Speech to Parliament: Broadcasting - Convergence Review and Licence Fees Legislation

March 19, 2013
Speeches

Mr TURNBULL (Wentworth) (16:38): These two bills relate to the commercial television industry, substantially, and also make some changes to the legislation relating to the ABC and SBS. They have been presented by the government as part of a package of six bills, the other four establishing the Public Interest Media Advocate, whose role it is to oversee the content of newspapers and determine whether media acquisitions can be permitted.

I have agreed with the Leader of the House that these two bills will be debated, first, in one group and dealt with and, then, the Public Interest Media Advocate legislation can be dealt with together. The government have said this is an all-or-nothing exercise and unless all the bills are passed then none of them will go forward. I do not know if they are still holding to that position, but, speaking on behalf of the coalition, we are determined not to play politics with these issues. We will examine the bills on their merits.

I will now turn to the principal bill we are considering at the moment, which is the Broadcasting Legislation Amendment (Convergence Review and Other Measures) Bill. The purpose of this bill is, firstly, to state or conclude that the sixth channel shall not be used for a fourth commercial television licence. This has been a controversy over the years. There have been arguments made that there should be another free-to-air television licence, but, as is so often the case, technology has rather overtaken those debates. As the internet has evolved into the ubiquitous super-platform for all manner of content, and as it is more available and broadband is more ubiquitous—and will become more ubiquitous a lot faster if the coalition is returned to government—the number of video services competing with free-to-air television stations is greater than ever. And, of course, that does not even take into account what is happening in the world of pay TV, whether it is through the Foxtel platform or through the various IPTV services that are available over the internet.

The free-to-air television stations are operating now in a dramatically transformed environment. When these licences were originally granted they represented the only way in which people could receive audiovisual entertainment, or indeed news and information, in their homes. That was it. There was a national service, the ABC, followed by SBS. But, in terms of advertising, subject to the SBS’s rights to carry some advertising, the only advertising platform was the commercial television stations. That oligopoly is a matter of history now. It is becoming increasingly obvious to all of us that Australians, like people everywhere else in the world, are accessing their content from a very wide range of sources.

We are indeed in a world of multisourcing. This poses great challenges for the free-to-air television stations. They are in a position now where, for example, if they do not broadcast a program, such as a drama that has been released in the United States, almost immediately after its international release, the extent of illegal downloading will be so considerable that its impact in Australia will be dramatically diminished. I regret to say—and this is an issue that is relevant to this bill but is not covered by it—that Australia is the leader in unlawful movie and television program downloads. A Game of Thrones, for example, was unlawfully downloaded in Sydney more than in any other city in the world, so the rights owners have assured us. I think this is a very dubious honour for us to have. It is an issue that has to be addressed. It is not covered in this legislation, but it provides part of the context for the challenge for the free-to-air television services.

The other issue the free-to-air television stations have to grapple with is that, in addition to all the competition for eyeballs presented by the vast range of services available online, the internet itself offers a very cost-effective advertising platform. The impact on free-to-air television advertising revenues has not been as marked or as damaging as it has been on newspaper advertising revenues. Classified advertising, particularly, moved online very quickly. When you reflect back on it nowadays, the idea of looking for a motor car or a house—or a lost goldfish, for that matter—by wading through pages and pages of newspaper classifieds seems completely absurd. But, until very recently, that was the only way you could effectively advertise and indeed search for classified information. All of that has changed and what we have seen with the newspapers is that their advertising revenues have declined dramatically even though at the same time their audience—when you aggregate their print audience and their online audience—has, if anything, expanded.

So actually the frustrating thing for the newspapers is: they are being read by more people, but the advertising revenues are declining. So the business base, the revenue model, has deteriorated.

Television still has that formidable impact: the impact of not being able to be avoided—other than by perhaps recording a program and fast-forwarding through the ads. But for most people that impact of a television advertisement is still the most engaging form of advertising today. But it is not unique to the free-to-air television stations and so they have suffered from a deterioration in revenues as well. As a consequence, the free-to-air television stations have been able to say, I think with some justification: ‘The deal that we are getting—what we are getting in return for our licence fees—was not part of the original bargain. We originally had, in effect, a monopoly or an oligopoly, and now we are in an increasingly competitive world.’

In addition to that, as part of the whole digital switchover, because they have moved out of analog broadcasting into digital broadcasting, into a more efficient use of spectrum, the free-to-air broadcasters have now received additional channels, multichannels, and that, too, has brought with it attendant costs—and, potentially, additional revenues. But whether the sum of all of the primary channels and multichannels will ever be in excess of what the sum of the primary channels was some years ago remains to be seen.

The coalition are very sympathetic to the television industry’s concerns in this regard, and that is why we have said publicly in the past that we support the provision in the license fees legislation, the smaller of the two bills we are discussing, which reduces by one-half the television station licence fees. I should say that they remain relatively high by global standards, as television licence fees.

