EXPLANATORY STATEMENT
Issued by the Australian Communications and Media Authority
Radiocommunications (Receiver Licence Tax) Amendment Determination 2015 (No. 1)
Radiocommunications Act 1992
Purpose
The Radiocommunications (Receiver Licence Tax) Amendment Determination 2015 (No. 1) (the Amendment Determination) amends the Radiocommunications (Receiver Licence Tax) Determination 2015 (the Determination) to:
- increase the receiver licence tax amount for receiver licences (except for fixed receive licences operating in spectrum below 960 MHz) by 1.5 per cent, based on the increase in the consumer price index (CPI); and
- adjust the receiver licence tax payable by licensees operating receivers in certain parts of the 400 MHz frequency band to implement opportunity cost (OC) pricing in the band.
Legislative Provisions
The Determination and Amendment Determination are both made under subsection 7(1) of the Radiocommunications (Receiver Licence Tax) Act 1983 (the Act). Section 6 of the Act imposes tax on:
- the issue of a receiver licence;
- the anniversary of a receiver licence coming into force; and
- the holding of a receiver licence.
Subsection 7(1) provides that the Australian Communications and Media Authority (the ACMA) may determine the amount of tax imposed by the Act.
Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to make an instrument, that power shall, unless the contrary intention appears, be construed as including a power exercisable in a like manner and subject to like conditions, to amend that instrument.
The Amendment Determination is a disallowable legislative instrument under the Legislative Instruments Act 2003 (LIA).
Background
It is an object of the Radiocommunications Act 1992 to provide for management of the radiofrequency spectrum in order to provide an efficient, equitable and transparent system of charging for the use of spectrum. The annual tax levied on apparatus licences allows the ACMA to create economic incentives for efficient use of the spectrum. It also encourages licensees to use the minimum amount of bandwidth for their needs, to move to less congested bands, and to surrender licences that are no longer needed.
The ACMA seeks to ensure efficient use of spectrum by allocating frequencies to licensees with the greatest willingness to pay. If a tax is too low, licensees with low-value uses can viably occupy frequencies, excluding more economically efficient uses.
The Determination sets out the different amounts of receiver licence tax that the ACMA has determined is payable by licensees of particular apparatus licences for receivers.
Operation
The Amendment Determination amends the taxing regime for radiocommunications receiver licences to adjust all taxes by a 1.5 percent increase, based on the increase in the CPI over the year to June 2015[1]. In real terms there should be no effect on businesses, as the nominal dollar increases merely preserve the value of the licence taxes (and therefore the incentives toward efficient use of spectrum) against erosion by inflation.
The only exception to the CPI increase is that the ACMA has decided to continue the freeze, in dollar amounts, of taxes levied on point to point and point to multi-point fixed wireless access services below 960 MHz in remote density areas (RDAs) at their 2008 levels.
However, in the frequency range of 403 MHz to 520 MHz (400 MHz band), the ACMA has applied OC prices. Using OC principles reduces the licence tax rate to $0.00/kHz in RDAs (subject to the minimum tax constraint) given low current demand for, and low forward risk of congestion in, the 400 MHz band in these areas.
The Amendment Determination also progresses the application of the ACMA’s OC principles in high density areas (HDAs) in the 400 MHz band. This involves a second increase in the licence tax rate of around 15 per cent to reflect the OC in HDAs, which is designed to address congestion risk in the 400 MHz band in these areas.
Consultation
CPI amendments
Subsection 18(1) of the LIA provides that the nature of an instrument may be such that consultation may be unnecessary or inappropriate.
The ACMA considered that it was unnecessary to consult on the changes in the Amendment Determination to increase taxes by the CPI, in particular as CPI increases are routine and machinery in nature. Industry is aware of adjustments to apparatus fees to account for CPI increases. Such adjustments have been made by the Spectrum Management Agency, the Australian Communications Authority and the ACMA since 1995. Information is available from the ACMA website (acma.gov.au) about apparatus licence fees including the statement that “All apparatus licence taxes are adjusted annually for changes in the CPI, to compensate for the effects of inflation”.
The formula the ACMA uses for calculating apparatus licence taxes has been in place since 1995 (it was updated in 2005) and the Amendment Determination is merely applying the same formula. Information about the CPI is freely available to the general public from the Australian Bureau of Statistics.
In the special case of the unchanged taxes for fixed receive services operating in frequency bands below 960 MHz in RDAs, the ACMA considered it unnecessary to consult with relevant stakeholders as there were no changes made affecting their licences.
Amendments relating to opportunity cost pricing
In 2012, the ACMA increased taxes in the 400 MHz band by around 15 per cent, as the first step towards fully rolling out OC pricing in the band. The OC of a part of the radiofrequency spectrum is the highest value alternative use that is denied by granting access to one party rather than to the alternative. Pricing on this basis encourages efficient use of spectrum.
The ACMA flagged that it would monitor the impacts on demand and congestion before implementing further tax increases. In June 2014 the ACMA consulted with stakeholders (relevant papers are available on the ACMA website) on the monitoring undertaken to identify the impacts on demand and congestion of that increase. The ACMA also published the key findings of the monitoring analysis relating to the demand and congestion, and proposed implementing a second increase of around 15 per cent in HDAs in the 400 MHz band and the reduction of tax in the RDAs. Seven submissions were received from interested stakeholders.
The main concerns raised by stakeholders related to:
- the monitoring framework, as it was submitted, did not relate to congestion;
- the inclusion in the monitoring framework of the spectrum used by the public sector;
- the related complexities caused by the establishment of harmonised government spectrum (HGS) in the 400 MHz band; and
- the other impacts of implementing the new band planning arrangements in the 400 MHz band.
