Commercial Broadcasting (Tax) Bill 2017 - Commentary on Ministerial Responses [2017] AUSStaCSBSD 279 (16 August 2017)

• Commercial Broadcasting (Tax) Bill 2017
• Significant matters in delegated legislation16
• Modified disallowance procedures28

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Commercial Broadcasting (Tax) Bill 2017

Purpose	This bill seeks to introduce a tax for transmitter licences issued under section 102 of the Radiocommunications Act 1992 that are associated with commercial broadcasting licences issued under Part 4 of the Broadcasting Services Act 1992
Portfolio	Communications and the Arts
Introduced	House of Representatives on 15 June 2017
Bill status	Before Senate
Scrutiny principles	Standing Order 24(1)(a)(iv) and (v)

2.42 The committee dealt with this bill in Scrutiny Digest No. 7 of 2017. The Minister responded to the committee's comments in a letter dated 9 August 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Minister's response followed by the committee's comments on the response. A copy of the letter is available on the committee's website.^[15]

Significant matters in delegated legislation^[16]

2.43 This bill seeks to introduce a tax for certain transmitter licences. The bill is complementary to provisions of the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 which, among other things, seeks to repeal existing broadcasting licence fees and datacasting charges as well as establish collection and assessment arrangements for the proposed new transmitter licence tax.

2.44 Under the bill, the Minister may, by legislative instrument, determine the amount of tax for each individual transmitter (the 'individual transmitter amount');^[17] however, this amount must not exceed the cap amounts specified in the bill.^[18] The capped amount applies as a default if no determination is in force.^[19]

2.45 In addition, the Minister may also make legislative instruments that:

• determine a specified time is the 'termination time' for the purposes of this bill (no further tax would be imposed after the 'termination time');^[20] and

• make provision for rebates of the whole or part of an amount of tax payable by a person.^[21]

2.46 One of the most fundamental functions of the Parliament is to levy taxation.^[22] The committee's consistent scrutiny view is that it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax. In this case, the fact that a cap on the amount of tax is set in the primary legislation partly addresses the committee's scrutiny concerns. However, any delegation to the executive of legislative power in relation to taxation still represents a significant delegation of the Parliament's legislative powers.

2.47 In relation to specifying a 'termination time', the explanatory memorandum states that 'it is expected that if the Minister were to make such a determination in the future, it would be after five years of its operation, in order to transition the commercial broadcasters to a spectrum usage charging regime'.^[23] There is, however, no provision in the bill limiting the making of a determination specifying a 'termination time' in this way.

2.48 In relation to the provision of rebates by the Minister, the explanatory memorandum states that 'it is expected that the rebates could be applied, where there is a strong policy rationale, to specified classes of transmitters or persons, or different periods'.^[24] Again, there is no provision in the bill to guide the exercise of the Minister's power to determine rebates (for example, there are no relevant policy considerations in the bill which must be taken into account prior to making these instruments).

2.49 Noting the determinations made under clauses 8, 11 and 14 delegate to the executive significant legislative power in relation to taxation, from a scrutiny perspective, the committee considers that it may be appropriate for these clauses to be amended to require the positive approval of each House of the Parliament before a new determination comes into effect.^[25]

2.50 In relation to clauses 11 and 14, the committee suggests it may, as an alternative, be appropriate to amend these clauses to provide further guidance in relation to the exercise of these powers on the face of bill (see paragraphs [2.47]–[2.48] above).

2.51 The committee requests the Minister's response in relation to this matter.

Minister's response

2.52 The Minister advised:

I wish to assure the Committee that the overriding objective underpinning the design of the proposed new ministerial power under proposed clause 8(2) of the Bill to determine individual transmitter amounts has been to maximise parliamentary scrutiny whilst maintaining a sufficient degree of flexibility. While the Bill would enable the ministerial determination to set out different rates, he or she must do so for different classes of transmitter, licence or licence-holder and the delegated power to set the rate of the tax is constrained by subclause 8(6) and clause 9, which impose a legislatively-prescribed 'cap' on the rates.
...
Finally, I note section 14 of the Bill provides for the Minister to make rules for the provision of rebates for whole or part of an amount of tax payable by a person. This is a common provision providing for rebates for tax amounts, and is subject to the usual disallowance procedure set out in section 42 of the Legislation Act.

