ALMOST 4.5 million residents now have an NBN broadband connection at home, and nearly half of them are on fast plans with speeds of 50Mbps or more, the latest ACCC quarterly Wholesale Market Indicators Report shows.

The ACCC’s report for the September quarter shows the number of NBN residential broadband connections rose from about 4.1 million last quarter (up almost 8.6 percent).

More than 2.2 million consumers are now on these high-speed plans, an increase of 20 percent on the previous quarter. Of these, there are now 1.8 million services on the 50Mbps speed tier, a more than a ten-fold increase compared to about 159,000 residential customers on 50Mbps plans in December 2017.

This reflects NBN Co’s pricing strategies to encourage Retail Service Providers (RSPs) and their customers to higher speed plans, as well as various other initiatives including the ACCC’s advertising speed guidance project.

“The NBN Co’s Focus on 50 promotion has demonstrated that RSPs and their customers are willing to move to higher speed plans if the incentives are right,” ACCC chair Rod Sims said.

“We expect these incentives will continue to operate as NBN Co transitions to longer term bundled pricing for the higher speed plans.”

However, at the same time, the number of customers choosing the most basic NBN services also continues to rise. Just over 1.2 million consumers are on the lowest 12Mbps speed plan (up by 4.3 percent).

“Consumers on 12/1 plans still represent more than a quarter of all NBN services. It is important that NBN Co recognises the needs of this significant cohort of consumers for an affordable and reliable service,” Mr Sims said.

Average CVC per user also continued to rise this quarter, up by 2.9 percent, from 1.66Mbps in June 2018 to 1.71Mbps in September 2018. In March 2017 it was 1.00Mbps.

“It is important RSPs maintain sufficient CVC capacity to ensure consumers get the service they have paid for, particularly in the busy period,” Mr Sims said.

“The ACCC will continue to monitor CVC utilisation under its record-keeping powers. The ACCC’s Monitoring Broadband Australia Program will also continue to rank RSPs by whether they are providing the speeds expected by consumers.”

This quarter’s report also includes, for the first time, the number of services provided over Fibre to the Curb (FTTC) technology, with 39,204 FTTC services in operation at the end of September.

Overall market shares remained relatively stable; smaller RSPs increased their market share slightly from 6.1 percent to 6.3 percent (adding about 27,000 more services).

All 121 POIs had at least six access seeker groups (including Telstra, Optus, TPG, Vocus and Aussie Broadband) acquiring NBN services directly from NBN Co. There were seven access seeker groups at 118 of the 121 POIs.

The ACCC will continue to monitor the evolution of the NBN broadband market to help consumers make an informed choices about broadband plans.

Key points from the September 2018 report:

  • The number of 50Mbps services continued to increase, reaching more than 1.8m services at the end of September, a 26 percent increase on the June quarter.
  • Plans with speeds of 50Mbps services or more now account for just under 50 percent of all NBN residential broadband services.
  • At the end of September 2018, NBN Co was supplying a total of 4,488,295 wholesale residential broadband access services (up from 4,133,791 in the June quarter).
  • FTTC services were reported by NBN for the first time. Over 39,000 services provided over this new technology were in operation at the end of the quarter.
  • There were at least six access seeker groups present at all 121 POIs.
  • The average CVC per customer increased an additional 2.9 per cent.

Further information, including time series data, is available at September quarter 2018 report.

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THE second public hearing on the Telecommunication and Other Legislation Amendment (Assistance and Access) Bill 2018 will be held on Friday, November 16, 2018 in Sydney.

The Committee will hear from academics, statutory oversight agencies, and industry peak bodies.

Public hearing details: 9am – 3.15pm, SMC Conference & Function Centre, 66 Goulburn St, Sydney (Carrington Room)

The hearing will be live streamed (audio only) at www.aph.gov.au/live.

The full program of the hearing is available at https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Intelligence_and_Security/TelcoAmendmentBill2018/Public_Hearings

Additional hearings will be held in Canberra on November 27 and 30.

Further information on the inquiry can be obtained from the Committee’s website.

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A PUBLIC HEARING hearing will be held in Melbourne next week by the House Economics Committee as it conducts an inquiry into the implications of removing refundable franking credits - an inquiry that has been welcomed by the Institute of Public Accountants (IPA).

“This inquiry will heighten community understanding of a well-established feature of our taxation system,” IPA chief executive officer, Andrew Conway said.

“The Labor Party is proposing to change the rules to remove the ability for individuals and superannuation funds to claim their full entitlement to franking credits.

“The inquiry will highlight the significant implications attached to any change in government policy on refunding imputation credits.

“If we were designing a new tax system today, you would most likely not have full imputation where the taxation is assessed in the hands of the recipient and any excess franking credits are refunded. 

