Chapter 2 - Expenditure on Commonwealth government advertising since 1996
Expenditure and trends
It is difficult to give a precise answer to the
question of the level of expenditure on Commonwealth government advertising
According to the Department of the Prime Minister and
Cabinet (PM&C), 'since financial year 1996-97 expenditure through CAS
[Central Advertising System] has totalled $929 million'.
In evidence given to the Committee in August 2005, the
Special Minister of State, Senator the Hon. Eric
Abetz, also stated that $929 million had
been spent by the government 'between 1996 and 2004'.
The figure of $929 million refers to the nominal
government expenditure on advertising over the period 1996-97 to 2003-04, as
presented in table 2.1. The table derived from a Parliamentary Library research
note published in June 2004, and the
Department of the Prime Minister and Cabinet Annual Report 2003-04, provides the breakdown of that expenditure. It also shows the conversion of that
nominal expenditure into 2003-04 prices.
In 2003-04 prices, the total expenditure on government
advertising through the Central Advertising System for the period 1996-97 to
2003-04 was $1.014 billion.
For the period 1995-96 to 2004-05, table 2.2 provides a
breakdown of advertising expenditure by media type. This table presents
expenditure disaggregated by newspapers (press) into national, metropolitan,
suburban and regional and rural categories, and by radio and television. It
represents the most comprehensive set of data currently available on government
advertising, but it is inadequate for reasons outlined in later sections of
Table 2.1: Government advertising expenditure 1996-2004
Source: Research Note No.62, Parliamentary Library, 21 June 2004, p. 2 and the Department of the Prime Minister and
Cabinet, Annual Report 2003-04,
Table 2.2: Government advertising expenditure by type 1995-2005
& Rural Press
Note: As it is too difficult
to separate out campaigns less than $100,000, all campaigns placed through the
Central Advertising System have been included. Total Press at column (a) above
also includes expenditure for NESB, Indigenous, Overseas, Street press, Kids
media and Trade press. 1995-1998 expenditure
also includes magazines.
Source: Department of Prime
Minister and Cabinet, answers to questions on notice, original dated 13 September 2005 and revised 29 November 2005. See also Appendix 8 of this report.
The following figure illustrates the pattern of
Commonwealth government advertising expenditure through the Central Advertising
System between financial years 1991-92 and 2003-04.
Figure 1—Government advertising expenditure 1991 to 2004
Source: Research Note No.62,
Parliamentary Library, 21 June 2004, p. 2 and the Department of the Prime Minister and Cabinet, Annual Report 2003-04, p. 94.
The figure shows that expenditure on Commonwealth
government advertising has climbed steadily since 1991-92. Between 1991-92 and
1995-96, the average yearly advertising expenditure through the Central
Advertising System was $85.6 million. Between 1996-97 and 2003-04, the average
yearly expenditure on advertising was $126.75 million.
The median expenditure over the whole period from
1991-92 to 2003-04 was $97 million. Expenditure by the Howard
government since 1996-97 thus averages $29.75 million more than the median;
expenditure by the Keating Labor government prior to 1996-97 averaged $11.4
million less than the median. Excluding the bi-partisan advertising campaigns
for Defence Force Recruitment, the next nine most expensive advertising
campaigns since 1991 have been conducted by the Howard
The overall cost of Commonwealth government advertising
is also tending to escalate each year. For example, advertising expenditure in
the three years from 1996-97 to 1998-99 was $55 million, $89 million and $92
million respectively. In 1999-00, there was a very large jump in expenditure to
$240 million, which is accounted for by the GST advertising campaign.
Expenditure since that time, however, has never dropped below $100 million per
year. In the four years from 2000-01 to 2003-04, yearly expenditure was $170
million, $122 million, $103 million and $143 million respectively.
In considering the figures above, it is important to
understand exactly what proportion of the government's expenditure on
advertising they include. In the next section, the Committee outlines some of
the methodological issues involved in drawing an accurate picture of the total expenditure
on government advertising.
