Chapter 1 - Introduction
Terms of reference
1.1
On 19 March 2008, the Senate referred the provisions of the
Telecommunications Legislation Amendment (Communications Fund) Bill 2008 (the
bill) to the Senate Standing Committee on Environment, Communications and the
Arts (the committee) for inquiry and report by 30 April 2008.
1.2
On 26 March 2008, in accordance with usual practice, the committee
advertised the inquiry in The Australian, calling for submissions
by 17 April 2008; the inquiry was re-advertised in The Australian on
1 April 2008. The committee also directly contacted a number of organisations
and individuals to invite submissions. The committee received four submissions,
which are listed in Appendix 1.
1.3
The committee acknowledges the Parliamentary Library for its work
preparing the Bills Digest on the bill, which assisted the committee in
considering the bill.
Background to the bill
Purpose of the bill
1.4
The bill has two purposes.
1.5
First, the bill amends the Telecommunications (Consumer Protection
and Service Standards) Act 1999 (the Act) to:
...enable money in the Communications Fund to be used for the
purpose of funding the creation or development of a national broadband network...[1]
1.6
The government has proposed the amendment because the Act currently prevents
the Communications Fund (the fund) being used for purposes other than to
implement recommendations arising from regular independent reviews of
telecommunications services in regional Australia by the Regional
Telecommunications Independent Review Committee (RTIRC).[2]
1.7
Second, the bill amends the Act to allow the $2 billion capital of the
fund to be expended for the purposes of the creation of a national broadband
network. The government has proposed the amendment because the Act currently
prevents the capital of the fund being drawn upon, which means that only the
income generated by the fund may be accessed.[3]
1.8
In the Second Reading Speech to the bill, the Minister for
Infrastructure, Transport and Regional Development, Mr Anthony Albanese,
stated:
The previous government legislated to prevent funds being drawn
below $2 billion and to only allow expenditure of the revenue stream. This
government is prepared to invest $2 billion right now to fund this critical
piece of national infrastructure.[4]
1.9
The minister also stated that the creation of the proposed national
broadband network will fulfil the original aims of the fund:
The intent of the Communications Fund is to address the
telecommunications needs of regional, rural and remote Australians. The...plan to
roll out a national broadband network is fully consistent with this...[5]
History of the fund
1.10
The fund was established in September 2005 from the proceeds of the sale
of the third and final tranche of Telstra shares, from which $2 billion was set
aside. It was intended that income from the fund would be used 'to support
broadband services in rural and regional Australia'.[6]
On 21 March 2007, the ALP announced an election commitment to
provide $4.7 billion for the building of a national broadband network to
provide broadband access to 98 per cent of Australians. Of the $4.7 billion, $2
billion was to be drawn from the fund.[7]
1.11
In response to this commitment, the Coalition introduced to
parliament the Telecommunications Legislation Amendment (Protecting Services
for Rural and Regional Australia into the Future) Bill 2007. The bill inserted
s 158ZJA into the Act, which requires the minister to
take all reasonable steps to ensure that the balance or value of the fund does
not fall below $2 billion. The amendment thus currently prevents the capital of
the fund being accessed.[8]
Inquiry into
the Telecommunications Legislation Amendment (Protecting Services for
Rural and Regional Australia into the Future) Bill 2007
1.12
The Senate Standing Committee on Environment,
Communications, Information Technology and the Arts conducted an inquiry into
the provisions of the Telecommunications Legislation Amendment
(Protecting Services for Rural and Regional Australia into the Future) Bill
2007.[9]
It received two submissions and made no recommendations on the bill. The report
stated:
...the committee received little evidence on the bill and the two
submissions it received addressed the bill in only general terms. No specific
issues with the bill were identified. The committee decided not to hold a
public hearing and has nothing further to report to the Senate regarding the
bill.[10]
Outline of the bill
1.13
The bill achieves its purposes in two ways. First, it removes the s
158ZJA requirement that the minister maintain the balance of the fund at not less
than $2 billion. This will allow the funds to be accessed immediately.
1.14
Second, the bill will enable the fund to be used for purposes related to
the creation of a national broadband network. This is in addition to the
purpose of financing the government's implementation of the RTIRC's review
recommendations.[11]
1.15
The bill also makes provision for a number of different legal structures
that might be needed to implement the national broadband network, depending on
the nature of what is proposed by the successful tenderer. The bill therefore
allows for Commonwealth contributions from the fund to a partnership, an
unincorporated/ incorporated joint venture or a trust, or by direct grant, loan
or direct purchase of assets.
Main provisions of the bill
1.16
The main provisions of the bill are as follows:[12]
Item 1 of the bill amends the Act to expand the
purposes for which the fund may be used to include ‘purposes relating to the
creation or development of a broadband telecommunications network.’
Items 2 to 6 insert definitions of new terms used in
the bill, such as 'broadband telecommunications network'.
Item 7 expands the meaning of 'unit' to include a
unit in a unit trust.
Items 8 and 9 make non-substantive changes to
paragraphs 158ZI(1)(b) and (c).
Existing s 158ZH provides for the establishment of a
Communications Fund Special Account (the fund account). Item 10 amends s
158ZI to extend the purposes to which the fund account may be put as follows:
- proposed paragraphs (d), (e) and (f) will permit the acquisitions
of, respectively, shares, debentures or units in a unit trust in a company or
unit trust that is or will be involved in the creation or development of a
broadband network;
- proposed paragraph (g) will permit financial assistance grants
for the creation or development of a broadband network;
- proposed paragraph (h) will permit the making of financial
assistance grants relating to the supply of a broadband service;
- proposed paragraph (i) will permit the acquisition of assets for use
in connection with a broadband telecommunications network; and
- proposed paragraph (j) will permit the fund account to be used
for any purpose incidental or ancillary to a purpose set out in paragraph (d),
(e), (f), (g), (h) or (i).
Item 11 repeals existing section 158ZJ, which requires
that the fund account be credited with $2 billion. Item 16 provides that
the repeal of this section does not affect a credit made before the
commencement of the bill.
Item 12 repeals section 158ZJA, which requires the minister
to take all reasonable steps to ensure that the balance or value of the fund does
not fall below $2 billion.[13]
Item 13 amends s 158ZL to require a written agreement
where one of the grants of financial assistance, provided for by the amendments
in item 10, is made to a state.
Similarly, item 14 amends s 158ZM to require a written
agreement where one of the grants of financial assistance, provided for by the
amendments in item 10, is made 'to a person other than a state'.
Item 15 inserts new s 158ZNA. Proposed subsections
(1), (2) and (3) define the three kinds of securities that the Commonwealth may
buy with monies from the fund account: broadband network shares, broadband
network debentures and broadband network trust units.
Further, the item provides that none of the defined
securities is affected by Division 3 of the Act or by s 39 of the Financial
Management and Accountability Act 1997 (FMA Act). Division 3 of the Act
governs the management of investments in the fund; a distinction is therefore
made between investments held in the fund account to generate returns, and
securities purchased by the Commonwealth in an entity involved in fulfilling
the purposes of the fund. Section 39 of the FMA Act governs the investment of
public money, but is considered inappropriate for the intended purpose of the fund.[14]
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