Telecommunications (Regional Broadband Scheme) Charge Bill 2017 - Commentary on Ministerial Responses [2017] AUSStaCSBSD 303 (6 September 2017)

• Telecommunications (Regional Broadband Scheme) Charge Bill 2017
• Significant matters in delegated legislation128
• Modified disallowance procedures143

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Telecommunications (Regional Broadband Scheme) Charge Bill 2017

Purpose	This bill seeks to establish an ongoing funding arrangement for fixed wireless and satellite infrastructure by imposing a monthly charge on carriers, including NBN Co Ltd, in relation to each premises connected to their network that has an active fixed-line superfast broadband service during the month
Portfolio	Communications and the Arts
Introduced	House of Representatives on 22 June 2017
Scrutiny principles	Standing Order 24(1)(a)(iv) and (v)

2.228 The committee dealt with this bill in Scrutiny Digest No. 8 of 2017. The Minister responded to the committee's comments in a letter dated 23 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.^[127]

Significant matters in delegated legislation^[128]

Initial scrutiny – extract

2.229 This bill seeks to establish an ongoing funding arrangement for fixed wireless and satellite broadband infrastructure through the imposition of a charge. The funding arrangement is to be known as the Regional Broadband Scheme and the explanatory memorandum notes that the bill is a taxation measure.^[129] The bill operates in conjunction with Schedule 4 to the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017 which, among other things, seeks to establish the types of broadband services subject to and exempt from the charge, penalties for avoiding the charge, and information gathering and disclosure powers and information reporting obligations.^[130]

2.230 The bill sets out default rates of charge which will require all telecommunications carriers to pay a charge of approximately $7.10 per month, per chargeable premises. Chargeable premises are premises where a carriage service provider (i.e. a provider of retail broadband services) provides a designated broadband service. Under the bill, the initial $7.10 monthly charge will be comprised of a $7.09 base component^[131] and a $0.01266 administrative cost component.^[132] The base component is indexed annually to the consumer price index (CPI).^[133] The default administrative cost component is specified in the bill for each of the first five years,^[134] and then is indexed annually to CPI thereafter.^[135]

2.231 Although specific default rates of charge are set out on the face of the bill, the Minister may, by legislative instrument, change the amount of both the base component and the administrative cost component;^[136] however, the sum of the base and administrative cost components for any month cannot exceed $10, indexed annually to CPI.^[137] In addition, in deciding whether to make such a determination the Minister must have regard to advice provided by the ACCC.^[138]

2.232 One of the most fundamental functions of the Parliament is to levy taxation.^[139] 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 default rates of the charge and a maximum cap 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.

2.233 While the committee welcomes the important limitations in the bill on the proposed ministerial power to alter the rate of taxation, from a scrutiny perspective, the committee considers that it may be appropriate for the bill to be amended to further increase parliamentary oversight by requiring the positive approval of each House of the Parliament before a new determination under subclause 12(4) or 16(8) comes into effect.^[140]

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

Minister's response

2.235 The Minister advised:

Subclauses 12(4) and 16(8) – positive approval of effective date for determination
The Committee has expressed a preference for positive approval of each House of Parliament before a new determination under proposed subclause 12(4) or 16(8) of the RBS Bill comes into effect. In addition to the points raised above in relation to proposed subsections 76AA(2), 79A(1) and 79A(2) of the TLA Bill, it is important to note that any charge that might be set by Ministerial determination would apply on a financial year basis, and it is important to ensure that the commencement date is aligned to natural business cycles for the telecommunications sector, for instance to ensure that any changes to the charge are known in advance of the start of the relevant financial year to provide industry with certainty and the opportunity to make commercial and investment decisions based on known liability. Imposing an additional requirement, that operated on top of the existing disallowance mechanism, would undermine this ability to provide industry certainty.
Requiring the positive approval of each House of Parliament risks additional delay in commencement of any revised charge and, this additional uncertainty, risks imposing unnecessary compliance burdens on carriers, and potentially resulting in over-collection of the charge. As the Explanatory Memorandum to the RBS Bill notes the Ministerial determination power in proposed subclause 12(4) is designed to provide a discretion that is necessary to reduce the risk that the regional broadband scheme over or under recovers the amount of money necessary to fund NBN Co Limited's (and other eligible funding recipient's) fixed wireless and satellite networks.