Committee comment

2.53 The committee thanks the Minister for this response. The committee notes the Minister's advice that the overriding objective underpinning the design of the proposed new ministerial power to determine individual transmitter amounts has been to maximise parliamentary scrutiny while maintaining a sufficient degree of flexibility.

2.54 The committee welcomes this approach, particularly the cap on the individual transmitter amount in clause 9 of the bill. However, the committee takes this opportunity to reiterate that one of the most fundamental functions of the Parliament is to levy taxation.^[26] The committee's consistent scrutiny view is that it is for the Parliament, rather than makers of delegated legislation, to set a rate of tax.

2.55 Therefore, from a scrutiny perspective, the committee remains of the view that it may be appropriate for clauses 8, 11 and 14 to be amended to require the positive approval of each House of the Parliament before a new determination comes into effect.^[27]

2.56 In relation to clauses 11 and 14, the committee remains of the scrutiny view that it may be appropriate to amend these clauses to provide further guidance in relation to the exercise of these powers on the face of bill (see paragraphs [2.47]–[2.48] above)

2.57 The committee draws its scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of amending the bill to increase parliamentary scrutiny of ministerial determinations setting the rate of a tax.

2.58 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.

Modified disallowance procedures^[28]

2.59 In relation to ministerial determinations of the 'individual transmitter amount' made under clause 8, the bill proposes to modify the usual commencement and disallowance procedures for these determinations in two ways.^[29]

2.60 First, subclause 13(4) improves parliamentary oversight of these instruments by ensuring that they do not come into effect until 15 sitting days after the disallowance period has expired. The committee welcomes this modified commencement procedure.

2.61 However, subclause 13(2) seeks to reverse the usual disallowance procedure in subsection 42(2) of the Legislation Act 2003 to require the Parliament to positively pass a resolution disallowing a determination within the 15 sitting day disallowance period in order for the disallowance to be effective.^[30] Normally, subsection 42(2) of the Legislation Act provides that where a motion to disallow an instrument is unresolved at the end of the disallowance period, the instrument (or relevant provision(s) of the instrument) are taken to have been disallowed and therefore cease to have effect at that time. Odgers' Australian Senate Practice notes that the purpose of this provision is to ensure that 'once notice of a disallowance motion has been given, it must be dealt with in some way, and the instrument under challenge cannot be allowed to continue in force simply because a motion has not been resolved.' Odgers' further notes that this provision 'greatly strengthens the Senate in its oversight of delegated legislation'.^[31]

2.62 Under the modified disallowance procedure proposed in subclause 13(2), if a disallowance motion is lodged, but not brought on for debate before the end of the 15 sitting day disallowance period, the relevant instrument will take effect. In practice, as the executive has significant control over the conduct of business in the Senate, there may be occasions where no time is made available to consider the disallowance motion within 15 sitting days after the motion is lodged and therefore the instrument would be able to take effect regardless of the attempt to disallow it. As a result, the proposed procedure would undermine the Senate's oversight of delegated legislation in cases where time is not made available to consider the motion within the 15 sitting days.

2.63 Noting the significant practical impact on parliamentary scrutiny of this measure, the committee requests the Minister's detailed justification as to why it is proposed to reverse the usual disallowance procedures in subsection 42(2) of the Legislation Act 2003 so that where a motion to disallow an instrument is not resolved by the end of the disallowance period, the instrument will be taken not to have been disallowed and would therefore be able to come into effect.

Minister's response

2.64 The Minister advised:

I also note that clause 13 of the Bill provides for a modified disallowance procedure in respect of a Ministerial determination setting the tax amounts for individual transmitters. This modified disallowance procedure provides enhanced Parliamentary scrutiny over any such Ministerial determination than would be available under the usual disallowance procedure in section 42 of the Legislation Act 2003 (Legislation Act). Under the usual disallowance procedure, a legislative instrument will take effect from when it is made and commences, and if disallowed, will only cease to have effect from the time of disallowance. Under the modified procedure in the Bill, a ministerial determination can only commence and take effect once the disallowance period has passed and the Parliament has had sufficient time to scrutinise the determination.

