 99(3) provides that the levy amount imposed on a participating person for the first
two eligible levy periods (i.e. financial years 2012-13 and 2013-14) will be the `levy
contribution factor', as worked out under clause 98, multiplied by an `overall levy cap
amount'.
The rationale for relying on different amounts to calculate the levy in the first two eligible
levy periods is as explained in the outline to Part 6 of this Bill. TUSMA's liabilities in the
first year of its operation are substantially less than those which it will ordinarily incur in a
levy period. If the new scheme was to rely on the overall levy target amount (clause 88) for
that first year, insufficient levy will have been collected to meet the substantive payments
from clause 13 contracts that fall due early in the following financial year.
Subclause 99(4) specifies that the `overall levy cap amount' for the purposes of that
subclause will be an amount determined by the Minister by legislative instrument. This
instrument must not be made before the end of the eligible levy period (subclause 99(6)) but
the Minister must take all reasonable steps to ensure such a determination is made within a
three month period starting immediately after the end of each period (subclause 99(7)).
Subclause 99(5) exempts a determination made under subclause 99(4) from the disallowance
requirements in section 42 of the Legislative Instruments Act 2003. This exemption from the
disallowance regime is intended to provide certainty for industry levy participants that a levy
amount will be payable by participating persons in relation to each of the first two eligible
levy periods, and that TUSMA will, through the making by the Minister of an overall levy
cap and the subsequent collection of that levy amount, be able to meet its expected liabilities
during the transitional period.
It is intended that the overall levy cap amount will not exceed the amount needed for
TUSMA to meet its expected liabilities during the transitional period, and that TUSMA will
publish details on the liabilities it incurs (through, e.g., contract or grant payments) with
respect to the first two years of its operation.
Modification of the levy amount
Under subclauses 99(2) and 99(8), the Minister may, by legislative instrument, modify the
formulas for the levy amount under subclauses (1) and (3) respectively. This ability to vary
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the formula of a levy amount would allow the Minister to modify the means by which the
overall levy amount is calculated to account for any irregularities that might otherwise
adversely affect the accurate assessment of a levy amount under this clause. For example, this
power could be utilised to adjust the calculations of a levy amount in the event of a
participating person going into receivership, liquidation or general administration or who for
any reason has ceased to exist. Through an instrument made under this clause, the ACMA
could exclude that person from the assessment and recalculate the levy amounts owed by
other participating persons in accordance with clause 102. For instance, the Levy Debit
Formula Modification Determination (No.1) 2002, made by the Minister under the equivalent
provision in subsection 20R(3) of the Consumer Protection Act, sets out a special formula to
apply if a participating person is in receivership or liquidation or for any reason ceases to
exist.
A determination made under subclauses 99(2) or 99(8) is a legislative instrument and so any
modification to the formula will be subject to parliamentary scrutiny and possible
disallowance.
Clause 100 - ACMA to make written assessment
Clause 100 requires the ACMA to make a written assessment setting out the levy amount, as
worked out under clause 99, and the levy that is payable by each participating person for the
eligible levy period. This assessment must be prepared in a timely manner, however, failure
to do so will not affect the validity of the assessment (subclause 100(3)).
Subclause 100(4) clarifies that an assessment of the levy amount under this clause will not be
a legislative instrument under the Legislative Instruments Act 2003. Assessments of tax are
not legislative instruments under Schedule 1 of the Legislative Instruments Regulations 2004.
The ACMA may utilise clause 104 to set out multiple assessments made under clause 100 in
one document.
Clause 101 - Publication of assessment
This clause requires that the ACMA publish a copy of its assessment of the levy amount
under clause 100 on its website as soon as practicable after that assessment is made, and
provide participating persons with a copy of that assessment. If an assessment is amended
under clause 102, then that amended assessment will also need to be published and given to
participating persons.
