Bills Digest no. 64 2007–08
Telecommunications Legislation Amendment (Communications
Fund) Bill 2008
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
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Amendment (Communications Fund) Bill 2008
House: House of Representatives
Portfolio: Broadband, Communications and the
On the day after the Royal
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be found on BillsNet at http://www.aph.gov.au/bills/.
Bills that have passed by both houses can be found under the Acts
link at http://www.comlaw.gov.au/.
This Bill proposes to amend that
part of the Telecommunications (Consumer Protection and Service
Standards) Act 1999 that concerns the Communications Fund. It
will allow for the capital of the fund and not just the income from
it, as the legislation currently implies to be applied to another
purpose, the building of a national broadband network. This may be
additional to the current purpose which is to fund the Government s
response to the recommendations of Regional Telecommunications Independent
Review Committee (RTIRC) which has yet to report. There are
also provisions dealing with the legal mechanisms by which funds
may be provided including equity contributions, loans, grants,
direct asset purchases and acquisitions of units in trusts.
The history of the Communications Fund
is set out in detail in the
digest for the Bill (now the Act) that set up the
Communications Fund, the
Telecommunications Legislation Amendment (Future Proofing and
Other Measures) Act 2005 ( the Communications Fund Act
2005 ) and in the
digest for the
Bill (now the Act) that amended it in 2007, the
Telecommunications Legislation Amendment (Protecting Services
for Rural and Regional Australia into the Future) Act 2007
( the Communications Fund Amending 2007 Act ).
The short history is this: The Communications Fund is the
creation of the previous Coalition government. It arose out of
internal negotiations over the Commonwealth s sale of the
3rd and last tranche of Telstra shares. For the support
of certain members of the Coalition for the passage of the enabling
sale legislation, agreement was reached to set aside, out of the
proceeds, $2 billion from which income could be drawn to support
broadband services in rural and regional Australia.
As originally introduced, the Bill provided for funds of up
to $2 billion to be credited to the Communications Fund
Account but a Government amendment saw a reversion to the original
proposal for a fund of at least $2 billion.
The purpose of the Communications Fund was to generate income to
fund the Government s response to the recommendations of the
Independent Review Committee (the Committee). The formation of
the Committee was provided for in the same Bill which provided that
the first review should commence before the end of 2008. The founding legislation
was given Royal Assent on 23 September 2005 and
membership of the Committee announced on 13 August 2007 by the
The ALP 2007 election platform included an undertaking to
provide funds of $4.7 billion towards a project to build a national
fibre broadband network which would provide broadband access to 98%
of the population. $2 billion of the $4.7 billion was expressed to
be the amount in the Communications Fund. This would have been
against the spirit, if not the express provisions, of the
2005 Act. In response, the previous Parliament passed the
2007 Act which required the Minister to take all reasonable
steps to ensure that the balance of the Communications Fund did not
fall below $2 billion. This effectively prevented access to the
initial capital of the fund for any purpose. Amongst other things,
this Bill reverses this amendment.
Broadly, the Bill does two things. First, it removes the
requirement that was inserted by the
2007 Act that required the Minister to take reasonable steps to
keep the balance of the Communications Fund above $2 billion. The
effect of this amendment was either to restrict the use of the
Communications Fund to the income generated by it or to require a
period of accumulation to elapse before larger amounts could be
drawn from it. By removing this requirement, all of the funds
standing in the Communications Fund may be drawn upon at once for
the permitted purposes.
The second significant change made by the Bill is to permit the
use of the Communications Fund for another purpose; the creation of
a national broadband network. This may or may not overlap with the
original purpose which was to fund the Government s response to the
Independent Review Committee. This Committee is still
conducting its inquiry, but it is possible that its recommendations
may fit with the Government s plan for a national broadband network
details of which are thin: Other than the
ALP broadband policy there is no public information about the
broadband plan that is not mere speculation. A tender process will
be conducted early this year to find a firm to join with the
Government in creating the network. No tender documents have been
released at the time of writing.