Committee comment

2.236 The committee thanks the Minister for this response. The committee notes the Minister's advice that imposing an additional requirement, that operated on top of the existing disallowance mechanism, would undermine the ability to provide industry certainty. The committee also notes the Minister's advice that requiring the positive approval of each House of the Parliament risks additional delay in the commencement of any revised charge and this additional uncertainty risks imposing unnecessary compliance burdens on carriers, and potentially resulting in over-collection of the charge.

2.237 The committee notes that it was not suggesting that a positive approval procedure should operate on top on the existing disallowance mechanism, but rather than a positive approval procedure replace this mechanism. As a result, moving to a positive approval procedure could, in practice, be speedier than providing that an instrument does not come into effect until 15 sitting days after the disallowance period has expired, as any motions approving new determinations with broad support within the Parliament could be passed by both Houses within a few sitting days of an instrument being tabled.

2.238 The committee also takes this opportunity to reiterate that one of the most fundamental functions of the Parliament is to levy taxation.^[141] 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.

2.239 Therefore, from a scrutiny perspective, the committee remains of the view that it may be appropriate for the bill to be amended to require the positive approval of each House of the Parliament before relevant ministerial determinations setting the rate of tax come into effect.^[142]

2.240 The committee draws its scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of allowing the Minister to alter the rate of a tax via delegated legislation.

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

Modified disallowance procedures^[143]

2.242 In relation to the ministerial determinations altering the base component and administrative cost component made under subclauses 12(4) and 16(8), the bill (as currently drafted) proposes to modify the usual commencement and disallowance procedures for these determinations in two ways.^[144]

2.243 First, subclause 19(3) improves parliamentary oversight of these determinations 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.

2.244 However, subclause 19(2) seeks to reverse the usual disallowance procedure in subsection 42(2) of the Legislation Act 2003 to require a House of 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.^[145] Normally, subsection 42(2) of the Legislation Act 2003 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'.^[146]

2.245 Under the modified disallowance procedure proposed in subclause 19(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 considerable 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. The explanatory memorandum provides no justification for this proposed reversal of the usual disallowance procedures in subsection 42(2) of the Legislation Act 2003.

2.246 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.

2.247 The committee notes that the suggested amendment outlined at paragraph [2.233] above would address the committee's concerns in this regard.

Minister's response

2.248 The Minister advised:

The Committee notes that proposed subclause 19(2) modifies subsection 42(2) of the Legislation Act in the same way as proposed section 102ZFB of the [Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017]. The response provided above in relation to those clauses applies equally to proposed subclause 19(2) of the RBS Bill.

Committee comment

2.249 The committee thanks the Minister for this response. The committee notes the Minister's advice provided in relation to proposed section 102ZFB of the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017 that the modified disallowance procedure provides greater parliamentary scrutiny than the usual disallowance procedure because relevant ministerial determinations can only commence and take effect once the disallowance period has passed.

2.250 In its initial comments the committee welcomed this aspect of the modified disallowance procedures; however, the committee also noted that proposed subclause 19(2) 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.^[147] 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.

2.251 The committee considers that, from a scrutiny perspective, it would be appropriate for the disallowance procedures for these ministerial determinations to be amended 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.

2.252 The committee notes that the suggested amendment in relation to subclauses 12(4) or 16(8) outlined at paragraph [2.239] above would address the committee's scrutiny concerns in this regard.

2.253 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.

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

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[127] See correspondence relating to Scrutiny Digest No. 10 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.

[128] 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.

[129] Explanatory memorandum, p. 2. See also explanatory memorandum for the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2017, p. 11.

[130] Explanatory memorandum, p. 3.

[131] Subclause 12(1).

[132] Subclause 16(1).

[133] Subclauses 12(2)–(3).

[134] Subclauses 16(1)–(5).

[135] Subclauses 16(6)–(7).

[136] Subclauses 12(4) and 16(8).

[137] Subclause 17A.

[138] Paragraph 12(5)(a), clause 13, paragraph 16(9)(a), and clause 17.

[139] 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'.

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

[141] 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'.

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

[143] 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.

[144] See clause 19. The usual commencement and disallowance procedures are contained in sections 12 and 42 of the Legislation Act 2003, respectively.

[145] Subclause 19(4) also states that section 42 (disallowance) of the Legislation Act 2003 does not apply to the determination.

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

[147] 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.