Division 4 - Assessments
The provisions in this Division, in substance, replicate sections 20W to 20Y of the Consumer
Protection Act.
Clause 102 - Variation of assessments
This clause enables the ACMA to make any alterations or additions to an assessment made
under clause 96 (assessment of eligible revenue) or clause 100 (assessment of levy amount)
as it deems necessary, even if the assessed levy amount has already been paid by the relevant
participating person.
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Unless the contrary intention appears, an assessment amended under this clause will be taken
to be an assessment made under clauses 96 or 100 (as the case may be).
Clause 103 - ACMA may accept statements
Clause 103 permits the ACMA to partially or completely accept a statement in an eligible
revenue return for the purposes of making an assessment under Part 6 of the Bill.
Clause 104 - Multiple assessments in the same document
Clause 104 provides that the ACMA may include more than one assessment made under
Part 6 of the Bill within the same document. This clause allows for the ACMA to make
combined assessments, if it is more administratively efficient to do so.
Division 5 - Collection and recovery of levy
Clause 105 - When levy payable
Clause 105 makes the levy due and payable by a participating person 28 days after the
ACMA has given the person a copy of an assessment under clause 100. Under
paragraph 105(1)(b), the ACMA may extend this to a later date as determined in writing. The
ACMA must publish a copy of a determination made under paragraph (1)(b) on the ACMA
website. This determination would be administrative in character and therefore does not fall
within the meaning of section 5 of the Legislative Instruments Act 2003.
Clause 106 - Recovery of levy
Clause 106 makes levy that is due and payable recoverable in a court of competent
jurisdiction as a debt due to the ACMA on behalf of the Commonwealth.
Clause 107 - Validity of assessment
Clause 107 provides that the validity of an assessment under Part 6 of this Bill is not affected
by a contravention of this Bill. Clause 107 will apply whether the contravention is by the
ACMA or a person. This clause is intended to prevent the validity of an assessment being
challenged on a minor technical matter or failure of procedure. This clause mirrors section
20ZB of the Consumer Protection Act.
Clause 108 - Evidence of assessment
If a document that purports to be a copy of an assessment under clause 100 is produced in a
proceeding, clause 108 presumes, unless the contrary is established, that the document is a
copy of the assessment, that the ACMA has duly made the assessment and that the amounts
and other particulars set out in the assessment are correct.
Clause 109 - Onus of establishing incorrectness of assessment
This clause provides that the onus of establishing that an assessment under clause 100 is
incorrect is on the party that makes that assertion. Clause 100 provides for the ACMA to
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make a written assessment of a participating person's levy amount and levy liability. This
clause mirrors section 20ZD of the Consumer Protection Act.
Clause 110 - Set-off
This clause enables the Minister, for the financial years 2012-13 and 2013-14, to set-off the
whole or part of the amount of levy payable by the person as against the whole or part of any
amount payable by the Commonwealth to the person. For example, the Commonwealth may
decide to make grants of financial assistance to persons, including persons falling within a
class or classes of levy payers. Those grants might be made during the first and/or second
year. Any such grant which was payable to an individual levy payer could be set off against
the amount of the levy which the person was liable to pay to the ACMA. This provision does
not in any way affect the amount of the person's levy liability.
Subclause 110(2) makes clear that if a person is eligible to receive a grant of financial
assistance from the Commonwealth, the amount of the grant is taken to be an amount payable
by the Commonwealth to the person.
Clause 111 - Refund of overpayment of levy
Clause 111 provides that if there is an overpayment of levy, the overpayment is to be
refunded by TUSMA on behalf of the Commonwealth.
Clause 112 - Cancellation of certain exemptions from levy
Clause 112 cancels the effect of a provision of another Act that would have the effect of
exempting a person from liability to pay levy, except if the provision of the other Act is
enacted after the commencement of this clause and refers specifically to levy imposed by the
Telecommunications (Industry Levy) Bill 2011.
