Chapter 2
Issues
2.1
This chapter covers issues raised in relation to the bill. These include
ensuring greater clarity and certainty around the scope of such bills by the
development of guidelines to assist parliamentary scrutiny, amendments to the Broadcasting
Services Act 1992 and comments by the scrutiny of bills committee in
relation to proposed subsection 152BEA(6) of the Competition and Consumer
Act 2010.
Clarifying the scope of the amendments contained in the bill
2.2
The government has indicated that this repeal process will occur twice a
year. Given this, the Clerk of the Senate has suggested that it may be useful
for there to be some legislative policy parameters developed to assist
parliamentary scrutiny. The Clerk drew the committee's attention to previous
guidelines from 1985 for Statute Law (Miscellaneous Provisions) Bills. These
guidelines were developed to address concerns regarding the scope of amendments
contained in such bills. The Clerk advised on the current status of the
guidelines:
I am not aware that the 1985 guidelines have any continuing
application, although they may continue to inform decisions by the Office of
Parliamentary Counsel as to suitable material for statute law revision bills,
as contemplated by the current terms of the Legislation Handbook.[1]
2.3
Nevertheless, the Clerk submitted that the previous guidelines provided
'useful guidance on what the Parliament could expect to be included in such
bills'. The Clerk added:
A statement from the executive government about what it
expects such bills to cover and – perhaps more importantly – not cover would be
a useful adjunct to parliamentary scrutiny and would assist in optimising the
limited resources of both Houses.[2]
2.4
The Clerk indicated that in the future, without a clear understanding of
the scope of the bills:
...the Senate may wish to apply the full range of scrutiny to
bills which might otherwise be able to be considered as non-controversial.[3]
Repeal of appropriation acts for
parliamentary departments
2.5
The Clerk also pointed out the intention of the bill to repeal spent,
exhausted and lapsed annual appropriations Acts or special appropriations Acts
and the claim that the process is consistent with the process used in relation
to the Statute Stocktake (Appropriations) Act 2013.[4]
The Clerk noted:
That Act, however, repealed a number of Appropriation
(Parliamentary Departments) Acts that were neither spent nor exhausted.[5]
2.6
The Clerk noted that the bill has repeated this error. The Department of
the Senate was consulted by the Department of Finance about the repeal of the Appropriation
(Parliamentary Departments) Act (No.1) 2010-11. The Department of the
Senate advised that the 2010-11 appropriation had been spent but that there
were unspent funds against the Appropriation (Parliamentary Departments) Act
(No.1) 2011-12. Despite this advice, the repeal of the Act was included in
the bill. The Clerk indicated that:
[T]his is yet another method by which the executive can
threaten the independence of the Parliament by cutting off access to
appropriated funds that are also the subject of agreement at ministerial level.[6]
2.7
The use of bills such as the one before the committee bypasses
established processes for negotiation between the President of the Senate, on
behalf of the Appropriations and Staffing Committee, and the Minister for
Finance. This process is set out in several resolutions of the Senate and in
the Appropriations and Staffing Committee's 55th report.[7]
2.8
The Clerk advised that while an administrative solution has been found:
[T]he repetition of the same error that occurred in the
Statute Stocktake (Appropriations) Act 2013 is disappointing. It indicates that
particular vigilance is needed in relation to these apparently innocuous kinds
of bills and that this is even more the case where such bills are to be a
regular event.[8]
Amendments to the Broadcasting Services Act
2.9
Part 14 of Schedule 2 of the Bill sets out amendments to the Broadcasting
Services Act 1992 (Broadcasting Services Act) which aim to 'streamline
notification and account keeping requirements on commercial broadcasting
licensees and to repeal spent and redundant provisions'.[9]
The committee received two submissions on the amendments in Part 14 of Schedule
2 which, while generally supportive of the amendments in the Bill, proposed changes
to further rationalise the operation of the notification requirements in the Broadcasting
Services Act.[10]
Reporting on directorships
2.10
Section 62 of the Broadcasting Services Act requires commercial
broadcasting licensees, restricted datacasting licensees and newspaper
publishers to inform the Australian Communications and Media Authority (ACMA) within
three months after the end of the each financial year of:
-
the details of all persons who were in a position to exercise
control of the licence; and
-
the name of each person who was a director of the licensee at the
end of that financial year.
