EXPLANATORY STATEMENT

 

Select Legislative Instrument 2008 No. 67

 

Television Licence Fees Amendment Regulations 2008 (No. 1)

 

Issued by the Authority of the Minister for Broadband, Communications and the Digital Economy

 

Television Licence Fees Act 1964

 

Television Licence Fees Amendment Regulations 2008 (No. 1)

 

The Television Licence Fees Act 1964 (the Act) requires commercial television broadcasting licensees to pay licence fees, which become part of the Commonwealth’s Consolidated Revenue Fund.

 

Section 8 of the Act provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Subsection 5(2) of the Act provides that the regulations may make provision for rebates of fees payable by licensees.

 

The purpose of the Regulations is to amend the Television Licence Fees Regulations 1990 (the Principal Regulations) to extend licence fee rebates provided under the Regional Equalisation Plan (REP) to holders of commercial television broadcasting licences in remote Western Australian licence areas.

 

This rebate assists licensees to convert their terrestrial television services from analogue to digital. The extension of the licence fee rebate scheme to commercial broadcasters in Western Australia would support the digital conversion model for remote Western Australia facilitated by the Broadcasting Legislation Amendment Act (No. 1) 2006 (the Amendment Act).

 

The Broadcasting Services Act 1992 provides for digital television to commence in all areas of Australia. On 18 December 2007, the Minister for Broadband, Communications and the Digital Economy announced that the digital television switchover would be completed by the end of 2013. To assist with the roll-out of digital television to regional and remote Australia, the Government introduced the REP in 2000-01. Under the REP, over 13 years, up to $250 million will be provided to commercial television broadcasters in the form of rebates against annual licence fees and, where necessary, supplementary grants to assist with offsetting the costs of converting to the new digital broadcasting platform. This assistance to commercial broadcasters in regional and remote licence areas represents 50 per cent of the estimated initial capital expenditure plus estimated operating costs for eight years of digital services.

 

The Principal Regulations implement the licence fee rebate component of the REP by stipulating the amount of licence fee rebate that may be claimed annually by each licensee in specific licence areas over a particular period of time. Of the 13 licence areas currently listed in the Principal Regulations, 12 are regional licence areas and 1 is a remote licence area.

 

There are five remote licence areas in Western Australia; they are not currently listed in the Principal Regulations.

 

The Regulations would amend the Principal Regulations to facilitate the extension of the licence rebate scheme to remote licensees in Western Australia and to ensure the continued conversion from analogue to digital television. This would be achieved through the following amendments:

 

(a)    extending the rebate under the Principal Regulations (which grant a rebate to commercial television regional licensees) to include remote area licensees in Western Australia;

 

(b)   clarifying the entitlements to a rebate of each of the licensees in the event of a change in ownership of the licences and broadcasters by parent companies, Prime and WIN; and

 

(c)    clarifying how the parent company is to claim the rebate for each of its licence holders during a financial year.

 

The extension of the rebate scheme to remote licensees in Western Australia would be included in the total REP budget of $250 million.

 

The Regulations would also make a number of minor technical amendments to the Principal Regulations.

 

The incumbent remote area commercial broadcasters in Western Australia (WIN and Prime) and the Australian Communications and Media Authority (ACMA) were consulted on these Amendment Regulations. The commercial broadcasters and the ACMA indicated their agreement with the amendments.

 

The Regulations are a legislative instrument for the purposes of paragraph 6(a) of the Legislative Instruments Act 2003.

 

Details of the Regulations are set out in the Attachment.

 

The Regulations commenced on the day after they were registered on the Federal Register of Legislative Instruments.

 

 

 

Details of the proposed Television Licence Fees Amendment Regulations 2008 (No. 1 )

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Television Licence Fees Amendment Regulations 2008 (No. 1).

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on the day after registration on the Federal Register of Legislative Instruments.

 

Regulation 3 – Amendment of Television Licence Fees Regulations 1990

 

This regulation provides that the Television Licence Fees Regulations 1990 (the Principal Regulations) are amended as set out in Schedule 1.

