EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Broadband, Communications and the Digital Economy
Telecommunications (Consumer Protection and Service Standards) Act 1999
National Relay Service (Participating Persons) Determination 2011 (No. 1)
Authority
The National Relay Service (Participating Persons) Determination 2011 (No. 1) (the Determination) is made by the Minister for Broadband, Communications and the Digital Economy (the Minister) pursuant to paragraph 94A(2)(a) of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act), which provides that the Minister may determine in writing an amount that will result in the person not being a ‘participating person’ for the purposes of section 94A if the person’s gross telecommunications revenue falls below that amount.
Purpose
The purpose of the Determination is to ensure that any carriers with a gross telecommunications revenue of less than $10 million remain exempt from the liability to pay the National Relay Service (NRS) levy under section 99 of the Act for the three levy quarters ending 31 December 2011, 31 March 2012 and 30 June 2012.
The National Relay Service (Participating Persons) Determination 2005 (No. 1) (the 2005 NRS Determination) determined a $10 million gross telecommunications revenue amount for the purposes of paragraph 94A(2)(a) of the Act. However, that determination was repealed from the commencement of the Telecommunications (Participating Persons) Determination (No. 1) (the Second Determination) on 6 July 2011. The Second Determination is intended, among other things, to increase the threshold amount from $10 million to $25 million. For reasons explained further below, this Second Determination will not apply to the three NRS levy quarters with the outcome that in the absence of this Determination smaller carriers would become liable to pay the NRS levy for those quarters.
Like the 2005 NRS Determination, the new Determination determines a $10 million gross telecommunications revenue amount for the purposes of paragraph 94A(2)(a) of the Act. The Determination will apply for three consecutive NRS levy quarters ending 30 June 2012, and will continue to ensure that a carrier is not a ‘participating person’ pursuant to that paragraph if the carrier has a gross telecommunications revenue of less than $10 million. The consequence of being exempt from being a participating person is that the person will be exempt from the liability to pay the NRS levy for the relevant quarter under section 99 of the Act.
Background
Part 3 of the Act establishes the NRS. The NRS provides persons who are deaf or who have a hearing and/or speech impairment with access to a standard telephone service on terms, and in circumstances, that are comparable to the access other Australians have to a standard telephone service.
The NRS is funded by a quarterly levy on ‘participating persons’. Division 3 of Part 3 of the Act sets out a method of calculating a participating person’s NRS levy for each quarter of the financial year.
Under paragraph 94A(1)(a) of the Act, a person is a ‘participating person’ for a quarter if the person was a carrier at any time during that quarter. However, paragraph 94A(2)(a) provides that a person is not a participating person for a quarter if their gross telecommunications revenue for the eligible revenue period to which the most recent eligible revenue assessment relates is less than an amount determined by the Minister for the purposes of that paragraph. An ‘eligible revenue period’ effectively covers a financial year and the ‘most recent eligible revenue assessment’ is defined by section 101C of the Act to mean the most recent assessment made by the ACMA under section 20F of the Act.
On 28 November 2005, the then Minister for Communications, Information Technology and the Arts made the 2005 NRS Determination under paragraph 94A(2)(a) of the Act. The 2005 NRS Determination provided that, for the purposes of that paragraph, $10 million was the amount in relation to a person’s gross telecommunications revenue for an eligible period to which the most recent eligible revenue assessment related. The effect of the 2005 NRS Determination was that if a person’s gross telecommunications revenue for the relevant eligible revenue period was less than $10 million, that person was not a participating person for the purposes of Part 3 of the Act, and was not liable to pay the NRS levy for the relevant quarter under section 99.
On 4 July 2011, the Minister made the Second Determination under paragraph 20A(2)(b) of the Act. The Second Determination will continue to exempt smaller carriers from having to contribute to both the universal service obligation (USO) and NRS levies by setting a new, higher revenue threshold amount of $25 million, below which a person will not be ‘participating person’ for the purposes of both levies. It also applies the amount to three different revenue amounts, namely, initial sales revenue, gross telecommunications sales revenue or eligible revenue.
Section 3 of the Second Determination repealed the 2005 NRS Determination on 6 July 2011, five days after the commencement of the July to September 2011 quarter. The 2005 NRS Determination continues to apply to that quarter. This is because the repeal of the 2005 NRS Determination did not remove the privilege of being exempt from having to pay the NRS levy for that quarter, as conferred by the 2005 NRS Determination on a carrier that has a gross telecommunications revenue of less than $10 million. Section 15 of the Legislative Instruments Act 2003 (the LI Act) provides that:
“the repeal of any legislative instrument... does not, unless the contrary intention appears in the Act or legislative instrument effecting the repeal:
...
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the instrument...”
Consequently, for the July to September 2011 quarter, carriers with gross telecommunications revenues below $10 million for the 2009-10 eligible revenue period will continue to not be regarded as participating persons required to pay the levy under section 99 of the Act.
