EXPLANATORY STATEMENT

Telecommunications (Consumer Protection and Service Standards) Act 1999

National Relay Service (Participating Persons) Determination

2005 (No. 1)

Issued by the authority of the Minister for Communications, Information Technology and the Arts

Background

Part 3 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act) establishes the National Relay Service (NRS).  The NRS provides people who are deaf or hearing or speech impaired with access to a standard telephone service on terms, and in circumstances, that are comparable to those available to other Australians.

The NRS is funded by a quarterly levy on ‘participating persons’. The Act sets out the method of calculating each participating person’s NRS levy for a quarter.  Currently, a person is a ‘participating person’ for a quarter if the person was a carrier at any time during the quarter (paragraph 94A(1)(a) of the Act) and is required to contribute to the funding of the NRS based on its eligible revenue determined before the start of each quarter.

Paragraph 94A(2)(a) of the Act provides that a person is not a participating person for a quarter if that person’s gross telecommunications revenue for the eligible revenue period to which their most recent eligible revenue assessment relates is less than an amount determined by the Minister for Communications, Information Technology and the Arts.  For the purposes of this provision, an ‘eligible revenue period’ is the 1999-2000 financial year and each later financial year (see paragraph 20C(1)(a) of the Act) and the ‘most recent eligible revenue assessment’ is the assessment most recently made by the Australian Communications Authority (the ACA) or its successor from 1 July 2005, the Australian Communications and Media Authority (the ACMA) (see section 101C of the Act and Schedule 2 and Part 3 of Schedule 4 to the Australian Communications and Media Authority (Consequential and Transitional Provisions) Act 2005).

The accompanying determination is made under paragraph 94A(2)(a) of the Act.  Subsection 94A(3) of the Act provides that such a determination is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.  As a consequence of the commencement of the Legislative Instruments Act 2003 (LIA) and the repeal of section 46A of the Acts Interpretation Act 1901 on 1 January 2005, the accompanying determination is a legislative instrument for the purposes of the LIA (see LIA paragraph 6(1)(d)).  The accompanying determination must therefore be tabled in the Parliament and is subject to Parliamentary disallowance.

The purpose of the accompanying determination is to establish a minimum revenue threshold for the purposes of determining who is required to pay the NRS levy.  There has been a significant growth in the number of licensed carriers since the NRS levy was legislated in 1998, a high proportion of whom earn minimal revenue in comparison to the total industry revenue base.

For the financial year 2004-2005 approximately 25% of the carriers eligible to pay the NRS levy, generated approximately 99% of the eligible revenue. This means that 75% of the administrative burden for the Government to collect and industry to pay the NRS levy, relates to approximately 1% percent of the levy payments.  Some quarterly levy invoices to the smaller carriers are for less than $10.

The effect of the accompanying determination is that if a person’s gross telecommunications revenue for an eligible revenue period to which its most recent eligible revenue assessment relates is less than $10 million, the person will not be a ‘participating person’ for the purposes of Part 3 of the Act and will not be liable to pay NRS levy for the relevant quarter.  The determination also provides a definition of ‘gross telecommunications revenue’ for the purposes of the determination.

The $10 million threshold will result in benefits for the smaller carriers, and have only a minor effect on other carriers who will still be required to pay the NRS levy.  The $10 million threshold will lead to a reduction in administrative and financial burdens for approximately 75% of eligible carriers.  The redistribution of approximately 1% of the NRS levy on the remaining participating carriers will have minimal effect on those carriers.  This redistribution will equate to approximately 0.03% increase in the levy for those carriers remaining above the threshold.

Consultation

All telecommunications carriers currently liable to pay the NRS levy were consulted by providing them with the draft determination and a summary of its provisions.  Carriers were given 30 days from the date of the accompanying letter, dated 13 September 2005, to comment.

Four carriers provided comments.  Three supported the proposal.  The fourth expressed concern about the concept of asymmetric regulation based on the size of carriers. 

Given the minimal financial impact of this measure and the benefits for most industry participants, the Government has decided that differential regulation is justified in this instance.

NOTES ON CLAUSES

Clause 1 – Name of Determination

Clause 1 provides that the name of the accompanying determination is the National Relay Service (Participating Persons) Determination 2005 (No. 1).

Clause 2 – Commencement

Clause 2 provides that the accompanying determination commences on the day after it is registered on the Federal Register of Legislative Instruments.

Clause 3 – Definitions

Subclause 3(1) defines key terms used in the accompanying determination.  The definitions of ‘eligible revenue period’ and ‘most recent eligible revenue assessment’ are discussed above.

Subclause 3(2) provides a definition of a person’s ‘gross telecommunications revenue’ for an eligible revenue period for the purposes of the Determination.  A person’s ‘gross telecommunications revenue’ for an eligible revenue period is the person’s gross telecommunications sales revenue for that period as calculated in accordance with the Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003, as amended or replaced from time to time, made by the Australian Communications Authority (ACA) under subsection 20B(1) of the Act.  As a result of Part 3 of Schedule 4 to the Australian Communications and Media Authority (Consequential and Transitional Provisions) Act 2005, the Telecommunications (Universal Service Obligation (Eligible Revenue) Determination 2003 will have effect from 1 July 2005 as if it had been made by the ACA’s successor, the Australian Communications and Media Authority (the ACMA).

Clause 4 – Determination

Clause 4 determines $10 million as the amount in relation to a person’s gross telecommunications revenue for an eligible revenue period to which the most recent eligible revenue assessment relates for the purposes of paragraph 94A(2)(a) of the Act.  The effect of clause 4 is that if a person’s gross telecommunications revenue (for an eligible revenue period to which its most recent eligible revenue assessment relates) is less than $10 million, the person will not be a participating person for the purposes of Part 3 of the Act and will not be liable to pay the NRS levy for the relevant quarter.