EXPLANATORY STATEMENT
Statutory Rule 1988 No 248 Issued by the Authority of the Minister for Transport and Communications
Section 80 of the Overseas Telecommunications Act 1946 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted to be prescribed by the regulations, or which are necessary or convenient to be prescribed by the regulations, for carrying out or giving effect to the Act.
Subsection 38(2) of the Act provides that the Overseas Telecommunications Commission (Australia) (the Commission) must obtain the Minister’s approval before entering into a contract exceeding the amount of $100,000, or if a higher amount is prescribed by regulations, that higher amount.
Regulation 13A of the Overseas Telecommunications Commission Regulations previously provided that, for the purposes of subsection 38(2) of the Act the prescribed higher amount was $6,000,000.
Section 45A of the Act empowers the Commission to borrow money from sources other than the Commonwealth. The approval of the Treasurer is required, which approval may relate to a particular transaction or to transactions included in a specified class of transactions (subsection 45A(4)).
Subsection 46(2) provides that moneys of the Commission not immediately required for the purposes of the Commission may be invested in a manner approved by the Treasurer (paragraph 46(2) (c)).
In the course of its normal operations, the Commission makes a large number of transactions relating to money management in accordance with approvals given by the Treasurer under section 45A and subsection 46(2). An average of sixty of these transactions each month exceed the $6,000,000 threshold set for the purposes of section 38. The Commission had not previously sought additional approval under section 38 for such transactions, relying instead on the Treasurer’s approval under section 45A or subsection 46(2).
Department of Finance Circular No 1988/12 entitled “Investment and Borrowing Powers of Statutory Authorities - Need for Ministerial Approval”, states that:
“Statutory authorities that are governed by a requirement to seek Ministerial approval for contracts above a specified limit should now ensure that investment or borrowing transactions above that limit receive Ministerial approval”.
This Circular was based on legal advice from the Attorney-General’s Department. For the Commission this had the effect that where a transaction relating to money management exceeded $6,000,000, approval had to be obtained under section 38 of the Act in addition to any approval required under section 45A or subsection 46(2).
It was impracticable for the Commission to obtain approval from the Minister for each individual money market transaction. Further, it was considered that the requirement for the Treasurer’s approval under section 45A or subsection 46(2) provided adequate supervision for these sorts of transaction.
The Government has decided that the requirement that the Commission obtain Ministerial approval to enter into contracts be removed (see Ministerial statement of 25 May 1988 by the Minister for Transport and Communications “Reshaping the Transport and Communications Government Business Enterprises” - page 28). This will require an amendment of section 38 of the Act. To allow the Commission to engage in investment and borrowing transactions in the period until the Act is amended, the Minister for Transport and Communications in consultation with the Prime Minister decided that where the Commission proposes to enter into a transaction in accordance with the approval from the Treasurer under section 45A or subsection 46(2), additional approval under section 38 will be required only where the amount involved exceeds $50,000,000.
The statutory rule repeals regulation 13A and substitutes a new regulation which provides a dual threshold for contract approvals under section 38 of:
• $50,000,000 where the transaction is entered into for the purposes of section 45A or subsection 46(2); and
• $6,000,000 in any other case.
Overview
The Statutory Rule 1988 No 248, issued by the authority of the Minister for Transport and Communications under section 80 of the Overseas Telecommunications Act 1946, was introduced to address the impracticality of requiring the Overseas Telecommunications Commission (Australia) to seek ministerial approval for each individual money market transaction exceeding $6,000,000. Previously, the Commission relied on the Treasurer's approval under section 45A or subsection 46(2) of the Act for such transactions, but a Department of Finance Circular in 1988 mandated that statutory authorities must seek ministerial approval for contracts above a specified limit. This created a need for dual approvals, which the government deemed impracticable. Consequently, the statutory rule was enacted to amend the threshold for ministerial approval, setting it at $50,000,000 for transactions approved under section 45A or subsection 46(2), while maintaining a $6,000,000 threshold for other transactions. This change was implemented to streamline the approval process and ensure adequate oversight through the Treasurer's existing approvals.
Scope and Application
The Overseas Telecommunications Act 1946 applies to the Overseas Telecommunications Commission (Australia), which is mandated to obtain the Minister’s approval before entering into a contract exceeding a specified amount. This Act governs the financial operations of the Commission, particularly its borrowing and investment activities. Regulation 13A previously established a threshold of $6,000,000 for contract approval under section 38, but following the Department of Finance Circular No 1988/12, it was clarified that the Commission needed to obtain Ministerial approval for transactions exceeding this amount, in addition to the Treasurer’s approval under section 45A or subsection 46(2). To streamline operations, the government amended section 38 to establish a dual threshold: a higher threshold of $50,000,000 applies for transactions approved under section 45A or subsection 46(2), while a lower threshold of $6,000,000 applies for other transactions. This change was intended to balance operational efficiency with adequate oversight of the Commission’s financial activities.
Key Provisions
The Statutory Rule 1988 No 248 amends the Overseas Telecommunications Commission Regulations by introducing a new regulation (subsection 38(2)) that establishes a dual threshold for contract approvals under section 38 of the Overseas Telecommunications Act 1946. Specifically, the new regulation sets the threshold at $50,000,000 for transactions entered into under section 45A (borrowing) or subsection 46(2) (investment), and $6,000,000 for all other transactions. This change aims to streamline the approval process for the Overseas Telecommunications Commission (Australia) while maintaining a level of oversight for significant financial transactions.
Under this amended regulation, the Overseas Telecommunications Commission must ensure that it obtains the Minister’s approval for any contract exceeding the specified threshold amounts. For transactions related to borrowing or investment under section 45A or subsection 46(2), the Commission must secure approval only if the amount exceeds $50,000,000. For other types of transactions, approval is required if the amount exceeds $6,000,000. This dual threshold is designed to balance the need for efficient financial operations with the requirement for appropriate ministerial oversight.
Failure to comply with the new regulatory requirements may result in legal consequences. If the Overseas Telecommunications Commission enters into a contract without the necessary ministerial approval, it may be subject to legal action for non-compliance. While the Statutory Rule does not specify explicit penalties, breaches of such regulatory provisions typically attract penalties under the relevant Act or could lead to enforcement actions by the relevant authorities. Additionally, the Commission may face reputational damage and loss of public trust if found to be in breach of these regulations.
The Statutory Rule 1988 No 248 also repeals the previous regulation 13A, which had set the threshold for ministerial approval at $6,000,000 for all transactions. This repeal and replacement are intended to align the regulatory framework with the current operational realities of the Commission, ensuring that it can continue to manage its financial transactions effectively while still adhering to necessary oversight requirements. The new regulation thus provides a more nuanced approach to managing contract approvals, tailored to the specific activities of the Commission.