The Bill also deals with the manner in which the Commonwealth
may contribute money from the Communications Fund. The legal
mechanism for implementing the plan will likely emerge as part of
the tender process. Possibilities include partnership,
unincorporated or incorporated joint venture, a trust, direct
grants, loans or direct purchases of assets by the Commonwealth.
This Bill allows for each of these possibilities.
Item 1 amends the simplified outline in
existing section 158ZE to expand the purposes to which the money in
the Communications Fund may be put to include purposes relating to
the creation or development of a broadband telecommunications
Items 2 to 6 insert definitions of new terms
used in the Bill.
Item 7 expands the meaning of unit to include a
unit in a unit trust.
Items 8 and 9 make
non-substantive changes to paragraphs 158ZI(1)(b) and
Existing section 158ZH provides for the establishment of a
Communications Fund Special Account (the Fund Account).
Item 10 of the Bill amends subsection
158ZI to extend the purposes to which the Fund Account may
be put. Acquisitions of shares (proposed
paragraph (d)), debentures
(proposed paragraph (e)) and
units in a unit trust (proposed paragraph
(f)) in a company or unit trust that is, or will be,
involved in the creation or development of a broadband network are
permitted. Also permitted are grants for the creation or
development of a broadband network (proposed
paragraph (g)); grants relating
to the supply of a broadband service; purchases of assets for a
broadband network or purposes incidental to these purposes
(proposed paragraph (j)).
Item 11 repeals existing section
158ZJ which required that the Fund Account be credited
with $2 billion. Item 16 provides that the repeal
of this section does not affect the credit made before the
commencement of this Bill.
Item 12 repeals section
158ZJA which requires the Minister to take all
reasonable steps to ensure that the balance of the Communications
Fund exceeds $2 billion. This was inserted in 2007 in order to
protect the fund from the Labor Party s express election
undertaking to use the capital of the fund to assist with the
provision of a national broadband network.
Item 13 makes amendments to
section 158ZL that are
consequential upon the amendments made by item 10.
Its effect is to require written agreements for the expanded range
of grants of financial assistance, provided for by the amendments
in item 10, to a State.
Item 14 makes amendments
similar to Item 13 but to
section 158ZM that are
consequential upon the amendments made by Item
10. Its effect is to require written agreements
for the expanded range of grants of financial assistance, provided
for by the amendments in item 10, to a person other than a
Item 15 inserts new
section 158ZNA. Proposed
subsections (1), (2) and (3) define the
three kinds of securities that the Commonwealth may buy with monies
from the Fund Account; broadband network shares , broadband network
debentures and broadband network trust units . It then provides
that none of these securities is affected by Division 3 or section
39 of the
Financial Management and Accountability Act 1997. Division 3
deals generally with the management of investments in the
Communications Fund. A distinction is therefore made between
investments which the Fund Account holds in order to generate
returns and securities that the Commonwealth may purchase in an
entity that is involved in fulfilling the purposes of the
Communications Fund. Section 39 of the
Financial Management and Accountability Act 1997 deals with the
investment of public money and includes provisions are not
appropriate for the intended purpose of the Communications Fund.
The exclusion of section 39 is not novel; a similar provision
applies to the
Future Fund, for example.
This Bill is consistent with the election commitment of the
Nothing can be said about the relative merits of applying the
Communications Fund to the recommendations of the Regional Telecommunications Independent
Review Committee (RTIRC) or the Government s national broadband
network because, in the former case, the Committee has yet to
report and in the latter case, no details are settled. However, it
can be said that the original plan, under which only the earnings
of the Communications Fund would be applied to rural, regional and
remote communications problems, would have made available
relatively small amounts annually in circumstances in which larger
investments may have been required in those areas.
On the other hand, the Bill leaves open the possibility that the
original focus on telecommunications in rural, regional and remote
Australia will be abandoned. It is possible that the Communications
Fund could be applied largely to a broadband network in areas not
originally intended to be assisted by the Communications Fund. It
is also possible that the Government may commit the entire
Communications Fund to the national broadband network leaving
nothing in the Fund for its response to the RTIRC.
20 February 2008
Bills Digest Service
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