The license fee is, of course, not the only thing that a commercial licensee provides in return for his or her licence. The licence is a right over a public asset—that is to say, the spectrum—and it carries with it a lot of other obligations. They include obligations to carry high levels of Australian content. These have traditionally been imposed by way of regulation and program standards administered by the ACMA, and in this bill there is a new development, where the Australian content transmission quota is now being set out in the legislation for the first time. So, in the Broadcasting Services Act, the proposed new section 121G will require, for example, that, on the primary channel, there must be 55 per cent of Australian content during the relevant targeted viewing hours.

There are also obligations imposed to require the commercial licensees to transmit a number of hours of Australian content on their multichannels. These step up from 730 hours in 2013 to, in 2015 and thereafter, 1,460 hours. There is also a provision that provides an incentive to licensees to broadcast first-release Australian drama on their multichannel, in that subsection (3) of the proposed new section 121G states that, if a first-release Australian drama program is transmitted during the targeted viewing hours—which, I should have noted, begin at 6 am and end at midnight—on the multichannel, then it will be deemed to be twice as long as its actual duration in terms of meeting the quota of hours set out in proposed subsection (2).

I should say that—while they largely restate what the existing obligations are, and are subject to the additional flexibility provisions relating to the multichannels—these arrangements are the subject of some controversy. The Australian screen industry, represented by the Screen Producers Association of Australia, the Australian Writers Guild and the Directors Guild, are concerned that these arrangements will result in broadcasters not so much transmitting less Australian content but transmitting less high-quality Australian drama. This is because they will be able to transmit drama programs and especially children’s television programs on the multichannels, and, because the audience on the multichannels, at least at present, is quite a bit lower than it is on what they call the primary channels, they will therefore pay less money to the producers for those programs. This is a fair point. It is one that deserves a very good hearing.

I have to say that it is a matter of considerable disappointment that the government, for whatever reason, has chosen to try to rush this legislation—and, indeed, the more offensive legislation relating to the Public Interest Media Advocate—through the parliament in the course of this week. There is absolutely no special urgency for it. There are committees sitting, still, considering this legislation, and they should be able to do their work and report in due time. There should be time for their reports to be considered by the time the legislation is debated in the Senate. But there is an indecent, even obscene, haste in all of this, and it is very hard to find any explanation for it. There is no particular urgency for this legislation to be dealt with this week. It has been considered, and these issues have been debated for some time; that is true. But it is one thing for issues to be considered in the context of an industry review like the convergence review, where the general issues are kicked around, and quite another thing for there to be a rush to deal with a specific set of proposals. The devil is always in the detail.

While there has been broad debate about content and the associated issues, once the government comes to a landing and actually draws up some amendments and some specific proposals, that is worthy of more detailed consideration. And that is not going to be available, given the government’s haste in seeking to push this through the parliament. The industry has been very critical of that. The government has been criticised from every quarter and not simply because of the Public Interest Media Advocate legislation, which so dangerously impinges on press freedom.

Returning to the substance of this legislation, there are also changes made to the charters of the ABC and the SBS—indeed, changes to their acts. The most important changes include the provision of digital media services in the charter of the ABC and, indeed, that of the SBS, each of which is chartered to provide broadcasting services. You could no doubt make a reasonable legal argument that digital online services amount to broadcasting, but, out of an abundance of caution, no doubt, it makes sense to change the charters to allow that to occur.

I will speak of the ABC in particular, but what I say about the ABC and its public obligations applies with equal force to the SBS. The ABC is more important than ever. Our public broadcasters are more important than ever. The great foundations of journalism are under real threat. I spoke earlier about the threats to the newspaper industry. The big daily newspapers were the greatest foundations of journalism and they are threatened. One thing we can be sure of is that there will not be as many of those big newspapers in five or 10 years time as there are today. There are new sources, there are new online publications, and that is to be welcomed. There is in every respect a greater variety of news services available to us, but I fear that the sheer mass, thoroughness and comprehensiveness of the big daily newspapers will not be there in the future given the threat to the business model.

The ABC and the SBS, not being solely dependent on advertising revenue—not at all dependent in the case of the ABC and not substantially dependent on it in the case of the SBS—therefore have a heavier responsibility. I am very pleased to see the way the ABC is putting more effort into news and information. The ABC, however, is in a very different position relative to the public than the commercial broadcasters, let alone commercial publishers. The ABC is a taxpayer funded entity, a chartered entity, and it has an obligation to the public, not simply as consumers but, as Jim Spigelman, its chairman, has said, as citizens, and it has a statutory obligation in the presentation of its news and information to be accurate and impartial, according to the recognised standards of objective journalism. It has that very clear obligation.

We had some controversy about the Daily Telegraph this week. The Daily Telegraph is free to be as biased as it likes. Its readers can decide not to read it, they can be appalled by it, they can cancel their subscription, they can throw it in the bin or do whatever they like, but it is free to do that. The ABC is not, any more than the SBS is free to do that. These are critically important institutions and they have to maintain the very high standards of objectivity, impartiality, fairness and balance. No doubt, journalists at the ABC will look at what their colleagues and friends are doing in the commercial media and say, ‘Why can’t I be as outrageous as that?’ Well, they cannot be. They are being held to a higher standard and that is a function of their very important public status. We welcome those changes to the charter. They make perfect sense.

