Current Issues

Funding of the Australian Broadcasting Corporation

E-Brief: Online Only issued November 2006, revised and updated version of August 2003 brief by Dr Kim Jackson

Dr Rhonda Jolly, Analysis and Policy
Social Policy Group

Introduction

The Australian Broadcasting Corporation (ABC) is the major national public broadcaster, contributing to and reflecting Australia s national identity.

The ABC is an integral part of the radio, television and online production industries and the news and information media. It also plays an important role in digital broadcasting and the introduction of new media services.

Under the ABC Charter found in section 6 of the Australian Broadcasting Corporation Act 1983, the Corporation is required to provide innovative and comprehensive broadcasting services of a high standard as part of the Australian broadcasting system consisting of national, commercial and community sectors and to transmit news, current affairs and entertainment programs outside Australia.

Radio

The ABC delivers radio broadcasting services over:

• Four national radio networks: Radio National, ABC Classic FM, Triple J and ABC NewsRadio;
• Local radio through nine metropolitan radio stations in capital cities and Newcastle, and 51 regional radio stations throughout Australia;
• Three Internet music based services; and
• Radio Australia, an international service broadcast by shortwave, online, satellite and local rebroadcasts to the Asia-Pacific region in five local languages Indonesian, Tok Pisin (Pidgin), Chinese, Vietnamese and Khmer (Cambodian) as well as English. Aside from news and current affairs, English lessons, sport and music from Australia, Radio Australia's programs cover the events and issues of the region with a particular emphasis on health, the environment, science and technology, agriculture and education.

In June 2006, the ABC estimated that its 617 Government-funded national radio services had achieved the following penetration rates:

• 99.4% of the Australian population had terrestrial access to Local Radio;
• 98.5% of the Australian population had terrestrial access to Radio National;
• 95.7% of the Australian population had terrestrial access to Classic FM;
• 95.2% of the Australian population had terrestrial access to Triple J; and
• 78.2% of the Australian population had terrestrial access to NewsRadio.

Television

ABC television consists of:

• an analogue television service ABC TV;
• digital television from 177 transmitters (simulcast with the analogue television signal);
• ABC2, a second digital channel, which began broadcasting in March 2005; and
• local television in each state and territory.

ABC2 broadcasts a range of new and repeat programming including children s programs, specific regional programs, documentaries and arts programs and international and regional news.

Additionally, Australia Network (formally ABC Asia Pacific Television) broadcasts under contract for the Department of Foreign Affairs and Trade via satellite and rebroadcast arrangements to 41 countries in Asia and the Pacific.

ABC television reflects the diversity of interests in the community nationally, through a range of distinctive programs of broad and specialist appeal. ABC television commissions, produces, purchases and schedules all general programs as well as current affairs programs. It is watched by in metropolitan areas by approximately 8.5 million viewers and in rural areas by 4.1 million viewers every week.

ABC television is available via analogue signal to 98.19 per cent of the population. The analogue service is transmitted via 961 terrestrial transmitters around Australia, including Self-Help facilities, which are operated and maintained by local councils or community groups and Broadcasting for Remote Aboriginal Communities Scheme (BRACS).

The ABC is in the process of progressively rolling out digital television services which will eventually have equivalent coverage to that of analogue television services. ABC television is available via digital signal to 96.19 per cent of the population.

The ABC digital television service is also retransmitted on various digital subscription platforms, including FOXTEL, Optus TV, AUSTAR, TransACT and Neighbourhood Cable.

Funding

The ABC is financed by the federal government, primarily through triennial funding arrangements. Major sources of data relating to ABC funding are the Annual Reports of the Corporation and the Commonwealth Budget Papers.

Other relevant information on funding can be found in the ABC Triennial funding submissions (such as the most recent submission for 2006-2009) and documents such as the 2006-07 Portfolio Budget Statement.

Budget documents relating to the Department of Communications, Information Technology and the Arts (DCITA), which has responsibility for the ABC, also provide information on funding.

Operating Revenue

The Operating Statements contained in the Annual Reports of the ABC detail revenues and expenses of the Corporation for each financial year. Revenue can be classified into two broad groups:

• Government appropriations (amounts legislated through the annual Appropriation Bills Nos 1 and 2 for the use of the ABC); and
• Revenue from independent sources (principally, the sale of goods and services).

Table 1 and Table 2 set out revenues for the ABC, by source of funds, for each year since 1970-71. In assessing comparatively actual funds available for ABC programs and services over this period of time, it is necessary to take into account changes in funding allocated for:

• Transmission services;
• Capital use charge;
• ABC subsidiaries; and
• Capital payments and equity injections

Transmission Services

The ABC does not broadcast over its own transmission network. Prior to 1992, transmission services were provided by Telecom and the then Department of Transport and Communications. From 1992 to 1999 this service was provided by the National Transmission Agency (NTA), until it was privatised in April 1999. In 1999-2000 the ABC received an appropriation to purchase transmission services from NTL Australia Pty Ltd (the purchasers of the NTA network). Similar appropriations have been made in subsequent years.

The cost of the ABC's transmission services was identified as 'resources provided free of charge' in the ABC's Financial Statements from 1990-91 to 1998-99, but for earlier years it is not recorded. The cost of ABC transmission services has been excluded therefore from Table 1 and Table 2 in order to obtain comparable trend data for the years before 1990.

