Broadband tax bill gets senate committee green light

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Broadband tax bill gets senate committee green light

Only minor transparency improvements needed.

The federal government’s proposed broadband tax on non-NBN operated fixed line services looks set to begin on 1 July 2020 after the senate committee examining the bill recommended it pass through parliament.

Handing down its report [pdf] on Friday, the committee said the Telecommunications (Regional Broadband Scheme) Charge Bill 2019 should pass granted “additional transparency measures” were introduced.

But the recommendation, which concerns the reporting of “NBN Co’s off-set arrangements and the effective management of these arrangements”, is only “subject to consideration” and therefore unlikely to hinder the passage of the bill.

The bill, which was examined alongside a complementary bill to establish NBN Co as the new default fixed-line operator in Australia, will see residential and business users of “NBN-equivalent” fixed line services hit with a monthly fee of $7.10.

NBN Co will use the proceeds of the tax to fund future costs of commercially unviable portions of its network – the satellite and fixed wireless footprints – and prevent future calls on the public purse, though it has long been unclear how the tax would fulfil this.

NBN users, however, will not be expected to pay the tax because it is already built into the wholesale price they pay.

During the course of the inquiry, the environment and communications legislation committee heard a range of concerns from stakeholder about the bills, the majority of which “primarily relate[d] to the RBS and the associated levy”.

Some submitters supported expanding the RBS levy to a “broader base” so the funding could be “shared more widely across the industry”, while others argued for the levy to “exclude enterprise networks on the basis that it raises competitive and neutrality issues”.

But instead of siding with the submitters, the committee said it agreed with the conclusion of the former Department of Communications, which said “the bills represent an appropriate policy response in the long term”.

“The committee is of the view that overall, the bills achieve the right balance between ensuring a transparent and equitable funding model to enable NBN Co to improve the provision of superfast broadband network, particularly to regional Australia, while also encouraging commercial opportunities for network operators,” it said.

The committee did, however, express “some concern” around proposed reporting mechanisms for the scheme, which it said “may not provide sufficient details of how the off-set arrangements operate, specifically in the context of enterprise networks”.

Existing transparency measures include the assessment and collection of the RBS levy by the Australian Communications and Media Authority, the establishment of a special account, and the other various reporting mechanisms.

“The committee agrees that these measures provide some assurances, but is of the view that additional transparency measures, with respect to the management of the RBS levy, should be implemented,” it said.

It has recommended the “implementation of additional transparency measures, developed in consultation with NBN Co and relevant stakeholders, to enable carriers, and indeed the public, to easily determine that the off-set arrangements are being managed effectively”.

Labor senators were also critical of the lack of mechanisms in the legislation to limit what NBN Co could spend the RBS on.

“Despite the passage there is seemingly no mechanism that requires the surplus revenue from the government’s $800 million annual broadband tax to be spent on regional networks,” they said.

“In practice, there remain legitimate concerns that once the tax revenues flow into NBN Co the company management can effectively direct surplus tax revenue towards anything they wish once it is washed through an offset account, regardless of whether the expenditure relates to a regional outcome or not.”

Greens senators are of the view that “the most equitable and sustainable funding model for the RBS is direct budget funding”, which they said was supported by the Australian Competition and Consumer Commission.

With the release of the committee report, the RBS bill, along with the Telecommunications Legislation Amendment (Competition and Consumer) Bill 2019, are likely to pass through parliament over the coming weeks.

The bills, which were reintroduced last November after a series of delays, passed through the lower house last week and are currently with the senate.

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