Commonwealth Numbered Regulations - Explanatory Statements

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TELECOMMUNICATIONS (CONSUMER PROTECTION AND SERVICE STANDARDS) (COMMUNICATIONS FUND) REGULATIONS 2005 (SLI NO 213 OF 2005)

EXPLANATORY STATEMENT

 

Select Legislative Instrument 2005 No. 213

 

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

 

Telecommunications (Consumer Protection and Service Standards) Act 1999

 

Telecommunications (Consumer Protection and Service Standards) (Communications Fund) Regulations 2005

 

Subsection 160(1) of the Telecommunications (Consumer Protection and Service Standards) Act 1999 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed; or necessary or convenient to be prescribed for the carrying out or giving effect to the Act.

 

Part 9C of the Act (inserted by item 1 of Schedule 1 to the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Act 2005) establishes a Communications Fund.  The main purpose of the Communications Fund is to provide an income stream to fund the Government’s response to reviews of the adequacy of telecommunications services in regional, rural and remote parts of Australia prepared by the Regional Telecommunications Independent Review Committee under section 158Q of the Act.

 

The purpose of the accompanying Regulations is to enable the Minister for Finance and Administration and the Minister for Communications, Information Technology and the Arts (the responsible Ministers) to authorise the investment of money standing to the credit of the Communications Fund Special Account in a term deposit or in other investments that are authorised investments for the purposes of section 39 of the Financial Management and Accountability Act 1997 (the FMA Act).

 

Section 158ZJ of the Act provides for the sum of $2 billion to be credited to the Communications Fund Special Account on the first business day after both the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Act 2005 and the Telstra (Transition to Full Private Ownership) Act 2005 receive the Royal Assent.

 

Section 158ZO of the Act provides that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund Special Account in any ‘financial asset’.

 

The term ‘financial asset’ is defined in section 158ZF of the Act and includes shares, debentures, interests in a managed investment scheme, units of such shares, debentures or interests, or derivatives (such as futures contracts).  It also includes an asset (other than tangible property) specified in the regulations.

 

It is proposed that the $2 billion credited to the Communications Fund be invested in a term deposit with the Reserve Bank of Australia in the short term, while machinery is put in place to manage broader investments.  To enable this to occur, the accompanying regulations ensure that term deposits are included in the definition of ‘financial asset’ in section 158ZF of the Act.  This is achieved by specifying the investments set out in the definition of ‘authorised investment’ in subsection 39(10) of the FMA Act as assets for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act.  This definition covers deposits with a bank as well as other conventional investments.

 

To enable money credited to the Communications Fund to be invested immediately in these shorter-term investments, such as a term deposits, the accompanying Regulations commenced at the same time as the commencement of Schedule 1 to the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Act 2005.  That is, when that Act receives the Royal Assent.  The accompanying Regulations were registered on the Federal Register of Legislative Instruments on the day they were made and took effect on that day.

 

The accompanying Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA) (see paragraph 6(a) of the LIA).  The Department of the Treasury and the Department of Finance and Administration were consulted about the accompanying Regulations.  Wider consultation was considered unnecessary due to the minor and machinery nature of the accompanying Regulations (see paragraph 18(2)(a) of the LIA).

 

The accompanying Regulations commenced on the commencement of Schedule 1 to the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Act 2005, that is upon that Act receiving the Royal Assent. They were registered on the Federal Register of Legislative Instruments on the day they were made and took effect on that day.

 

Details of the accompanying Regulations are set out in the Attachment.

 

 

Authority:   Section 160 of the Telecommunications (Consumer Protection and Service Standards) Act 1999


 

ATTACHMENT

 

Details of the Telecommunications (Consumer Protection and Service Standards) (Communications Fund) Regulations 2005

 

Regulation 1 – Name of Regulations

 

This regulation provides that the title of the Regulations is the Telecommunications (Consumer Protection and Service Standards) (Communications Fund) Regulations 2005.

 

Regulation 2 – Commencement

 

This regulation provides for the Regulations to commence on the commencement of Schedule 1 to the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Act 2005 (Future Proofing Act).  Schedule 1 to this Act commences on the date that the Future Proofing Act receives the Royal Assent (see item 2 in the table at section 2 of that Act). 

 

This ensures that the Regulations are in place on or before the date on which the sum of two billion dollars is to be credited to the Communications Fund under section 158ZJ of the Act.  Section 158ZJ provides for this sum to be credited on the first business day after both the Telecommunications Legislation Amendment (Future Proofing and Other Measures) Act 2005 and the Telstra (Transition to Full Private Ownership) Act 2005 receive the Royal Assent.