However, there is one amendment to the ABC legislation which makes no sense at all. It is the new section 31AA to be inserted in the ABC’s act. It states:

The Commonwealth must not enter into a contract or other arrangement with a person or body other than—

the ABC—

if the contract or arrangement:

(c) is for the provision of international broadcasting services …

This is designed to remove all prospect of contestability in terms of the provision of the Australia Network.

We all remember the catastrophic and chaotic tender process relating to the Australia Network. At the end of 2010, the then Minister for Foreign Affairs, the member for Griffith, announced a tender for a 10-year contract to provide the Australia Network—a really important part of Australia’s public diplomacy. As it turned out, there was a contest between the ABC, which, of course, had been providing the service in the previous five years, and Sky. When the first tender closed and it was considered by an independent committee established by DFAT, Sky apparently won the tender. This was not very satisfactory to the government, so they announced a variation to the tender and, in effect, had a retender. After that, Sky won it again, at which point the government abandoned the whole process because, they said, there were concerns about probity, leaks and so forth, and granted the contract to the ABC. It was a humiliating shambles and classic mismanagement on the part of the government.
You had—apparently—the foreign minister, the member for Griffith, arguing for Sky and the Prime Minister and Senator Conroy, the communications minister, arguing for the ABC.

I will say this: the ABC is a perfectly appropriate entity to deliver the international broadcasting service for Australia. Most international broadcasting services are delivered by the public broadcaster of the relevant nation. There is nothing wrong with that. They were awarded that contract when we were in government. We made no complaints about it. But you have to ask yourself: what government in its right mind—with a rational, business-like mind—would preclude itself from ever making this job contestable? Even if you took the view that the ABC was, all other things being equal, the appropriate body to provide this service, why would you want to put yourself in the position that, if the ABC proposed at some future date to provide the service at a price or on conditions that were unreasonable or too expensive or too over the top in some manner or other, then you could not say to the ABC: ‘That’s not good enough. You’ve got to sharpen your pencil. We’ll put it out to tender’ or ‘We’ve got the power to put it out to tender’? Why would you preclude yourself from being able to do that? That is exactly what the government has done. It is a rather bizarre turn of events, because it was only a few years ago that the government apparently thought that a competitive tender was the best way to award this contract and actually held a tender. Then, because the government did not get the result that at least part of it wanted—it seems the other part did want the result that was delivered—it aborted the tender and ended up having to pay, we understand, well over $2 million in damages and compensation to Sky. It was really a hopeless failure of process.

In due course, in the consideration in detail stage, we will move an amendment to delete section 31AA from the bill, and I would commend the amendment to all members. I sincerely ask the government to think again. It is perfectly open for a government, under the legislation as it stands, to take the view that the ABC is the appropriate entity. Indeed, that was the view John Howard took—so it is not a partisan issue. To deprive yourself of the ability to make this contestable seems to us to be the height of foolishness.

So those are the principal matters dealt with in the legislation. As I said, broadly speaking we support the changes. We are appalled by the haste with which it is being presented, but we are not going to treat this bill in a political way. We have looked at it carefully on its merits and have presented—which I trust honourable members will recognise—a considered response to it. The converging media world is very challenging and very exciting. We have more diversity than ever before. We have more opportunities than ever before. Established players are under great threat. Rupert Murdoch, who is the great paragon of the honourable member opposite me, the member for Reid—he features in all of his speeches!—has said that the internet will destroy more profitable businesses than it will create, and certainly a lot of Rupert Murdoch’s businesses are very much under challenge.

We have to ask: how long will it be before the AFL, the NRL and the other owners of sporting rights—the big sporting codes—decide to use the platform of the internet to sell their programming direct to consumers, rather than selling their rights to a pay TV company or even a free-to-air television station? How long will it be before Mr Demetriou and the AFL just sell an AFL app, for a few hundred dollars a year, which entitles subscribers to watch every game on any device, live or in replay, with the metadata and so forth? You can see the platform of the internet potentially disintermediating all the other platforms, just as it has cut out the newspapers as the platform for classified advertising and just as, increasingly, it is cutting out free-to-air and subscription television as the platform of choice for delivering drama. So many people now are watching drama directly downloaded or streamed, purchased from the rights owners or companies such as Netflix and their local counterparts. How long will it be before these businesses are under real threat? It is important for us here to remain very flexible in our approach to regulation. We have clear objectives: protecting the Australian content and ensuring that Australian voices are heard and all of those very important objectives. But we have to recognise that we are in a rapidly changing environment, and it is important that legislation be regularly reviewed so that it keeps up to date with the changes in technology.

So that is my response to the legislation. As I foreshadowed, we will be moving the amendment to delete the proposed section 31AA in the consideration in detail stage.

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