Methodological issues in reporting
The submission from the Department of the Prime
Minister and Cabinet states that the amount of $929 million is the expenditure
on government advertising that has come through the Central Advertising System
(CAS). Similarly, advertising expenditure
reported in the annual reports of PM&C is expenditure which is placed
All Australian Government departments and agencies
subject to the Financial Management and
Accountability Act 1997 are required to place their advertising through the
Central Advertising System. The purpose of this system is to consolidate
government advertising expenditure and to secure the best possible media
discounts and benefits, as well as to ensure that government departments do not
compete against each other for media time and space.
It is important to note, however, that the money
expended through CAS is not necessarily the total expenditure on any particular
advertising campaign. It is only what Mr
First Assistant Secretary, People, Resources and Communications Division, PM&C,
has called the 'media spend' on the campaign.
In evidence to the Finance and Public Administration
Legislation Committee at Senate Estimates in May 2004, Mr
Williams, was asked to provide the 'global
budget' for then current government advertising campaign activity. He said:
I cannot run through the global budget, because that is not
information the GCU has, but I can run through the proposed media spend ... The
other elements of the campaign are contract arrangements between the
departments running the campaigns and the various suppliers. We do not hold
details of those contractual amounts.
When asked to specify the elements of advertising
campaigns that were not included in the budget for the 'media spend', Mr
Williams said that with an advertising campaign there will be costs for the
advertising agency and for producing the material, market research involving
qualitative and quantitative focus group testing, and in some cases public
In other words, as the Committee confirmed at a
subsequent public hearing, the expenditure reported through the Central
Advertising System relates only to
the cost of buying media time and space to place the advertisements. The costs of market research, creating
and producing the advertisements themselves, producing and distributing other
advertising material such as booklets, posters, and mail-outs, testing the
material, and evaluating the effectiveness of the campaign are all separately
managed and recorded through the budgets of individual departments.
When these amounts are included in a total advertising
expenditure figure, the overall amount will rise considerably. The Committee
examined the annual reports of a number of departments to gather an indication
of the difference that might be made by reporting the 'global budget' of
In relation even to an individual campaign, the
difference can be significant. For example, Mr
Williams gave evidence at Senate Estimates,
saying that the proposed 'media spend' for the campaign called Strengthening Medicare was $15.7
million. This amount referred only
to the cost of buying media space for the advertisements. The Department of
Health and Ageing, in response to a question on notice from Senator
Murray, indicated that the estimated or
contract cost of the campaign was $19.2 million. In that answer, the department
stated that the two advertising agencies to carry out the campaign were
Universal McCann, who would provide the media slots, and Whybin/TBWA, who would
actually create the advertisements.
The department's Annual
Report 2003-04 indicates that the total cost of the campaign was actually
$21.5 million. This cost is comprised of the following elements:
Table 2.3: Total expenditure on Strengthening
Paid $ (GST incl.)
placement and advertising
16, 930, 383
Whybin/TBWA & partners
2, 824, 742
Worthington di Marzio
research and development
Worthington di Marzio
tracking and evaluation
Distribution and postage of Strengthening
1, 449, 708
21, 505, 353
Source: Department of Health and Ageing, Annual Report 2003-04, pp 452-461.
In addition to this expenditure, the Department of
Health and Ageing spent another $3 million on Medicare 'non-campaign'
While it is clear from this example that by far the
most expensive part of an advertising campaign is the purchase of media
placement, it is also clear that the creation of advertising material and
extensive direct mailing as part of a campaign adds millions of dollars to the
total cost. These costs are not reflected in the expenditure reported under the
CAS, and thus belie the claim made by Senator Abetz
in evidence to the Committee that the $929 million figure represents what 'the
Australian government spent ... on government information programs'.
The Committee notes that it should be possible to
compile a complete account of expenditure on government advertising by working
through each department and agency's annual report, and adding the reported
costs of different elements of each campaign.