 

Regulation 3 – Definitions

 

This regulation provides a definition for certain terms used in the regulations.

 

The term Act is defined to mean the Telecommunications (Consumer Protection and Service Standards) Act 1999.

 

The term bank is defined to have the same meaning as in section 5 of the Financial Management and Accountability Act 1997 (the FMA Act).  The FMA Act defines a ‘bank’ in section 5 to mean:

 

(a)     a person who carries on the business of banking, either in Australia or outside Australia; or

(b)     any other institution:

         (i)      that carries on a business in Australia that consists of or includes taking money on deposit; and

         (ii)     the operations of which are subject to prudential supervision or regulation under a law of the Commonwealth, a State or a Territory.  

 

The definition of a ‘bank’ is relevant to the meaning of the assets specified in items 3 and 5 to Schedule 1 to the Regulations.

 

The term responsible Ministers is defined to have the same meaning as in section 158ZF of the Act.  Section 158ZF of the Act defines ‘responsible Ministers’ to mean the Minister administering the Financial Management and Accountability Act 1997 and the Minister administering this Act.  Currently this refers to the Minister for Finance and Administration and the Minister for Communications, Information Technology and the Arts.

 

Regulation 4 – Communications Fund – financial assets

 

This regulation provides that for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act, the assets mentioned in Schedule 1 are specified.  This has the effect that those assets specified in Schedule 1 to these Regulations come within the meaning of a ‘financial asset’ for the purposes of Part 9C of the Act.

 

The term ‘financial asset’ is relevant in determining how the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund.  The Communications Fund is established under Part 9C of the Act.  The main purpose of the Fund is to provide an income stream to fund the Commonwealth Government’s response to a review of the adequacy of telecommunications services in regional, rural and remote parts of Australia that the Regional Telecommunications Independent Review Committee prepares and gives to the Minister for Communications, Information Technology and the Arts under section 158Q of the Consumer Protection Act.

 

The definition of ‘financial assets’ in section 158ZF of the Act enables the responsible Ministers to authorise the investment of money in a wide range of financial assets, as the term is defined widely to include shares, debentures, interests in a managed investment scheme, units of such shares, debentures or interests or derivatives (such as futures contracts).  It also includes an asset (other than tangible property) specified in the regulations (paragraph (f) of the definition).

 

Schedule 1 – Assets

 

Item 1

 

This item specifies that securities of the Commonwealth, or of a State or Territory to which paragraph (a) of the definition of ‘financial asset’ in section 158ZF of the Act does not apply are assets for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act.  Paragraph (a) of the definition of ‘financial asset’ in section 158ZF of the Act refers to ‘a debenture, stock or bond issued by a government’.  Such assets are not included in the meaning of ‘securities of the Commonwealth, or of a State or Territory’ for the purposes of this item.

 

This means that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund in securities of the Commonwealth, or of a State or Territory (that are not a debenture, stock or bond issued by a government).


 

Item 2

 

This item specifies that securities guaranteed by the Commonwealth, a State or a Territory are assets for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act.

 

This means that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund in securities guaranteed by the Commonwealth, a State or a Territory.

 

Item 3

 

This item specifies that a deposit with a bank, including a deposit evidenced by a certificate of deposit is an asset for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act.

 

This means that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund in a bank deposit, including a deposit evidenced by a certificate of deposit.

 

Item 4

 

This item specifies that a debt instrument issued or guaranteed by the government of a foreign country; or a financial institution whose members consist of foreign countries, or of Australia and foreign countries; being a debt instrument with a credit rating that is consistent with the sound management of public debt are an asset for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act.

 

This means that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund in a financial asset as specified in item 4.

 

Item 5

 

This item specifies that a bill of exchange accepted or endorsed only by a bank is an asset for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act.

 

This means that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund in a bill or exchange accepted or endorsed by a bank.

 

Item 6

 

This item specifies that a professionally managed money market trust is an asset for the purposes of paragraph (f) of the definition of ‘financial asset’ in section 158ZF of the Act, if the responsible Ministers are satisfied that the only investments managed by the trust are mentioned in items 1, 2 or 3; and a charge over trust assets does not support any borrowings by the trust.

 

This means that the responsible Ministers may authorise the investment of money standing to the credit of the Communications Fund in an asset specified in item 6.

 


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