The purpose of this provision is to prevent the unintentional exemption of persons being
liable to the taxation by virtue of another Act, by ensuring that the exemption will only apply
if legislation specifically refers to the Telecommunications (Industry Levy) Bill 2011.
Clause 113 - Commonwealth not liable to levy
Clause 113 provides that the Commonwealth is not liable to pay levy, as the Commonwealth
cannot tax itself. It makes clear that a reference in this clause to the `Commonwealth'
includes a reference to an authority of the Commonwealth that cannot, by law of the
Commonwealth, be made liable to taxation by the Commonwealth.
Clause 114 - Performance bonds and guarantees
This clause enables the Minister, by written determination, to require a person who has a
liability (or anticipated liability) to pay levy, to obtain performance bonds or guarantees in
respect of the person's liability (or anticipated liability). The performance bond has the
meaning given in the determination. A determination under this clause is a legislative
instrument. This clause mirrors clause 20ZH of the Consumer Protection Act.
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Division 6 - Disclosure of information
The purpose of this division is to enable the process regarding the ACMA's assessment of the
new industry levy to be open to public and industry scrutiny. The provisions in this division
provide a balance between making information available to the public as against ensuring
persons do not incur substantial damage to their commercial or other interests as a result of
the disclosure of information. This Division 6 is largely modelled on Division 15 of Part 2 of
the Consumer Protection Act.
Clause 115 - Public may request information
This clause, which is based on section 22 of the Consumer Protection Act, enables a member
of the public to request the ACMA to make available to the person information or documents
about the basis on which the ACMA may make or has made its assessment under clause 100
and information about how the ACMA may work out, or has worked out that assessment.
This is to enhance industry and public scrutiny in relation to the preparation of the
assessments. However, the ACMA is not required to comply with the request if the
information sought was obtained from, or relates to, a participating person and the disclosure
of that information could reasonably be expected to cause substantial damage to the
participating person's commercial or other interests (which would include any disclosure of
personal information in breach of the Privacy Act 1988). Subclause 115(3) further provides
that the ACMA is not required to disclose information if it is prescribed for the purposes of
that subclause.
Clause 116 - Request for information that is unavailable under section 115
Clause 116 enables a participating person for an eligible revenue period to request the ACMA
to make available specified information, being information the ACMA cannot provide under
clause 115. This clause also sets out rules in relation to the ACMA's compliance with the
request.
Clause 117 - How the ACMA is to comply with a request
This clause replicates section 22B of the Consumer Protection Act. It sets out how the
ACMA is to comply with a request for information under clauses 115 or 116 in
communicating or otherwise providing the information to a party requesting that information.
Clause 118 - Minister's information-gathering powers
This clause, which is based on section 22C of the Consumer Protection Act, enables the
Minister to obtain from a carrier or carriage service provider information that is relevant to
the exercise of the Minister's powers or the performance of the Minister's functions under
Part 6 of this Bill. It is anticipated that information covered by this clause will be business or
financial information rather than personal information. However, if any personal information
is received, it is intended that such information not be disclosed in breach of the Privacy Act
1998. The Minister may give written notice to the carrier or carriage service provider
requiring the provision of information and the carrier or carriage service provider must
comply within the time and in the manner specified in the notice. The notice must allow for a
minimum of 14 days within which to comply. Subclause 118(7) provides that the notice is a
legislative instrument.
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Subclauses 118(5) ensures that the Minister's information-gathering powers under this clause
will not abrogate the privilege of self incrimination as it relates to individuals, while
subclause 118(6) likewise ensures that this clause will not affect the law relating to legal
professional privilege.
Division 7 - Other matters
Clause 119 - Delegation by the Minister
Clause 119 enables the Minister to delegate, in writing, any or all of his or her functions or
powers under Part 6 of the Bill to a member of the staff of the ACMA. The delegate must be
either an SES employee or acting SES employee of the ACMA, and he or she must comply
with any written direction made by the Minister.