There are, however, methodological difficulties here as
well. In particular, it is difficult readily to distinguish which market
research and consultancy costs pertain to advertising or information campaign
expenditure, and which do not; and, departments do not report their expenditure
in a way that facilitates effective comparison of spending between departments.
Distinguishing market research and consultancy costs
Departmental annual reports contain an appendix titled
'Advertising and Market Research', and another appendix titled 'Consultancies'.
From the information contained in the Department of
Health and Ageing's Annual Report 2003-04
in appendix 6, Advertising and Market Research, it appears that the
department's total 'media spend' in that year through the CAS was approximately
$34 million. If one adds all the other expenditure reported in that appendix,
thus assuming that all the reported market research pertains to advertising
costs, then the department's total advertising expenditure for the year was
approximately $44 million.
However, it is not clear from the report that in fact
all the market research costs were related to advertising campaigns. For
example, market research described as 'National Illicit Drugs Youth Campaign –
Concept Testing Research' ($237,699) and 'Annual Evaluation of the National
Tobacco Campaign' ($176,000) appears to be advertising expenditure. On the
other hand, market research titled 'Consultation with NHMRC stakeholders on the
impact of privacy regulations and the preparation of detailed analysis' ($258,331)
or 'Qualitative research evaluating the bowel cancer screening pilot with
consumers and general practitioners in the Pilot sites' ($53,760) appears not to
pertain to advertising activity.
Conversely, at least some of the consultancies listed
in appendix 7 were for evaluations of advertising campaigns and would not be
captured by an approach which merely added up the total expenditure reported in
appendix 6. There seems no point at
which a total figure for the department's advertising expenditure is provided.
It is likewise difficult to track the reporting of
advertising expenditure in the Department of the Prime Minister and Cabinet's
annual report. The Annual Report 2003-04
states that appendix 3, Advertising and Market Research, will include an
itemised listing of payments of $1,500 and above made to external consultants
engaged by the department to provide advertising and market research services.
However, the figures provided in that appendix do not
include a raft of payments to external consultants who were engaged to provide
research and other advertising services relating to the National Campaign for
the Elimination of Violence Against Women.
These are listed separately under consultancies.
The Committee attempted to ascertain the basis upon
which some external consultants who provide market research related to
advertising are listed under the appendix on 'advertising and market research'
and others are listed under the appendix on 'consultancies'.
The Department of the Prime Minister and Cabinet's Requirements for Annual Reports for
Departments, Executive Agencies and FMA Act Bodies (the Requirements) state
that 'a consultant is an individual, a partnership or a corporation engaged to
provide professional, independent and expert advice or services'. In deciding whether a particular
contractor should be categorised as a consultant for annual reporting purposes,
the Requirements advise that agencies must ask whether 'the services involve
the development of an intellectual output that assists with agency
decision-making' and whether the output reflects 'the independent views of the
service provider'. If the answer to those questions is 'yes', the arrangement
must be categorised as a consultancy for annual report purposes.
The requirements covering the reporting of advertising
and market research derive from the Commonwealth
Electoral Act 1918, section 311A. The Act states that departments must
attach to their annual reports a statement 'setting out particulars of all
amounts paid by, or on behalf of, the Commonwealth Department during the
financial year' to advertising agencies, market research organisations, polling
organisations, direct mail organisations and media advertising organisations.
The Committee notes that in some cases it will be clear
that an organisation, such as a master media placement agency, is providing an
advertising service but no distinctive intellectual 'output'. Payments to these
organisations is thus reported under 'advertising and market research' and not
However, in other cases, it may well be possible for
individuals or organisations to fall into both these categories. For example,
in PM&C's Annual Report 2003-04 a
payment of $990,000 is reported as having been made to the company Grey
Worldwide Pty Ltd for 'the advertising component of the National Campaign for
the Elimination of Violence Against Women'.