Capital Use Charge

The capital use charge was part of changes introduced with the Accrual Budgeting framework in 1999-2000. It was levied on Commonwealth authorities and agencies to reflect the cost of the Commonwealth's investment in those entities. Funding for the capital use charge was included in the annual appropriations for the ABC from 1999-2000 to 2002-03. The charge has since been abolished. Appropriations for the charge are not included in Table 1 and Table 2.

Consolidated Revenue

Since the Annual Report 1994-95, the ABC's operating revenue has been presented in two formats - Consolidated and ABC. The former encompasses the accounts of both the ABC and its controlled entities (companies owned by the Corporation), while the latter consists only of operating revenue for the Corporation. The revenues associated with controlled entities has increased substantially in recent years, from $602 000 in 1993-94 to over $30 million in 2005-2006. This is in part due to the different treatment of the ABC's orchestras, which became subsidiary companies during and after 1996-97. The data presented in Table 1 and Table 2 are derived from the Consolidated figures as they more accurately reflect the scope of the current operation of the Corporation. Revenue associated with controlled entities before 1994-95 was negligible.

Orchestral Subsidies

The ABC operated symphony orchestras in each State as part of its Concert Music Division until 1997. In December 1996, the State Governments and ABC Board agreed to a proposal from the Commonwealth Government to corporatise five ABC symphony orchestras. The Sydney Symphony Orchestra had been incorporated in February 1996. An ABC-owned subsidiary, Symphony Australia Holdings Pty Ltd, was established in July 1997 and $32 million was transferred in the 1997-98 Budget from the ABC's base funding to Symphony Services Australia.

Since 1997-98, the ABC financial statements have separately identified the orchestral subsidies. These are received from both DCITA, through Symphony Australia, and from State Governments. In Table 1 and Table 2 and, the Commonwealth orchestral contributions have been included with other Commonwealth revenue, while the State subsidies have been placed with revenue from other sources.

Capital Payments and Equity Injections

The ABC s financial statements classified all Commonwealth appropriations as revenues from government until 1999-00, when a payment of $32.2 million was classified as an injection of equity and not included in total operating revenues . In Table 1 and Table 2 this payment and subsequent equity injections have been included in Capital Revenues to maintain consistency with previous years.

Table 1 gives the ABC s revenues since 1970-71, and indicates the proportion of these revenues that come from the Commonwealth Government. The main sources of current revenue, apart from the Commonwealth, are the sales of goods and services, interest, royalties and the State orchestral subsidies. The table indicates that non-Commonwealth revenue has grown substantially since the late 1980s.

Table 1: ABC Revenues, 1970-71 to 2005-06 (a) (actual dollars).

Source: ABC Annual reports, ABC Financial Statements.

(a)    Excludes revenues for transmission costs and capital use charge. Includes equity injections and orchestral subsidies.

Table 2: ABC Revenues, 1970-71 to 2004-05 (a) (adjusted to 2004-05 prices)

Source: ABC Annual Reports, Financial Statements. Figures have been adjusted to 2004-05 prices using the implicit price deflator for non-farm GDP.

(a)    Excludes revenues for transmission costs and capital use charge. Includes equity injections and orchestral subsidies.

Commonwealth Funds for the ABC

It is possible to merge the projections contained in the 2006-07 Budget Papers with the figures from the Annual Reports to obtain trend data on Commonwealth ABC funding since 1990-91, when transmission costs were first identified. This is presented in Table 3 below. Table 4 presents these figures (excluding the out years) in constant 2004-05 prices.

The Budget Papers do not separate operating revenue from transmission costs for future years. Under the budget framework, Appropriation Bill No. 1 provides for operating revenue and transmission costs.

Equity injections are provided for by Appropriation Bill No. 2. Substantial increases in capital funding were allocated to assist in digital conversion in the 1998-99 Budget, which provided $20.8 million from 1998-99 to 2001-02, while the 2000-01 Budget provided $30.4 million from 2000-01 to 2002-03. Other capital funding increases have included $29.1 million in 1999-2000 to meet debt financing arrangements and additional funding for the 2006-09 period for additional equipment and infrastructure needs.

The ABC's orchestral subsidies are not separately identified in the Budget Papers. In the absence of any measures affecting this item in subsequent budgets, it has been assumed that the funding levels similar to those allocated since 2002-03 will continue.

Table 3: Commonwealth Funds for the ABC, 1990-91 to 2006-07 (a) (actual dollars).

Source: ABC Annual Reports, Financial Statements, 2006-07 Budget statements.

(a) Does not include funds for the capital use charge or loans from the Commonwealth. Orchestral subsidies were included in the ABC s operating revenue for 1996-97 and earlier years.

Table 4 Commonwealth Funds for the ABC, 1990-91 to 2006-07 (a) Adjusted to 2004/05 prices.

Source: ABC Annual Reports, Financial Statements. Figures have been adjusted to 2004-05 prices using the implicit price deflator for non-farm GDP.

(a) Does not include funds for the capital use charge or loans from the Commonwealth. Orchestral subsidies were included in the ABC s operating revenue for 1996-97 and earlier years.

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