 

Schedule 1 Amendments

 

Item [1] – Regulation 13, definition of ‘digital service’

 

Regulation 13 of the Principal Regulations defines a ‘digital service’ as a commercial television broadcasting service that is transmitted in digital mode and approved by the then Australian Broadcasting Authority (ABA) (now the Australian Communications and Media Authority (ACMA)) other than a test transmission.

 

Item 1 inserts a new definition of ‘digital service’ which provides that test transmissions and satellite transmissions are excluded from the definition. This amendment clarifies that a rebate entitlement may only arise under regulation 14 in relation to terrestrial digital services. The commencement of satellite transmissions in digital mode will not give rise to an entitlement to a licence fee rebate.

 

Item [2] – Regulation 13, definition of first financial year

 

Regulation 13 of the Principal Regulations provides that references to a ‘first financial year’ means the first financial year in which a digital service commences.

 

Item 2 inserts a new definition of ‘first financial year’ which provides that the ‘first financial year’ for a ‘digital service’ is the financial year in which a licensee first becomes entitled to claim a rebate under regulation 14.

 

Item [3] – Regulation 14, heading

 

Item 3 substitutes the heading to regulation 14 to recognise the entitlement of regional and remote licensees to a licence fee rebate.

 

Item [4] – Paragraph 14(3)(a)

Item 4 omits a reference to Division 11 of Part A of the Commercial Television Conversion scheme. This amendment corrects an out-of-date reference.

 

Item [5] – Subregulation 14(3), note 1

 

Item 5 substitutes the existing note 1 of the Principal Regulations with new notes 1 and 1A. Note 1 replaces references to the ABA with references to ACMA. Note 1A inserts references to remote licences.

 

Item [6] – After subregulation 14(4)

 

Item 6 inserts new subregulation 14(5), which provides a special rule for the accrual of the rebate entitlement for certain licensees operating in remote Western Australia.

 

There are five remote licence areas in Western Australia, each with a single incumbent licensee. Four of the five licensees (the licensees operating in Western Zone TV1, Kalgoorlie TV1, Geraldton TV1 and South West and Great Southern TV1) are wholly-owned subsidiaries of the same parent company. These four licensees provide services in licence areas which together cover a similar geographic area as the fifth licence, Remote and Regional WA TV1, owned by another company.

 

Subregulation 14(5) provides that where one of the subsidiary companies becomes entitled under regulation 14 to the rebate, each of the other subsidiary companies also becomes entitled to the rebate at the same time. The explanatory note accompanying new subregulation 14(5) makes reference to new regulation 17A (inserted by item 9), which establishes the method of apportionment of the rebate between the various subsidiary companies.

 

Item [7] – Subregulation 15(4)

 

Subregulations 15(3) and (4) of the Principal Regulations provide that entitlements to rebates, for both remote and regional licensees, end on 31 December 2012. Item 7 extends the rebate entitlement until 31 December 2017, which will accommodate the eight year period during which remote licensees can claim licence fee rebates. Broadcasters have indicated they currently plan to commence their digital services in late 2008 (i.e. the financial year 2008—09). Eight years from this planned commencement date would be the financial year 2016-17.

 

Item [8] – Subregulation 16(2)

 

Item 8 omits “regulation 17” from the Principal Regulations and inserts “regulation 17 or 17A”. This amendment is consequential to item 9.

 

Item [9] – After regulation 17

 

Item 9 inserts new regulation 17A, which sets out how the rebate amount is to be calculated for certain remote area licences in Western Australia.

 

New subregulation 17A(1) provides that the rebate entitlements for Western Zone TV1, Kalgoorlie TV1, Geraldton TV1 and South West and Great Southern TV1 are to be apportioned on the basis that each of the remote licensees are wholly owned subsidiaries of the same parent company.

