EXPLANATORY STATEMENT
Statutory Rule 1988 No 167 Issued by the Authority of the
Minister for
Transport and Communications Support
Section 112 of the Telecommunications Act 1975 (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 79(1) of the Act provides that the Australian Telecommunications Commission (the Commission) must obtain the Minister’s approval before entering into a contract exceeding the amount of $500,000, or if a higher amount is prescribed by regulations, that higher amount.
Regulation 42A of the Telecommunications Regulations previously provided that, for the purposes of subsection 79(1) of the Act the prescribed higher amount was $6,000,000.
Section 72A 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 72A(4)).
Subsection 75(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 75(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 72A and subsection 75(2). Up to twenty of these transactions each day exceed the $6,000,000 threshold set for the purposes of section 79. The Commission had not previously sought additional approval under section 79 for such transactions, relying instead on the Treasurer’s approval under section 72A or subsection 75(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 be obtained under section 79 of the Act in addition to any approval required under section 72A or subsection 75(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 72A or subsection 75(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 25. This will require an amendment of section 79 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 Acting Prime Minister and Attorney-General, decided that where the Commission proposes to enter into a transaction in accordance with the approval from the Treasurer under section 72A or subsection 75(2), additional approval under section 79 will be required only where the amount involved exceeds $50,000,000.
The statutory rule repeals regulation 42A and substitutes a new regulation which provides a dual threshold for contract approvals under section 79 of:
• $50,000,000 where the transaction is entered into for the purposes of section 72A or subsection 75(2); and
• $6,000,000 in any other case.
Overview
The Statutory Rule 1988 No 167, issued under the authority of the Minister for Transport and Communications, amends the Telecommunications Act 1975 to address the impracticality faced by the Australian Telecommunications Commission (the Commission) in obtaining Ministerial approval for numerous daily transactions exceeding the previously prescribed $6,000,000 limit. The rule responds to legal advice and a Department of Finance Circular, which underscored the necessity of Ministerial approval for such transactions, despite existing approvals from the Treasurer. The overarching policy objective is to streamline the Commission's operations while maintaining sufficient oversight through the Treasurer's existing approvals. Consequently, the rule introduces a dual threshold for contract approvals, setting the higher threshold at $50,000,000 for transactions under section 72A or subsection 75(2), and retaining the $6,000,000 limit for other transactions, thereby providing a practical solution until the Act is formally amended.
Scope and Application
The Statutory Rule 1988 No 167, issued under the Telecommunications Act 1975, applies to the Australian Telecommunications Commission and pertains to the authority required to enter into contracts and transactions involving significant financial amounts. Specifically, the Act addresses the thresholds and conditions under which the Commission must seek ministerial approval for financial transactions. The rule modifies the previous regulation by setting a dual threshold for contract approvals under section 79: a higher threshold of $50,000,000 applies when the transaction is related to borrowing or investment activities approved by the Treasurer under section 72A or subsection 75(2), while a lower threshold of $6,000,000 applies in all other cases. This amendment reflects the government's decision to streamline the approval process for certain high-value transactions, allowing the Commission to proceed with transactions up to $50,000,000 without additional ministerial approval, provided they have already received the Treasurer's approval. The rule's geographic and jurisdictional reach is confined to the Commonwealth level, and it supersedes previous regulatory thresholds set out in regulation 42A.
Key Provisions
The Statutory Rule 1988 No 167 amends the Telecommunications Regulations 1990, primarily by adjusting the threshold for contract approvals under section 79 of the Telecommunications Act 1975. Specifically, Regulation 42A is repealed and replaced with a new regulation (section 1). The new regulation introduces a dual threshold for contract approval under section 79: a higher threshold of $50,000,000 applies when the transaction is related to borrowing or investment activities as permitted under section 72A or subsection 75(2), while a lower threshold of $6,000,000 applies in all other cases (section 3(1)). This amendment responds to the Department of Finance Circular No 1988/12, which clarified the necessity for Ministerial approval for certain transactions, leading to the impracticality of seeking approval for each individual transaction exceeding $6,000,000.
The amended regulation imposes specific obligations on the Australian Telecommunications Commission (the Commission). Firstly, the Commission must ensure that any contract exceeding the prescribed thresholds is subject to the appropriate level of approval. For transactions related to borrowing or investment under section 72A or subsection 75(2), the Commission must obtain Ministerial approval if the transaction exceeds $50,000,000. For all other transactions, Ministerial approval is required if the amount exceeds $6,000,000 (section 3(1)). These obligations are intended to provide a balance between operational efficiency and adequate oversight, ensuring that significant financial activities are appropriately authorised.
In terms of compliance and enforcement, the Statutory Rule does not explicitly outline offences or penalties for non-compliance. However, any breach of the requirements for contract approvals under section 79 of the Telecommunications Act 1975 could potentially result in legal consequences. Non-compliance might be subject to existing provisions within the Act that deal with unauthorised activities or mismanagement of funds, although specific penalties would be determined in the context of broader legal proceedings. The intent of the rule is to streamline the approval process while maintaining sufficient regulatory oversight to protect the interests of the Commission and its stakeholders.