At the beginning of the subsequent NRS levy quarter on 1 October 2011, a new liability for participating persons to pay the levy for the October to December 2011 quarter will arise. At this time, the 2005 NRS Determination will have been repealed and will not operate to exempt from payment of the liability those carriers with a gross telecommunications revenue of less than $10 million. Similarly, the Second Determination will not have come into effect. This is because the Second Determination applies as from the eligible revenue period for 2010-11, which will not be assessed by the Australian Communications and Media Authority (ACMA) until mid-2012. The NRS levy is based on the most recent assessment of eligible revenue under section 20F of the Act, which for the three identified quarters is the assessment made by the ACMA on 14 June 2011 in respect to the 2009-10 eligible revenue period.
With the 2005 NRS Determination repealed and the Second Determination not coming into effect in relation to the assessment of the 2009-10 eligible revenue period, section 94A of the Act would operate to provide that all carriers, irrespective of their telecommunications-related revenue, will be liable to pay the NRS levy under section 99 of the Act during the October 2011 to June 2012 period. This is an unintended consequence of the Second Determination. To remedy this gap with respect to smaller carriers, the Determination ensures that carriers with less than $10 million gross telecommunications revenue are not required to pay the liability for these three NRS levy quarters. In the absence of the Determination, smaller carriers would be required to pay an NRS levy that they have so far been free from the liability to pay under section 99. The imposition of the NRS levy on smaller carriers in such circumstances would represent an unintended financial and administrative burden on smaller carriers.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
The Government undertook a public consultation process in respect to the Second Determination following a release of its consultation paper on 2 May 2011. Subsequent to the making of the Second Determination it became clear that there was an unintended gap in time during which no Determination would apply exempting the small carriers from payment of the NRS levy. This was not the intended consequence following the original consultation. The Government has since consulted with the ACMA, as a key stakeholder, on how best to rectify this potential problem, but has not consulted more widely on the solution since it is necessary to resolve the matter expeditiously.
Notes on Sections
Section 1 - Name of Determination
Section 1 provides that the name of the Determination is the National Relay Service (Participating Persons) Determination 2011 (No. 1).
Section 2 - Commencement
Section 2 provides that the Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.
The Determination will only apply, however, from the commencement of the October to December 2011 NRS levy quarter. Prior to the commencement of that quarter, the National Relay Service (Participating Persons) Determination 2005 (No. 1) will apply with respect to the definition of a participating person for the purposes of paragraph 94A(2)(a) of the Act.
Section 3 - Application
Section 3 provides that the Determination applies only to the three NRS levy quarters ending 31 December 2011, 31 March 2012 and 30 June 2012.
The Determination is intended to apply for so long as the most recent eligible revenue assessment relates to the 2009/10 eligible revenue period. At the end of the 30 June 2012 quarter, it is anticipated that the ACMA will have made its assessment under section 20F of the Act for the 2010/11 eligible revenue period, and consequently the Second Determination will thereafter apply in assessing the liability to pay the NRS levy.
Section 4 - Definitions
Subsection 4(1)
Subsection 4(1) defines key terms used in the Determination.
The term ‘Act’ refers to the Telecommunications (Consumer Protection and Service Standards) Act 1999.
The term ‘most recent eligible revenue assessment’ is defined to have the same meaning as in section 101C of the Act.
The term ‘quarter’ is defined to have the same meaning as in section 94A of the Act: a period of three months ending on 30 September, 31 December, 31 March and 30 June. However, the Determination will not apply to any quarter ending 30 September.
The note to subsection 4(1) clarifies that the term ‘eligible revenue period’ has the same meaning as in section 5 of the Act.
Subsection 4(2)
Subsection 4(2) defines ‘gross telecommunications revenue’ for an eligible revenue period to mean a person’s gross telecommunications sales revenue for that period as calculated in accordance with the Telecommunications Universal Service Obligation (Eligible Revenue) Determination 2003 made by the ACMA under subsection 20B(1) of the Act, as in force from time to time.
Section 5 – Determination
Section 5 determines $10 million as the amount with respect 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 section 5 is that if a person’s gross telecommunications revenue (for an eligible revenue period to which the most recent eligible revenue assessment relates) is less than $10 million, that person will not be a ‘participating person’ for the purposes of Part 3 of the Act.
Pursuant to section 99 of the Act, a person is liable to pay the quarterly NRS levy if the person is a ‘participating person’ for the relevant NRS quarter (for the purposes of section 94A of the Act) and is covered by the most recent eligible revenue assessment made by the ACMA before the start of that quarter. Under subsection 94A(1), a participating person for the purposes of the NRS levy is a person who is a carrier at any time during the relevant NRS quarter. However, paragraph 94A(2)(a) provides that a person is not a participating person for a quarter if their gross telecommunications revenue for the eligible revenue period to which the most recent eligible revenue assessment relates is less than the amount determined in writing by the Minister for the purposes of that paragraph.
Consequently, as a result of the Determination, for the three consecutive NRS levy quarters ending 30 June 2012, a carrier whose gross telecommunications revenue is less than $10 million:
- will not be a participating person for the purposes of Part 3 of the Act; and
- will not be liable under section 99 to pay the levy for the quarter.