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Bills Digest No. 153  1999-2000
Broadcasting Services Amendment Bill (No.3) 1999

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Passage History

Date Introduced: 6 December 1999

House: House of Representatives

Portfolio: Communications, Information Technology and the Arts

Commencement: Royal Assent, apart from Part 2 of Schedule 1, which commences on 1 July 2000 and Part 3 of Schedule 1, which commences on 1 July 2001.

Purpose

The purpose of the Bill is to:

• require subscription television licensees to meet certain levels of expenditure on Australian drama programs
• limit the international obligations of the Australian Broadcasting Authority (ABA) to the protocol on trade in services of the Australia New Zealand Closer Economic Relations trade agreement (the CER trade in services protocol), and
• regulate international broadcasting services transmitted from Australia.

Background

Legislative History

This Bill was introduced to the House of Representatives on 6 December 1999 and passed (with amendments) the following day. It was introduced to the Senate on 9 December 1999 and passed on the same day. The major amendment to the Bill involved the excision of Schedule 3, which contained the provisions relating to international broadcasting services. Schedule 3 was recast as the Broadcasting Services Amendment Bill (No.4) 1999 and is still before Parliament.⁽¹⁾

Section 102 of the Broadcasting Services Act 1992 (the BSA) required subscription television licensees providing predominantly drama services to spend at least ten per cent of their annual program budget on new Australian drama programs. On 2 April 1998 the Minister for Communications, the Information Economy and the Arts announced the results of a review of the Australian content rules for pay TV. The review concluded that s.102 was effectively unenforceable because channel providers, rather than pay TV licensees, are responsible for most expenditure on programs. In March 1999 the Government announced that it would make the ten per cent Australian content quota for pay TV drama enforceable.

In lieu of an enforceable provision, the Australian Broadcasting Authority (ABA) has developed guidelines for the voluntary implementation of the licence condition, with licensees and channel providers reporting annually on Australian drama expenditure. Reported expenditure by the predominantly drama channels for the last three years has been as follows:

.

According to the ABA, only four of the sixteen channels complied with the ten per cent requirement in 1997-98.

Schedule 1 of the Bill amends the BSA to ensure that pay TV licensees providing TV drama services spend ten per cent of annual program expenditure on Australian or New Zealand productions. The ten per cent requirement is to be calculated by reference to the expenditure incurred by channel providers if necessary.

On 26 October 1996 Project Blue Sky and five New Zealand production companies commenced proceedings in the Federal Court of Australia. They took the view that the Australian Broadcasting Authority's Australian television content standard contravened Australia's treaty and obligations under the Trade in Service Protocol to the Australia New Zealand Closer Economic Relations (CER) Trade Agreement. Project Blue Sky claimed the ABA's standard did not accord national treatment to New Zealand programs and commenced legal proceedings against the ABA.

On 28 April 1998 the High Court ruled that the ABA's Australian Content Standard was 'unlawfully made' as it was inconsistent with Australia's treaty obligations under the CER.⁽²⁾ The ABA was required to revise the standard. In July 1998 the ABA released a discussion paper that identified a range of options for implementing the Court's ruling and formed the basis for initial submissions and consultation. In November the ABA released a draft standard and sought further comment from interested parties. The new standard was finally released on 18 February and took effect on the 1 March 1999. The new standard treats New Zealand and Australian/NZ programs as equal to Australian programs for the purpose of compliance with the standard. The new standard will be closely monitored by the ABA and reviewed after two years of operation.

On the 19 March 1999 the Minister for Communications, Information Technology and the Arts, Senator Alston, announced that the Government would amend the Broadcasting Services Act 1992 to protect the level of Australian content on television. This amendment would ensure that foreign access to local content is confined to New Zealand.

Schedule 2 of the Bill amends the BSA to limit the scope of international obligations applicable to the ABA to the CER Trade in Services Protocol.

Main Provisions

Schedule 1 inserts a new Division 2A into part 7. The division imposes licence conditions on subscription television broadcasters to ensure minimum levels of expenditure on 'eligible drama programs'.

An eligible drama program is defined in proposed section 103B as a drama program that is:

• an Australian program
• an Australian/ New Zealand program, and
• a New Zealand program or an Australian official co-production.

All these definitions are elaborated on in the Australian content standard.⁽³⁾ As noted above the definition reflects the High Court decision in the Project Blue Sky Case.

Under proposed section 103N, if a licensee provides a subscription TV drama service and a person is a channel provider to the licensee it is a condition of the licence that the channel provider's new eligible drama expenditure exceeds ten per cent of the channel provider's total program expenditure in relation to the channel.

The term 'channel provider' is defined in proposed section 103C to include a person who:

• packages a channel and
• supplies the licensee with a channel and
• carries on business in Australia that involves the supply of a channel.

A breach of new section 103(1) will not result in penalties being applied under Division 3 Part 10 of the Act. This is because the Bill proposes that any shortfall in drama expenditure can be made up in the following year (new section 103P and 103Q). Penalty provisions will apply if the expenditure is not made up in the following year.

Proposed subdivisions C to G also impose the ten per cent new eligible drama expenditure requirement on licensees in situations where programs are supplied by a person who is not a channel provider. Examples of such persons include pass through providers (ie a channel provider based overseas)⁽⁴⁾, part-channel providers⁽⁵⁾, part-pass through providers⁽⁶⁾ and the licensee.

Schedule 2 is intended to limit the implications of the High Court's decision in the Project Blue Sky case. Item 2 of the schedule amends paragraph 160(d) which currently provides that the ABA is to perform its functions in a manner consistent with Australia's obligations under any convention to which Australia is a party or any agreement between Australia and a foreign country. The proposed new paragraph provides that the ABA must perform its functions in accordance with Australia's obligations under the Closer Economic Relations Trade in Services Protocol with New Zealand. In his second reading speech the Minister noted that the amendment 'will retain the special position of New Zealand, while making it clear that there are no flow-ons under the amended section to other treaties.'⁽⁷⁾

A discussion on the provisions of schedule 3 of the Bill which purport to establish a regulatory framework for international broadcasting services may be found in the Bills Digest No.121 1999-2000.

Endnotes

1. See Bills Digest No 121 1999-2000 (http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD121.htm). The Senate Foreign, Affairs, Defence and Trade Legislation Committee issued its report on the Bill on April 4 2000. http://www.aph.gov.au/senate/committee/fadt_ctte/broadcasting/broadcasting%20services.pdf

2. Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490.

3. This Standard is made by the ABA under section 122 of the BSA.

4. The term 'pass through provider' is defined proposed section 103E.

5. Defined in proposed section 103D.

6. Defined in proposed section 103F.

7. House of Representatives, Debates, 6 December 1999, p. 9592.

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