2.11
Items 208, 210 and 212 of Schedule 2 amend section 62 to 'narrow the
scope of the substantive obligation' by repealing the requirement for
notification of the details of persons in a position to exercise control of the
licence.[11]
The EM explains the effect of the amendment:
As amended, the control notifications only require the names
of the directors of each licensee company or newspaper publishing company as at
the end of the financial year.
This amendment reduces the duplication of control change
notifications.[12]
2.12
Free TV Australia contended that section 62 of the Broadcasting Services
Act should be repealed in its entirety:
Information on directorships of
broadcasting licensees is already reported to [the Australian Securities &
Investment Commission (ASIC)]. It is unnecessary duplication for broadcasters
to have to report this information annually to a separate government regulator,
particularly if there is no change. The ACMA can gain information about
directors simply by accessing the ASIC register. This is a clear example of
unnecessary red tape for industry.[13]
2.13
News Corp Australia (News Corp) stated that it supported the repeal of
subsection 62(3) – which deals specifically with the notification requirements
for publishers of newspapers. However, News Corp submitted that the substitute
text – which provides for notification of the directors of the licensee – is
not required.[14]
News Corp argued:
[G]iven that the Limitation on directorships within the BSA
relates to television and radio, and television and datacasting only, it
appears that there is no purpose for the existing requirement to report
directorships by publishers (that are companies). Moreover, the substitute text
in the Bill would unnecessarily continue a purposeless and redundant
obligation, and – if it was pursued – would in fact be counterintuitive to the
objectives of regulation repeal.[15]
2.14
In relation to the repeal of section 62, the Department of
Communications (the department) has indicated:
ASIC collects information to assess compliance with very
different obligations than the ACMA. Accordingly, we do not consider that the
complete repeal of section 62 would be appropriate [at this time].[16]
2.15
However, the department advised:
The ACMA, in consultation with the Department, has commenced
a program of review of statutory reporting obligations in the context of the
government's deregulation agenda. This will include consideration of any
legislative changes that should be made. The ACMA's review program will of
necessity result in further consideration of the need for section 62.[17]
2.16
In relation to the repeal of subsection 62(3) suggested by News Corp,
the department agreed that directorship limits in the Broadcasting Services Act
do not apply to newspaper publishers. However, the department noted:
...newspaper company directorships are nevertheless a relevant
factor for assessing compliance with the statutory control rules, particularly
the cross-media diversity scheme in part 5 of the Broadcasting [Services] Act.
For example, the presence of one or more directors, or a number of directors known
to be associates, on boards across a number of media companies may provide an
early indication of a control relationship. Therefore, at the present time, we
do not consider that there is merit in amending section 62 in the manner that
has been suggested by News Corp.[18]
Notification of changes in control
2.17
Section 63 of the Broadcasting Services Act sets out the notification
requirements for licensees and publishers of newspapers to notify ACMA within
five days of becoming aware of either of the following:
-
a person who was not in a position to exercise control of the
licence, coming into a position to exercise control of the licence; or
-
a person who was in a position to control the licence, ceasing to
be in that position.
2.18
Section 64 of the Broadcasting Services Act deals with the notification requirements
for controllers of licences and newspapers to notify ACMA within five days of
becoming aware that a person who is not in a position to exercise control of a
licence or newspaper comes into a position to exercise the licence or
newspaper.
2.19
Items 215 and 216 amend sections 63 and 64 of the Broadcasting Services
Act to extend the timeframe within which a licensee, controller or newspaper
publisher must provide the required notifications of changes in control from
five days to 10 days after that person becomes aware of the change in control.[19]
Notification period of 10 days
2.20
Both Free TV Australia and News Corp argued that the period for
notification of changes in control in sections 63 and 64 should be 10 business
days.[20]
Free TV stated:
Controller/shareholder arrangements can be very complex and
it can often take some time to determine whether there has been a change in
control.
