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This instrument sets out the overall levy cap amount for the 2013-14 eligible levy period. The overall levy cap amount is relevant for working out the levy amount of a participating person for the 2013-14 eligible levy period, under section 99 of the TUSMA Act.
Administered by: Communications and the Arts
General Comments: Despite the repeal of the Telecommunications Universal Service Management Agency Act 2012, this instrument continues in force, subject to Schedule 1, Part 4, item 151 (including such modifications as are specified) of the Telecommunications Legislation Amendment (Deregulation) Act 2015.
Registered 26 Sep 2014
Tabling HistoryDate
Tabled HR30-Sep-2014
Tabled Senate30-Sep-2014
Date of repeal 01 Jul 2015
Repealed by Repeal of the enabling legislation by Telecommunications Legislation Amendment (Deregulation) Act 2015

EXPLANATORY STATEMENT

 

Telecommunications Universal Service Management Agency Act 2012

 

Telecommunications (Overall Levy Cap Amount) Instrument 2014

 

Issued by the Authority of the Minister for Communications

 

Authority

 

The Telecommunications (Overall Levy Cap Amount) Instrument 2014 (instrument) is made by the Minister for Communications (Minister) under subsection 99(4) of the Telecommunications Universal Service Management Agency Act 2012 (TUSMA Act).  Subsection 99(4) 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 the subsection.

 

Purpose

The instrument sets out the overall levy cap amount for the 2013-14 eligible levy period.  The overall levy cap amount is relevant for working out the levy amount of a participating person for the 2013-14 eligible levy period, under section 99 of the TUSMA Act.  

Background

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 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 TUSMA Act are broadly based on the USO levy provisions contained in Part 2 of the Telecommunications (Consumer Protection and Service Standards) Act 1999.

 

 

Under the industry levy scheme, a ‘participating person’ continues to lodge eligible revenue returns with the Australian Communications and Media Authority (ACMA), and the levy amount of the person is worked out under section 99 of the TUSMA Act.

 

The levy operates over a two and a half year period, as follows:

·         an eligible revenue period (the relevant eligible revenue period), during which participating persons earn the revenue that their levy contribution will be based on;

·         an eligible levy period starting immediately after the relevant eligible revenue period, during which participating persons submit their eligible revenue returns to the ACMA, which then calculates their levy contribution factors under section 98 of the TUSMA Act; and

·         a subsequent period of approximately six months during which participating persons’ individual levy amounts under section 99 of the TUSMA Act for the eligible levy period (and the levy payable by each person on that amount) are assessed by the ACMA under section 100 of that Act, and then paid by each person.

 

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)); 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)).

 

Currently, there is no determination under subsection 92(1)(b) of the TUSMA Act.

 

However, a person is not a participating person for an eligible revenue period if the person is of a kind, determined in writing by the Minister for the purposes of subsection 92(2) of the TUMSA Act, to be exempt from section 92 (subsection 92(2)).

 

A determination has been made for the purposes of subsection 92(2) – the Telecommunications (Participating Persons) Determination 2013 (No. 2) – which applies in relation to the 2012-13 eligible revenue period and subsequent eligible revenue periods. The Determination provides that carriers which earn less than $25 million in eligible revenue, initial sales revenue or gross telecommunications sales revenue in a given eligible revenue period are not participating persons for that period.

 

 

 

Calculation of the levy amount for 2013-14 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. By way of example, a person that was a participating person in the 2012-13 eligible revenue period will be liable to pay the levy based on that revenue. Their levy amount owing will be calculated in relation to the 2013‑14 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’ for an eligible levy period, as defined under section 88 of the TUSMA Act, which is the sum of:

·         all payments made by TUSMA under section 13 contracts for that period,

·         all payments made by TUSMA under section 13 grants for that period, and

·         TUSMA’s total administrative costs for that period,

less the total amount of money appropriated by any Appropriation Acts in relation to that period for the purposes of meeting costs under any of the three categories listed above.

 

Subsection 99(3) of the TUSMA Act sets out the formula for calculating the levy amount of a participating person for either the first or second eligible revenue period (i.e. the 2011-12 and 2012-13 financial years, respectively) which, unlike the general rule, relies on the ‘overall levy cap amount’. The levy cap amount is the amount ascertained in accordance with a written instrument made by the Minister (subsection 99(4) 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 financial year of operation (the 2012-13 financial year) were substantially less than those that it would ordinarily incur in an eligible levy period. If the formula for the first two eligible revenue periods was based on the overall levy target amount, insufficient levy would be collected to cover TUSMA’s actual costs for the 2012-13 and 2013‑14 eligible levy periods.

 

The instrument

 

The instrument sets out the overall levy cap amount for the 2013-14 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), but is not subject to disallowance under section 42 of that Act (subsection 99(5) of the TUSMA Act).

 

Consultation

 

The ACMA, TUSMA and Telstra Corporation Ltd (Telstra) were consulted in relation to the making of this instrument. Each of these stakeholders was provided with an exposure draft of the instrument, and feedback was taken into consideration when finalising the instrument.

 

All participating persons were consulted on the making of the same instrument with respect to the 2012-13 financial year. Given the instrument is machinery in nature and the overall levy cap amount is not substantially different from the previous financial year, a decision was taken that Telstra would be the only participating person consulted on the draft instrument. Not only is Telstra the largest levy contributor, it is also the primary recipient of funding from TUSMA. 

 

Regulatory impact

The Office of Best Practice Regulation (OBPR) has advised that the proposal to which this instrument relates is machinery in nature and, on that basis, a Regulation Impact Statement assessed by the OBPR is not required.

 

Notes on sections

Section 1 - Name of instrument

Section 1 provides that the name of the instrument is the Telecommunications (Overall Levy Cap Amount) Instrument 2014.

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 out the overall levy cap amount for the 2013-14 eligible revenue period, which is $221,000,000. This amount has been worked out taking into account:

·         TUSMA’s total payments (composed of contract and grant payments under section 13 of the TUSMA Act), plus TUSMA’s administrative costs, during  2014-15, which are estimated to be $321,000,000; and

·         funding appropriated to TUSMA for 2014-15 under Appropriation Acts.

The overall levy cap amount has been set at $221,000,000 to ensure that sufficient levy is collected by the ACMA to cover TUSMA’s total payments and administrative costs during 2014-15.