The ACMA considered the views of stakeholders and modified the monitoring framework in response to the feedback received. The ACMA undertook further monitoring and focused on congestion risk over the next few years. The ACMA has also modified the monitoring analysis to exclude public sector demand for spectrum which will generally migrate to the HGS. This revised monitoring framework has been used to inform the decision to proceed with the increase in licence tax rates of around 15 per cent flagged in the consultation paper.
The consultation paper released in June 2014 also flagged an intention to apply OC principles in the RDAs in the 400 MHz band, by reducing the receiver licence tax rate to $0.00/kHz given low demand and the lack of congestion. The consultation paper also foreshadowed that the minimum tax amount would continue to apply. Responses received were generally in support of the application of OC principles in RDAs.
The difference between the tax amounts proposed in the June 2014 paper and those specified in the Amendment Determination is an increase of 1.5 per cent, to account for the CPI changes for 2015.
Regulatory Impact Statement (RIS)
The Office of Best Practice Regulation (OBPR) has considered the routine annual escalation of licence tax rates by CPI, and formed the opinion that no regulatory impact analysis is required. The OBPR reference number is ID12297.
In April 2012, the ACMA released the general consultation paper Adoption of opportunity cost prices for apparatus licences in the 400 MHz band seeking views on the methodology and proposed OC-based licence tax rates to be set in the HDAs in relation to the 400 MHz band, and flagging the introduction of OC principles in setting the licence tax rate in RDAs in relation to the 400 MHz band. The ACMA undertook a RIS which OBPR endorsed - reference Number 13381.
Further, the ACMA considered whether a regulatory impact analysis process is required by undertaking a preliminary assessment of the impact of the introduction of OC principles in RDAs in relation to the 400 MHz band. Based on this preliminary assessment the OBPR has determined that the proposed regulatory change in the RDAs in relation to the 400 MHz band is minor or machinery in nature and has therefore verified that no further regulatory impact analysis is required – OBPR reference number 14683.
Amendment Determination Details
Details of the Amendment Determination are provided in Attachment 1.
Statement of Compatibility with Human Rights
In accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 the ACMA has considered whether the Amendment Determination engages any applicable human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 and has formed the view that it does not. The Amendment Determination is made under subsection 7(1) of the Act and amends the Determination by changing the tax amounts payable by licensees to account for an increase in CPI and to implement the ACMA’s OC pricing principles in the 400 MHz band. The Amendment Determination is compatible with human rights as it does not raise any human rights issues.
ATTACHMENT 1
DETAILS OF THE AMENDMENT DETERMINATION
Section 1 Name of Determination
Section 1 specifies the name of the Amendment Determination.
Section 2 Commencement
Section 2 provides that the Amendment Determination commences on the day after it is registered on the Federal Register of Legislative Instruments.
Section 3 Amendment
Section 3 provides that Schedule 1 of the Amendment Determination amends Determination.
Schedule 1 Amendments to Radiocommunications (Receiver Licence Tax) Determination 2015
Item [1]
Item [1] amends the definition of the minimum annual amount of tax by omitting $38.60 and substituting $39.18. This raises the minimum annual amount of tax by 1.5 per cent, the increase in CPI.
Item [2]
Item [2] amends section 3 of the Determination to include a definition of ‘receiver licence tax’. The purpose of this amendment is to clarify that the term ‘receiver licence tax’ means the tax imposed under the Act.
Item [3]
Item [3] substitutes Part 3 of the Determination to introduce new transitional arrangements.
New section 7 of the Determination sets out the relevant definitions for Part 3, and new section 8 provides transitional arrangements for the implementation of the receiver licence tax amendments made by the Amendment Determination.
Under the Act, tax is imposed on the issue of a licence and, subject to decisions and actions of the licensee, on each anniversary of the day the licence comes into force, or otherwise upon the holding of a licence. Where tax is imposed on issue of a licence, the ACMA intends for the higher tax rates, which account for the increase in CPI and for the increases due to implementation of OC pricing, to apply only to those licences that come into force on or after 5 April 2016 (whether or not the licence was issued before 5 April 2016).
In order for a licensee to have early notice of the amount of tax that will be imposed on the issue of its licence, the Amendment Determination will commence the day after it is registered. However, because the ACMA intends for the tax imposed on licences that come into force before 5 April 2016, to be the amount of tax payable before the increases in the Amendment Determination are accounted for, transitional provisions are required to ensure that the tax continues to be calculated in accordance with the Determination as in force immediately before the day on which the Amendment Determination commences.
Item [4]
Item [4] substitutes a new table 202 (and accompanying note) in Part 2 of Schedule 2 to the Determination, which sets out the amount of tax for each kHz of bandwidth for the licensing options specified in Part 2 of Schedule 2 of the Determination.
The amount of tax varies with the frequency range and area density of the spectrum access of a licence. All amounts have been raised by the adjustment of 1.5 per cent. The amounts relevant to HDAs and RDAs in the 400 MHz band also reflect the implementation of OC principles.
Item [5]
Item [5] amends sub-item 203(1) of the Determination by omitting the amount of $275 and replacing it with the amount of $279. The amount of $275 has been increased by the CPI of 1.5 per cent to $279.
Item [6]
Item [6] substitutes a new table 302 (and accompanying note) in Part 3 of Schedule 2 to the Determination, which sets out the amount of tax for each kHz of bandwidth for fixed receive licences.
The amount of tax varies with the frequency range and area density of the spectrum access of a licence. All amounts have been raised by the adjustment of 1.5 per cent, except for frequency bands below 960 MHz in RDAs where the amount of tax remains set at the 2008 level. The amounts relevant to the HDAs and RDAs in the 400 MHz band also reflect the implementation of OC principles.
[1] Australian Bureau of Statistics, Catalogue 6401.0, Consumer Price Index, June Quarter 2015.