EXPLANATORY STATEMENT
Telecommunications Universal Service Management Agency Act 2012
Telecommunications (Overall Levy Cap Amount) Instrument 2013
Issued by the Authority of the Minister for Broadband, Communications and the Digital Economy
Authority
The Telecommunications (Overall Levy Cap Amount) Instrument 2013 (the Instrument) is made by the Minister for Broadband, Communications and the Digital Economy (the Minister) under subsection 99(4) of the Telecommunications Universal Service Management Agency Act 2012 (the TUSMA Act). This subsection provides that the overall levy cap amount for an eligible levy period is the amount ascertained in accordance with a written instrument made by the Minister for the purposes of subsection 99(4) of the TUSMA Act.
Purpose
The Instrument sets out the overall levy cap amount for the 2012-2013 eligible levy period. The overall levy cap amount is relevant for determining the levy amount owed by a participating person for the 2012-2013 eligible levy period, under section 99 of the TUSMA Act.
Background
The TUSMA Act
In early 2012, as part of a package of legislation to achieve continuity of key telecommunications safeguards in the transition to the National Broadband Network, the government established a new statutory agency, the Telecommunications Universal Service Management Agency (TUSMA). TUSMA has responsibility for the effective implementation and administration of service contracts or grants that deliver universal service and other public policy telecommunications outcomes.
As part of the reform package, the government consolidated the previous Universal Service Obligation (USO) and the National Relay Service (NRS) levies into a single levy to cover TUSMA’s costs (together with government funding). The levy provisions in Part 6 of the Act are broadly based on the USO levy provisions contained in Part 2 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Consumer Protection Act).
Under the new levy scheme, a ‘participating person’ will continue to lodge eligible revenue returns with the Australian Communications and Media Authority (the ACMA) and levy payments will continue to be based on the ACMA’s assessment of each participating person’s proportion of the overall levy cap amount.
The levy operates over a two and a half year period, as follows:
- an eligible revenue period, during which participating persons earn the revenue that their levy contribution will be based on;
- an eligible levy period, during which participating persons submit their eligible revenue returns to the ACMA, which then calculates their levy contribution factors;
- and a subsequent period of approximately six months during which the individual levy amounts owed are calculated by the ACMA based on each participating person’s share of eligible revenue and then paid by participating persons.
Participating person
Under subsection 92(1) of the TUSMA Act, a person is a ‘participating person’ for an eligible revenue period if:
- the person was a carrier at any time during the eligible revenue period (paragraph 92(1)(a) of the TUSMA Act); or
- the Minister has made a written determination that carriage service providers are participating persons for the eligible revenue period and the person was a carriage service provider at any time during the eligible revenue period (paragraph 92(1)(b) of the TUSMA Act).
Currently, there is no written Ministerial determination under paragraph 92(1)(b) of the TUSMA Act.
The Minister has made an instrument under subsection 92(2) of the TUSMA Act, which exempts certain persons from being a ‘participating person’ under section 92 of the TUSMA Act. In relation to the 2011-2012 eligible revenue period and subsequent 2012‑13 eligible levy period, the relevant determination is the Telecommunications (Participating Persons) Determination 2013.
Calculation of the levy amount for 2012-2013 eligible levy period
The calculation of a participating person’s levy amount relies on the ACMA’s assessment of a participating person’s eligible revenue for the previous financial year. By way of example, a person that was a participating person in the 2011-2012 eligible revenue period will be liable to pay the levy amount with respect to that revenue, which is calculated for the 2012‑2013 eligible levy period.
The general rule for calculating a participating person’s levy amount is set out in subsection 99(1) of the TUSMA Act. This formula relies on the ‘overall levy target amount’ which is the actual amount paid, or incurred as administrative costs, by TUSMA with respect to the eligible levy period as provided for in section 88 of the Act.
Subsection 99(3) of the TUSMA Act sets out the formula for calculating the levy amount with respect to either the first or second eligible revenue period (i.e. the 2011-2012 and 2012-2013 financial years, respectively) which, unlike the general rule, relies instead on the ‘overall levy cap amount’. The levy cap amount is set by the Minister in a legislative instrument (subsections 99(4) and (5) of the TUSMA Act).
The formula for calculating the levy amount for these two periods is different from the formula that applies in subsequent periods, due to the substantially different liabilities incurred by TUSMA during its first two years of operation. In particular, TUSMA’s liabilities in its first year of operation are substantially less than those it would ordinarily incur in a levy period. If the formula for the first two eligible revenue periods was based on the overall levy target amount (as defined in section 88 of the TUSMA Act), insufficient levy would be collected to cover substantive payments for section 13 contracts that fall due early in the 2013-14 financial year.
The Instrument
The Instrument sets out the overall levy cap amount for the 2012-2013 eligible levy period in accordance with subsection 99(4) of the TUSMA Act.
The Instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LI Act). However, under subsection 99(5), an instrument made under subsection 99(4) is not subject to disallowance under subsection 44(2) of the LI Act.
Consultation
The ACMA and TUSMA were consulted in relation to the making of this Instrument.
On 27 June 2013, an exposure draft of the Instrument was released to relevant stakeholders for a one week consultation period. The only feedback received was from Telstra, which was taken into consideration when finalising the Instrument.
Regulatory impact
The Office of Best Practice Regulation (the OBPR) has agreed that the regulatory changes arising from the Instrument are machinery in nature and that a Regulation Impact Statement is not required.
Notes on sections
Section 1 - Name of the Instrument
Section 1 provides that the name of the Instrument is the Telecommunications (Overall Levy Cap Amount) Instrument 2013.
Section 2 - Commencement
Section 2 provides that the Instrument commences on the day after it is registered on the Federal Register of Legislative Instruments.
Section 3 - Definitions
This section defines the terms used in the Instrument.
Section 4 – Overall Levy Cap Amount
Section 4 sets the overall levy cap amount at $254 900 000. This amount has been worked out as follows:
- TUSMA’s total payments (composed of contract and grant payments under section 13 of the TUSMA Act, plus TUSMA’s administrative costs) falling due in 2013-14 are estimated to be $335 737 000.
- Taking into account funding appropriated to TUSMA under the Appropriation Acts for 2013-14, the overall levy cap amount needs to be set at $254 900 000 to ensure that sufficient levy is collected by the ACMA to cover TUSMA’s total payments and administrative costs which fall due in 2013-14.
Note that:
- for the 2012-2013 eligible levy period, the aggregate levy contribution of telecommunications carriers other than Telstra will be capped at the level of their total contribution to the previous USO and NRS levies in the 2011-2012 financial year, as set out in the Consumer Protection Act; and
- any levy overpayments will be refunded by TUSMA under section 111 of the TUSMA Act.