The terms `SES employee' and `acting SES employee' are defined in the Public Service Act
1999.
Clause 120 - Offence of failing to lodge eligible revenue return
Subclause 120(1) provides that a person commits an offence if the person is a participating
person for an eligible revenue period and omits to do an act required under clause 91. For
example, an offence will be committed if the person fails to give the ACMA a written return
within the timeframe specified (clause 91(1)) or fails to provide the information required by
the approved form (clause 91(4)).
Subclause 120(2) provides that an offence against subclause (1) is an offence of strict
liability. If the offence is proven, the participating person will be liable to pay a fine of 50
penalty units.
Subclause 120(3) provides that a person who contravenes subclause 120(1) commits a
separate offence for each day during which the contravention continues. This includes the day
of conviction for the offence or any later day.
Clause 121 - Late payment penalty
Subclause 121(1) provides that if a levy remains unpaid after the day on which it becomes
due and payable under clause 105, the person is liable to pay a late payment penalty on the
unpaid amount. This penalty continues for each day until the entire levy has been paid.
The late payment penalty rate is 20 per cent per year, unless the ACMA determines in writing
that the penalty shall be lower. This determination is a legislative instrument.
Subclause 121(5) provides that the late payment penalty is a debt due to the ACMA on behalf
of the Commonwealth and may be recovered by the ACMA on behalf of the Commonwealth
in a court of competent jurisdiction.
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Part 7 - Miscellaneous
Clause 122 - Disclosure of information to the ACMA and the ACCC
Subclause 122(1) enables TUSMA to disclose information to the ACMA or the ACCC if it is
satisfied that the information will assist the relevant authority to perform or exercise any of
its functions or powers. Subclause 122(2) enables TUSMA to impose, in writing, conditions
which must be complied with regarding information disclosed under subclause 122(1). It is
not anticipated that the disclosure of any information under this provision will be personal
information (as defined by section 6 of the Privacy Act 1988), since ordinarily TUSMA will
not collect personal information in the performance of its functions and exercise of its
powers.
Subclause 122(3) provides for an instrument made under subclause 122(2) to not be a
legislative instrument where it relates to one particular disclosure; otherwise it is taken to be a
legislative instrument. This is declaratory of the law and is provided to assist the reader.
Clause 123 - Review of the operation of this Act
Subclause 123(1) requires the Minister to cause to be conducted a review of the operation of
the Bill, the legislative instruments made under the Bill and the Telecommunications Act to
the extent to which that Act relates to this Bill, prior to 1 January 2018.
Subclause 123(2) sets out the matters which must be considered under the review, including:
� whether the policy objectives listed in clause 11 have been achieved;
� whether any changes to the arrangements for standard telephone services, payphones,
the emergency call service and the NRS are required; and
� whether any changes to the functions of TUSMA are required.
A review conducted under subclause 123(1) must have regard to developments in the
telecommunications industry, including developments in the technology for the provision of
standard telephone services, payphones, emergency call services and the NRS (subclause
123(3)).
Subclause 123(4) provides that the review must make provision for public consultation.
Subclause 123(5) requires the Minister to cause a report to be prepared of the review, and
cause copies of the report to be tabled in both the House of Representatives and the Senate
within 15 sitting days after the completion of the report.
Clause 124 - Compensation for acquisition of property
Subclause 124(1) provides for the Commonwealth to be liable to pay a reasonable amount of
compensation to any person who may, by operation of the Bill, be subject to having their
property acquired on anything other than just terms. If the person and the Commonwealth
cannot agree on a reasonable amount of compensation, the person may institute proceedings
in a court of competent jurisdiction.
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Clause 125 - Regulations
Clause 125 enables the Governor-General to make regulations prescribing matters which may
be required or permitted by the Bill to be so prescribed, or necessary or convenient to be
prescribed in order to carry out and give effect to the Bill.
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