“In today’s economic circumstances it would be difficult to justify from a fiscal sustainability perspective.

“However, the refunding of imputation credit policy has been in operation for close to two decades and removing it in a piecemeal way without dealing with the consequences is fraught with danger.

“The case for removing dividend imputation is not strong and any tinkering needs to be assessed against some alternative benchmark tax system such as removing dividend imputation entirely and replacing it with a discounted tax rate.

“More importantly we need to be looking at how we tax all forms of savings more consistently. A more holistic approach to taxing personal savings across all asset classes as recommended by the Henry Review would be more beneficial than changing one aspect in isolation.

“We do not support any changes in the removal of refundable franking credits unless it is associated with more holistic tax changes to the treatment of savings more broadly.  A survey of our members also shows that 95 percent of respondents do not support any change,” said Mr Conway.

The IPA will be appearing before the inquiry next week.

www.publicaccountants.org.au

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THE Defence Sub-Committee of the Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade is holding a public hearing in Canberra on Friday November 16 for its inquiry into transition from the ADF.

Members of the Defence Sub-Committee will hear from individuals and representatives of Ex Service Organisations and Mental Health Researchers on the efficacy of support services available to members of the ADF transitioning out of active service, particularly focussing on mental health care, employment pathways and the role of Ex-Service Organisations (ESOs).

Representatives of the Department of Defence and Veteran’s Affairs will also give evidence.

Public Hearing details:  8.45am to 12.30pm, Friday 16 November 2018, Committee Room 1R3, Parliament House, Canberra

The full program for Friday’s hearing is available from the committee’s website.

This hearing will be streamed live at aph.gov.au/live.

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A SURVEY of large super funds by the Financial Services Council (FSC) has found it is likely that the largest group of people benefiting from franking credit refunds are ordinary Australians who are members of large super funds.

The number of Australian beneficiaries is significantly larger than the number of individuals and Self- Managed Super Funds (SMSFs) who also benefit from refunds. The FSC has expressed its support for refunds of franking credits in a submission released today.

The submission to the House of Representatives Economics Committee reveals that these franking credit refunds benefited up to 2.6 million members of large super funds in 2015–16 and up to 3.5 million members in 2014–15.

While refunds provide a smaller average benefit for individuals in large super funds than for SMSFs, the FSC survey shows the impact on some members could be significant; over a lifetime the benefit of refunds could add up to a considerable figure, up to $55,000 at retirement.

Refunds of franking credits mean an Australian investor in local shares pays the same overall tax as an investor into other Australian assets including bonds, term deposits, property and infrastructure. If refunds are restricted then some low-income earners, retirees and super funds will face a tax penalty if they invest in shares.

The FSC survey of 14 retail super funds found:

  • Many super fund members with low balances benefit from refunds. Four surveyed funds had an average balance below $100,000; there were 73,000 accounts in these funds and refunds increased returns to all fund members on average by 0.26% per year.
  • There were also 33,000 surveyed super accounts where the average benefit of refunds was more than 0.3 percent per year across all fund members. As an illustration, an increase in superannuation returns of 0.3 percent per year over a working life would increase retirement savings for a typical full-time worker by about $55,000, based on Productivity Commission methodology.
  • There were 66,000 retiree accounts in the surveyed funds; if the retirees received the benefit of the refunds then the average benefit per retiree was $850 per year.

Refunds also provide a significant benefit to small APRA regulated funds, of many thousands of dollars per year on average, increasing average returns by up to 4.2 percent per year. In addition, over $100 billion invested in managed funds outside of super receive significant benefits from refunds.

FSC CEO Sally Loane said, "The FSC considers that franking credit refunds should continue. They provide substantial support to the retirement savings of millions of Australians — including many with fairly modest savings.

"Constant tinkering with the rules on retirement savings and superannuation, and hitting retirees hardest, will only erode confidence in the system, leaving more Australians reliant on the age pension.

"The FSC supports a moratorium on adverse changes to the superannuation system, including changes to franking credit refunds. A more stable superannuation system will encourage engagement and confidence in the system and increase self-reliance in retirement. If policy makers keep moving the goal posts Australians will disengage with the super system and stop contributing more to their superannuation."

 

About the FSC survey

The survey covers 14 Australian retail superannuation funds, with 305,000 member accounts in total. The average franking credit refund was $4.7m per fund.

About the Financial Services Council

The FSC is a leading peak body which sets mandatory Standards and develops policy for more than 100 member companies in Australia’s largest industry sector, financial services. FSC's Full Members represent Australia’s retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. FSC Supporting Members represent the professional services firms such as ICT, consulting, accounting, legal, recruitment, actuarial and research houses. The financial services industry is responsible for investing almost $3 trillion on behalf of more than 14.8 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange, and is the fourth largest pool of managed funds in the world.

www.fsc.org.au

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