NO.081

BUDGET TREATMENT: REGIONAL COMMUNICATIONS FUND

The Regional Telecommunications Fund will be established with $2 billion from

cash reserves currently held at the Reserve Bank of Australia.

The money will be credited once the Future Proofing Bill and the Telstra Sale

Bill are passed by the parliament. This is not conditional on any actual sale

of further shares in Telstra.

The impact on the budget balance from the establishment of the Fund is nil

as no expenditure has occurred and there is no change in the Government’s

assets.

Interest earned on the term deposit will have a positive impact on the budget.

Future draw downs on the Fund for expenditure on regional telecommunications

will have a negative impact on the budget.

The Fund will be used for upgrading regional telecommunications in the future.

The Government will consider recommendations by an independent committee, the

Regional Telecommunications Independent Review Committee, on the adequacy of

telecommunications services in regional, rural and remote parts of Australia.

The first review must start before the end of 2008.

Draw downs can only be made as part of the Government’s response to recommendations

set out in a report by the Independent Review Committee.

13 September 2005

CANBERRA

Contact: David Alexander

02 6277 7340