Committee comment

2.65 The committee thanks the Minister for this response. The committee notes the Minister's advice that the modified disallowance procedure in respect of a ministerial determination setting the tax amounts for individual transmitters means that such determinations can only commence and take effect once the disallowance period has passed. In its initial comments the committee welcomed this approach, noting that it will improve parliamentary oversight by ensuring that the ministerial determinations do not come into effect until 15 sitting days after the disallowance period has expired.

2.66 However, the committee also noted that clause 13 seeks to reverse the usual disallowance procedure in subsection 42(2) of the Legislation Act 2003 so that if a disallowance motion is lodged, but not brought on for debate before the end of the disallowance period, the relevant instrument will remain in force by default.^[32] As a result, in practice, as the executive has considerable control over the conduct of business in the Senate, there may be occasions where no time is available to consider the disallowance motion within disallowance period. In such cases, the determination would prevail regardless of the attempt to disallow it. The proposed procedure would therefore undermine the Senate's oversight of delegated legislation in cases where time is not made available to consider the motion within the 15 sitting days.

2.67 The committee considers that, from a scrutiny perspective, it would be appropriate for the disallowance procedures for these ministerial determinations to be amended to ensure that the usual procedure applies so that the determinations are taken to be disallowed if a disallowance motion remains unresolved at the end of the disallowance period. The committee notes that this should be in addition to the procedure as currently drafted which provides that the determinations do not come into effect until the relevant disallowance period has expired.

2.68 The committee notes that the suggested amendment in relation to clause 8 outlined at paragraph [2.55] above would address the committee's scrutiny concerns in this regard.

2.69 The committee draws its scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of reversing aspects of the usual disallowance procedure in relation to these instruments.

2.70 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.

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[15] See correspondence relating to Scrutiny Digest No. 9 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.

[16] Clauses 8, 11 and 14. The committee draws Senators’ attention to these provisions pursuant to principles 1(a)(iv) and (v) of the committee’s terms of reference.

[17] Clause 8.

[18] Clause 9.

[19] Paragraph 8(1)(b).

[20] Clause 11.

[21] Clause 14.

[22] This principle has been a foundational element of our system of governance for centuries: see, for example, article 4 of the Bill of Rights 1688: 'That levying money for or to the use of the Crown by pretence of prerogative without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal'.

[23] Explanatory memorandum, p. 16.

[24] Explanatory memorandum, p. 18.

[25] See, for example, section 10B of the Health Insurance Act 1973.

[26] This principle has been a foundational element of our system of governance for centuries: see, for example, article 4 of the Bill of Rights 1688: 'That levying money for or to the use of the Crown by pretence of prerogative without grant of Parliament for longer time or in other manner than the same is or shall be granted is illegal'.

[27] See, for example, section 10B of the Health Insurance Act 1973.

[28] Clauses 8 and 13. The committee draws Senators’ attention to these provisions pursuant to principles 1(a)(iv) and (v) of the committee’s terms of reference.

[29] The usual commencement and disallowance procedures are contained in sections 12 and 42 of the Legislation Act 2003, respectively.

[30] Subsection 13(5) also states that section 42 of the Legislation Act does not apply to the determination.

[31] Rosemary Laing (ed), Odgers' Australian Senate Practice: As Revised by Harry Evans (Department of the Senate, 14^th ed, 2016), p. 445.

[32] Normally, subsection 42(2) of the Legislation Act provides that where a motion to disallow an instrument is unresolved at the end of the disallowance period, the instrument (or relevant provision(s) of the instrument) are taken to have been disallowed and therefore cease to have effect at that time. Odgers' Australian Senate Practice notes that the purpose of this provision is to ensure that 'once notice of a disallowance motion has been given, it must be dealt with in some way, and the instrument under challenge cannot be allowed to continue in force simply because a motion has not been resolved.' Odgers' further notes that this provision 'greatly strengthens the Senate in its oversight of delegated legislation': Rosemary Laing (ed), Odgers' Australian Senate Practice: As Revised by Harry Evans (Department of the Senate, 14th ed, 2016), p. 445.