Presumably Grey Worldwide Pty Ltd provided distinct
intellectual 'output' for the campaign, because its payment is listed in the
appendix on consultancies. However, it is also an advertising agency providing
advertising services, and is not
listed under the appendix on Advertising and Market Research despite the
introductory statement to that appendix saying that it 'covers payments (of
$1,500 and above) to external consultants engaged by the department to provide
advertising and market research services'.
The Committee questioned PM&C about the reporting
of expenditure on advertising services being split between the two separate
appendices, and whether this practice facilitated effective disclosure of
government expenditure on advertising services.
subsequently advised the Committee that 'it appears that an error was made in
the preparation of this department's 2003-04 annual report'. This is because PM&C's guidelines
on the preparation of annual reports require that 'where information is
reportable as both advertising and market research and expenditure on
consultancies, it should be reported under both headings but flagged as such'. In the case of the payment to Grey
Worldwide Pty Ltd, this did not occur.
The Committee notes that additional payments of approximately $6 million
were made to a range of other external consultants for aspects of the
advertising campaign. These were also reported as consultancies, but not as
advertising and market research. The Committee asked PM&C whether these
additional payments were also wrongly reported in the department's 2003-04
annual report. An answer to the question had not been received by the time the
report was finalised.
Even without this mistake, the Committee notes that the
practice of separating the reporting of payments made to advertising agencies into
two different appendices makes it difficult to derive a total figure for the
amount expended on advertising activities by this, and other, departments.
Reporting under different criteria
As noted earlier, the Commonwealth Electoral Act 1918, s 311A requires that Commonwealth departments
attach a statement to their annual reports setting out particulars of all
amounts paid by, or on behalf of, the department during the financial year to
advertising agencies, market research organisations, polling organisations,
direct mail organisations and media advertising organisations.
Under this section, departments are not required to
report details of payments made where the total paid is less than $1500, but they
appear to have adopted different practices in relation to that requirement.
For example, the Department of Education, Science and
Training (DEST) does not report payments of this size; PM&C has provided an aggregate
figure of these payments together with its non-campaign advertising payments; the Department of Health and Ageing
does not specify what its practice is, but appears not to report amounts less
Departments also vary in the categories under which
they report their expenditure in the appendices titled 'Advertising and Market
Research'. Some departments report the expenditure under program outputs, while
others group it on a whole of department basis according to the types of
organisation to which payments are made.
For example, while PM&C and the Department of
Agriculture, Fisheries and Forestry list the different types of advertising and
market research expenditure under Output Groups, DEST and the Department of
Health and Ageing list them under headings such as 'Advertising Agencies',
'Market Research Organisations', 'Direct Mail Organisations', 'Media
Advertising Organisations'. Again, these differences in reporting practices
make it difficult to compare like with like, especially given the additional
confusion engendered by the different classification of consultancies.
The Government has claimed that 'detailed information
about the cost of government advertising campaigns' is made publicly available
through mechanisms such as Senate estimates hearings and questions on notice,
the Senate order on departmental and agency contracts, agency and departmental
annual reporting arrangements and gazettal of contracts on the internet.
The Committee disputes that assertion. While it may be
correct to claim that all costs are disclosed somewhere in annual reports and
other documents, it is not possible for an external reader of these documents
to form a clear picture of the total sum of money expended in any one financial
The Committee has conducted a detailed analysis of the
information provided by these mechanisms but has been unable to quantify what
the government's total expenditure on advertising has been in the past year,
let alone over the past eight years. The Committee asked GCU to provide that
figure and received no reply. It is clear, however, that the figure of $1
billion expended through CAS since 1996-97 must be a very significant under-estimate of the total costs of
researching, developing, creating, producing, placing, direct mailing and
evaluating government advertising campaigns in that period.
The Committee considers that an essential building
block for accountability in government is the capacity to establish the basic
facts concerning what money is spent on what activities. The reporting systems
in place in relation to expenditure on government information campaigns are
manifestly unable to provide that information.
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