[Australian Stock Exchange (ASX)] listed companies do not
receive notification of changes of substantial shareholdings for up to 3 days
after shares are traded. Once notified (by lodgement on the ASX), it can, in
some cases, be difficult to ascertain ownership and control of such shares. ASX
listed companies therefore must engage third parties to undertake an analysis
of the share holdings and these reports are not compiled or delivered in less
than 7 days after making a formal request for such information.
Five consecutive days is a clear example of an unreasonable
and disproportionately burdensome obligation, particularly given the serious
consequences that flow from breaching these notification provisions. While ten
consecutive days is an improvement, it is still an unreasonably short
timeframe, given the complexity of control arrangements.[21]
2.21
Free TV Australia noted that companies have 28 days to notify ASIC when
a director or a secretary is appointed. Therefore, '[e]xtending the timeframe
will not impact at all on the effective operation of the Register of Controlled
Media Groups'.[22]
2.22
In relation to the notification period, the department has responded:
Relevant licensees, publishers and incoming controllers will
be very likely to have advance notice of transactions with the potential to
result in changes of control. This would be the case as it would be expected
that relevant transactions would be examined carefully to ensure that there was
no potential for breach of the statutory control rules in the Broadcasting [Services]
Act. This allows consideration, prior to the relevant transaction, of whether a
change in control will occur such that notification to the ACMA will be
required. Accordingly, there is limited need for an additional period of time
to be allowed for such notification to occur.[23]
Duplication of notification
requirements
2.23
Free TV Australia argued that section 63 should be repealed and
consequential amendments made to section 64 to remove the duplication of requirements
for both the controller and the licensee to notify the ACMA about control changes:
Often a licensee will not know if there has been a control
change for some time due to the complexity of the relevant transactions and
corporate structures, and technical reports on company structures can take a
number of days to receive. The licensee may be reliant on the controller to
provide information about their activities.
Hence the person entering the position of control or
alternatively, leaving the position of control should be the one to notify the
ACMA in both instances, rather than the licensee. This will reduce duplication.[24]
2.24
Conversely, News Corp supported the continued operation of sections 63
and 64:
We support the comments articulated in the Explanatory
Memorandum of the Bill, namely that the control reporting obligations contained
in sections 63 are 'considered sufficient for the due administration of the [Broadcasting
Services Act]', and are 'complemented' by those in section 64.[25]
2.25
The department has indicated:
...it remains appropriate for both [incoming controller and
licensee] to have this obligation, to ensure that all relevant notifications
are made and there are no inadvertent omissions, particularly as some licensees
have a large number of controllers. In any event, we understand that, as a
matter of practice, licensees, publishers and controllers are able to provide
notification using a single form where the notification relates to a single
change of control. Allowing for such a single notification (covering multiple
parties) per transaction reduces the administrative burden on parties subject
to section 63 and 64 of the Broadcasting [Services] Act. Accordingly, we do not
agree that further amendments are required at this time. Again, this position
is able to be reconsidered as part of the general review of statutory reporting
obligations.[26]
Provision of audited accounts
2.26
Section 205B of the Broadcasting Services Act requires commercial
broadcasters to keep accounts for the purposes of determining their licence fee
liability. One of these account keeping obligations requires broadcasters to
submit audited balance sheets and audited profit and loss accounts to the ACMA.[27]
2.27
Item 223 amends section 205B inserting a new subsection which empowers
the ACMA to exempt classes of licensees from the requirement to submit audited
balance sheets and audited profit and loss accounts:
The ACMA may specify the classes that will be granted
exemptions for the audit rule under this section by making a legislative
instrument. The legislative instrument would be subject to Parliamentary
scrutiny and disallowance in accordance with the [Legislative Instruments
Act 2003].[28]
2.28
Free TV Australia noted that the changes in item 223 would give the ACMA
the discretion to exclude certain classes of licensee from the requirement to
provide audited accounts. However, Free TV argued that some licences should be
excluded from the requirement altogether:
There are a number of small joint ventures holding
broadcasting licences issued under section 38B and 38C of the [Broadcasting
Services Act]. These are very small licences and the cost of audited accounts
separately for these entities is prohibitive...