 

New subregulation 17A(2) establishes a formula for crediting the licence fee rebates amongst the four subsidiary companies and licensees mentioned in subregulation (1). The licence fee rebate is calculated for each financial year to reflect the annual imposition of licence fees. The parent company mentioned in subregulation (1) will be entitled to be credited with a rebate of up to $760,000 for the first and subsequent financial years. The licence fee rebate is intended to be apportioned at 25% for each of the four remote licence holders so that each would receive up to $190,000 for the first and subsequent financial years. It also establishes a limit of $6,080,000 for the total rebate entitlement.

 

New subregulation 17A(3) establishes a mechanism where the licences in subregulation (1), currently controlled by Prime Television Ltd, are sold to another parent company. In the event that all of the subsidiary companies mentioned in subregulation (1), are sold by the parent company to another company, the licence fee rebates would be credited to the parent company controlling the licences. This would be based on the licence fee apportionment rule established in subregulation (2).

 

Two further situations are relevant to subregulation (3). Paragraph 17A(3)(a) provides that where the previous parent company has claimed the rebate for the financial year in which the subsidiary companies are sold, the new parent company will be credited with the rebate for a subsequent financial year. Paragraph 17A(3)(b) provides that where the previous parent company has not claimed the rebate for the financial year in which the subsidiary companies are sold, the rebate for that financial year and a subsequent financial year will be credited to the new parent company.

 

New subregulation 17A(4) provides that where the subsidiary companies become owned by more than one parent company, then each parent company will be entitled to a digital conversion rebate as set out in subregulation (2) and new paragraphs 17A(4)(a) and (b). Paragraph 17A(4)(a) provides that when the new parent company acquires a subsidiary company, where its previous parent company has already claimed the rebate, then the new parent company is entitled to claim 25% of the total rebate entitlement for each subsequent financial year. Paragraph 17A(4)(b) provides that where a parent company has not made a claim in respect of a subsidiary company then it is entitled to claim 25% of the total rebate entitlement for the disposition year (i.e. the financial year in which any subsidiary company is sold) and subsequent financial years.

 

Item [10] – Schedule 2

 

Schedule 2 to the Principal Regulations lists the remote licence areas that are eligible for digital conversion rebates. Schedule 2 currently provides for rebates only in relation to one remote licence area – the Remote Central and Eastern TV2 licence area. However, the listing of this licence area is a technical error. In its place, Schedule 2 should list the licence area Remote Central and Eastern TV1. This licence area covers areas in the Northern Territory, South Australia, Queensland (including Mt Isa), New South Wales, Victoria and Tasmania.

 

Item 10 substitutes existing Schedule 2 to the Principal Regulations with new Schedule 2. New Schedule 2 includes the five new remote licence areas in Western Australia and corrects the listing of Remote Central and Eastern TV2 in Schedule 2 by substituting the licence area Remote Central and Eastern TV1.

 

New Schedule 2 would provide rebates for the five additional remote licence areas in Western Australia as well as the Remote Central and Eastern TV1 licence area. The licensee in Remote and Regional WA TV1 would be entitled to a maximum rebate of $660,000 per financial year, up to a maximum entitlement of $5.28 million.

 

The licensees in Western Zone TV1, Kalgoorlie TV1, Geraldton TV1 and South West and Great Southern TV1 would be entitled to $190 000 each per financial year, to a total of $1,520,000 each up to a maximum aggregated entitlement of $6,080,000. The entitlements of each licensee are calculated in accordance with the mechanisms set out in new regulation 17A.

 

Item [11] – Further amendments

 

Item 11 makes further amendments to the Principal Regulations to correct out-of-date references.

 

References to a ‘regional licensee’ and a ‘regional licence’ are to be amended to include a ‘remote licensee’ and a ‘remote licence’. These amendments make it clear that the same rules are to apply for both regional and remote licensees in relation to the rebate entitlements under the Principal Regulations.

 

References to the ‘ABA’ are to be replaced with references to the ‘ACMA’, as a result of the merger between the ABA and the Australian Communications Authority on 1 July 2005 to form the ACMA.