EXPLANATORY STATEMENT

Telecommunications (Consumer Protection and Service Standards) Act 1999

NRS Levy Formula Modification

Determination 2005 (No. 1)

Issued by the authority of the Minister for Communications, Information Technology and the Arts

Background

Part 3 of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act) establishes the National Relay Service (NRS).  The NRS provides people who are deaf or hearing or speech impaired with access to a standard telephone service on terms, and in circumstances, that are comparable to those available to other Australians.

The NRS is funded by a quarterly levy on ‘participating persons’ for a quarter who are covered by the most recent eligible revenue assessment made by the Australian Communications Authority (ACA) or its successor from 1 July 2005, the Australian Communications and Media Authority (ACMA) before the start of the quarter.  Currently a person is a ‘participating person’ for a quarter if the person was a carrier at any time during the quarter (paragraph 94A(1)(a) of the Act).  The formula for the NRS levy in subsection 100(2) of the Act is based on carriers’ eligible revenue as a proportion of the total eligible revenue of all carriers determined before the start of each quarter.

The accompanying determination is made under subsection 100(2A) of the Act, which permits the Minister to modify the formula in subsection 100(2) by written determination.  Subsection 100(2B) of the Act provides that a determination under subsection 100(2A) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.  As a consequence of the commencement of the Legislative Instruments Act 2003 (LIA) and the repeal of section 46A of the Acts Interpretation Act 1901 on 1 January 2005, the accompanying determination is a legislative instrument for the purposes of the LIA (see LIA paragraph 6(1)(d)).  The accompanying determination must therefore be tabled in the Parliament and is subject to Parliamentary disallowance.

The purpose of the accompanying determination is to introduce a modified levy formula, alongside the current formula, to allow for the redistribution among eligible telecommunications carriers of levy defaults and recovered funds for the NRS.

The collapse of some telecommunications carriers has resulted in outstanding NRS levy debts being owed to the NRS. This raises the possibility of recovered funds being made available to the NRS from defaulting taxpayers.

The effect of the accompanying determination is to distribute defaults or a surplus in an equitable manner across the industry.  The modified formula will apply only when there are levy defaults or a surplus due to levy debts being partly or fully recovered from a defaulting taxpayer.

Consultation

All telecommunications carriers currently liable to pay the NRS levy were consulted by providing them with the draft determination and a summary of its provisions.  Carriers were given 30 days from the date of the accompanying letter, dated 13 September 2005, to comment.

Four carriers provided comments.  None objected to the principle of redistribution of levy defaults among the remaining carriers.  Two carriers suggested the need for a minor adjustment to the proposed formula, which was implemented.

NOTES ON CLAUSES

Clause 1 – Name of Determination

Clause 1 provides that the name of the accompanying determination is the NRS Levy Formula Modification Determination 2005 (No. 1).

Clause 2 – Commencement

Clause 2 provides that the accompanying determination commences on the day after it is registered on the Federal Register of Legislative Instruments.

Clause 3 – Application

Clause 3 provides that the accompanying determination applies to each levy quarter beginning with the first quarter that commences after the day on which the determination commences.  Section 94 of the Act defines a levy quarter as a quarter for which NRS levy is payable.  Section 94 defines a quarter as a period of 3 months ending on 30 September, 31 December, 31 March or 30 June.

Clause 4 – Definitions

Clause 4 defines the term ‘Act’ for the purposes of the accompanying determination as the Telecommunications (Consumer Protection and Service Standards) Act 1999.

Clause 5 – Modification of the formula in subsection 100(2) of the Act

Clause 5 modifies the formula set out in subsection 100(2) of the Act to deal with 2 situations.  The first situation is where there are no defaulting taxpayers and no recovered funds are available in relation to the current quarter.  In this situation, the formula in new subsection 100(2) of the Act will apply.  The second situation is where there are defaulting taxpayers or recovered funds are available in relation to the current quarter.  In this situation, the formula in new subsection 100(2AA) will apply.

New subsection 100(2AB) inserts definitions for the purposes of new subsections 100(2) and (2AA).

A defaulting taxpayer is defined to mean a taxpayer (defined in section 94 of the Act to mean a person who is liable to pay NRS levy for a quarter) who is in receivership or liquidation or for any reason ceases to exist or before the end of the third month of the previous quarter in relation to the current quarter to which this Determination applies.

The term recovered funds is defined to mean an amount paid on or before the end of the third month of the previous quarter to the ACMA in relation to a defaulting taxpayer’s NRS contribution amount included in the levy deficit for any previous quarter in relation to the current quarter to which the accompanying determination applies.

The term adjustment factor, which is used in the formula in new subsection 100(2AA) of the Act, is defined to mean the sum of the levy contribution factors of all taxpayers for a quarter minus the levy contribution factor of a defaulting taxpayer for the quarter.

The term levy contribution factor is defined to mean the ratio of a taxpayer’s eligible revenue for a quarter to the total eligible revenue of all taxpayers for the quarter.

The term levy deficit, which is used in the formula in new subsection 100(2AA) is defined to mean any shortfall in the total levy for a quarter.