While we appreciate the moves to allow the ACMA discretion to
exclude certain licensees, Free TV does not support the proposal in its current
form, particularly in the absence of any criteria or information about how the
ACMA would exercise the discretion.[29]
2.29
Free TV Australia estimated that removal of this requirement is expected
to save more than $220, 000 per annum.[30]
2.30
In the alternative, Free TV Australia proposed:
[A]mend the [Broadcasting Services Act] so that section 38B
and 38C licensees are not required to provide audited accounts unless requested
to so by the ACMA and only in respect of the most recent financial year.[31]
2.31
The department considered that the changes suggested by Free TV outlined
above:
...would favour particular classes of licensee to the potential
exclusion of others who could also claim that they were entitled to an
equivalent exemption. It is therefore more appropriate to provide the ACMA with
the flexibility to respond to evidence and circumstances which may change from
time to time.[32]
Comments by the Scrutiny of Bills Committee
2.32
The Senate Standing Committee for the Scrutiny of
Bills has drawn attention to part 2, schedule 2, item 3, proposed
subsection 152BEA(6) of the Competition and Consumer Act 2010 (CCA).
This section provides that an instrument made by the Australian Competition and
Consumer Commission (ACCC) for the purposes of specifying information that must
be included in quarterly reports about access agreements is not a legislative
instrument. The Explanatory Memorandum (EM) notes that proposed subsection
152BEA(6) represents a substantive exemption from the Legislative
Instruments Act 2003 (LIA). However, the EM also provides a detailed
explanation of the reason for the exemption:
The reason for exempting this type of instrument from the LIA
is that the ACCC, as the independent expert regulator responsible for
administering and enforcing compliance with Part XIC of the CCA, is best placed
to decide what additional information should, from time to time, be included in
the quarterly reports...The ACCC has the relevant technical and industry
expertise to determine what additional information would assist it in
performing its role.
Subjecting these decisions of the ACCC to disallowance would
not be consistent with the operation of the ACCC as an independent regulator
and would cause some uncertainty for the regulated companies. The proposed
exemption from the LIA is consistent with other substantive exemptions in
respect of the written statements made by the ACCC under existing paragraphs
152BEA(4), (5), (6) and (7) for the purposes of existing paragraphs
152BEA(1)(d), (2)(d) and (3)(b).[33]
2.33
The Scrutiny of Bills Committee noted the following additional
information contained in the EM:
...that written instruments made by the ACCC under new
subsection 152BEA(3) operate for a maximum of five years and that it is
anticipated that the instruments will be reviewed more regularly than would be
the case under the sunsetting provisions of the LIA. Finally it is noted that
the instruments must be published on the ACCC’s website.[34]
2.34
The Scrutiny of Bills Committee concluded:
In light of this detailed justification, the committee leaves
the question of whether the proposed approach is appropriate to the Senate as a
whole.[35]
Conclusion
2.35
The committee supports periodic repeal of spent legislation to ensure
legislation in the statute books is current. Noting the government's intention
for this process to occur on a regular basis, the committee is supportive of
the suggestion by the Clerk of the Senate that guidelines to assist
parliamentary scrutiny be developed by government.
2.36
The Department of Communications has considered and responded to the
issues raised in relation to the Broadcasting Services Act. The committee notes
the ongoing consultation process being undertaken by the department which
commenced in September 2013 and the review of statutory reporting obligations
being undertaken in consultation with the ACMA.
2.37
The committee notes the views of the Senate Standing Committee for the
Scrutiny of Bills in relation to part 2, schedule 2, item 3, proposed
subsection 152BEA(6) of the Competition and Consumer Act 2010 and refers
the Senate to these comments.
Recommendation 1
2.38
The committee recommends that the Senate pass the bill.
Senator Cory Bernardi
Chair
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