Wednesday, May 25, 2011

The farce of "cutting red tape"

I stewed for days after seeing the Eligible Revenue Threshold consultation issued by DBCDE as part of Telecommunications regulatory reform.

In a nut-shell, telecommunications carriers are required to submit an annual return of their "eligible revenue" which is all their (and related companies revenue) from which is deducted non-telecommunications revenue, revenue from equipment sales and content, and payments to other licenced carriers.

The instrument being consulted on has been a long time coming. While the USO regime was canvassed in the Blue Book, the idea of the Eligible Revenue Return as an impost was not raised in any submission by a carrier.

The ACMA did however comment on what it considers an "onerous" administrative task.

The proposed instrument has been trumpeted as a "reduction in red tape". This is a classic case of policy makers mouthing a slogan created by free-market theorists, it creates the illusion of acting to deregulate markets while achieving very little. Indeed, the measure often used by de-regulationists is the cumulative number of pages of law and regulation - the proposal actually increases the number of pages.

The proposal chooses a number of $25M as the boundary for which an ERR is required, claiming this is harmonised with Corporations Act requirements. This is an apparent reference to the requirements for a corporation to have audited accounts.

In reality every corporation is required to count its revenue (and costs) and provide them to Government as a tax return. The difference is that a company tax return is not required to be audited. The ACMA insists on the ERRs being audited.

It is the cost of audit that creates the impost on business. No auditor knows how to do it, since an audit only says the procedures followed are right not the numbers. The other consequence is the increase in the cost of the USO, NRS and funding the regulators on the remaining carriers. This is not red tape reduction as much as cost shifting.

Meanwhile the Budget Papers reveal;

The Government will provide $3.4 million over two years for the Australian Communications and Media Authority to conduct a revenue assurance project to improve the management of existing administered revenues and increase revenue collections.

The revenue assurance project will involve a new audit and assurance program for broadcasting licence fees, expanded quality assurance and industry monitoring for revenue streams, and a new outreach program to engage and educate industry members with obligations to pay broadcasting licence fees under the Broadcasting Services Act 1992. There are no changes to existing statutory requirements for payment of broadcasting licence fees.

I couldn't quite bring myself to make a submission because I don't represent anyone and the people to whom I would be submitting had previously heard my views. This is, quite simply, A-grade nonsense. But it was an initiative from Parliament House to respond to the requirements from the Minister for Deregulation to "do something".

Novae Meridianae Demetae Dexter delenda est

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