Budget Review 2014–15 Index

Dr Rhonda Jolly

ABC and SBS

As has been widely predicted this Budget involves funding cuts for the national public service broadcasters, the Australian Broadcasting Corporation (ABC) and the Special Broadcasting Service (SBS). The extent of the Budget pain for the broadcasters is considerably less than it may have been had the recommendations of the National Commission of Audit (NCoA) to subject the broadcasters to efficiency dividends been imposed.[1] The NCoA’s approach would have meant losses of $204.0 million from the broadcasters’ budgets over the next four years.[2] Instead, a one per cent efficiency saving for each broadcaster means that base funding will be reduced by $43.5 million over the same period. This will amount to approximately $35.5 million for the ABC and $8.0 million for SBS.[3]

Both the ABC and SBS have warned that if they receive less government funding they will have no choice but to reduce the services they provide.[4] In response to the Budget announcement, ABC Managing Director, Mark Scott, iterated the caution. Scott was adamant that while the ABC would be able to achieve some efficiency gains, the present ‘cuts would regrettably and inevitably result in redundancies and a reduction in services’.[5] On the other hand, while SBS’s Michael Ebeid acknowledged that the Budget cuts would be felt across his organisation, the major concern for SBS’s managing director was for the future.[6] Ebeid noted that despite the fact that the broadcaster was ‘highly-skilled at delivering more with less’, the probability was that there would be further reductions in funding. SBS would not be able to absorb these, and as a result, content production and the broadcaster’s ability to attract commercial revenue would be affected.[7]

Ebeid’s concern is likely to be justified, given that the Budget papers describe the savings measure for the broadcasters as a ‘down payment’ on greater efficiencies. These are likely to be required as a result of the findings of a study by Peter Lewis (the Lewis inquiry), commissioned by Minister Malcolm Turnbull in January 2014.[8] It has been reported that the findings of the inquiry are currently under consideration by the ABC and SBS Boards and that the inquiry is confident the broadcasters should be able to deliver what has been labelled ‘back office’ savings in the operations of the broadcasters without interfering with programming quality or quantity.[9]

Moreover, reports indicate that the broadcasters will be required to consider six categories under which they will be expected to produce the administrative savings: working together, harnessing technology, modernising business, revenue opportunities, better resource allocation and financial management and governance. It is also expected that the broadcasters will better match supply and demand for services and cease producing low-rating programs in order to achieve ongoing efficiencies.[10]

It is interesting that there has been a more lenient than anticipated approach taken by the Government to funding public service broadcasters in this Budget given the Prime Minister’s strident criticism of the ABC with regards to the reporting of allegations by former United States’ National Security Agency contractor, Edward Snowden.[11] In addition, the broadcaster has been subject to recent criticism regarding editorial policies, an embarrassing apology following the telecast of an offensive Chaser skit and the court case which followed, as well as allegations of entrenched ‘left’ bias have resurfaced.[12] Some commentators therefore saw this Budget as an opportunity either to privatise the ABC or to introduce aspects of commercialisation in the form of limited advertising and to curb what they saw as its excessive digital presence.[13] The NCoA’s assessment also concluded there is a legitimate case for reconsidering the level of support for the ABC and SBS as a result of advances in technology and commercial imperatives and that there is no ‘right’ level of government funding for, or services that should be provided by public broadcasters.

Denis Muller notes that ‘Government displeasure with the ABC and budgetary pain for the national broadcaster are almost clichés of Australian politics’.[14] Before the 1980s, eminent media academic Henry Mayer described government funding as 'a permanent problem' for the broadcaster.[15] This is because it raised questions of, and called for decisions about how much money the ABC needs to fulfil its Charter obligations, and to what extent there is waste or inefficiency by the Corporation in the use of public funding.

Writing in 1988, academic Glyn Davis concluded that the ABC had 'swung through several cycles of expansion and contraction; it 'prospered' under the Whitlam Government, but 'fared less well under Fraser'. The Hawke Government increased funding initially, but curbed its financial largess later in its term, with Treasurer Paul Keating arguing that the Corporation was self-indulgent and self- interested and that it would not get 'one more zac out of us'.[16]

With reference specifically to the Howard Government, journalist Shaun Carney argued in 2000:

... under the Fraser, Hawke and Keating governments budget cuts both real and threatened were used by incumbent ministers and prime ministers to put the screws on the ABC. With the [Howard] government, it is just a little more obvious ...To the government, the ABC is a plaything. Having attempted to tame it, the new direction seems to be to run it down at every opportunity, rhetorically and financially.[17]

It appears, however, that in this case demands for harsher treatment of the broadcaster have been tempered with regard for the views of supporters of public service broadcasting. Supporters argue that the modern media environment is more concentrated and less diverse as a result of the same advances in technology and commercial imperatives advanced by the NCoA as a reason to rethink Government support. For this reason it is critical that public service broadcasters continue to deliver services which inform, educate and entertain. As one assessment has noted: the ABC operated more television and radio networks and one of the largest suites of online services in Australia's media on an annual budget less than that available to any of the commercial free to air television broadcasters with whom it competes for audiences.^[18] The Friends of the ABC (Victoria) have also argued the national public broadcaster ‘has been built and paid for through taxes by three generations of Australians. It is not meant to be a business. The ABC was conceived as a service to the public— an independent institution of ideas, information, education and culture that enriches the nation and the lives of its citizens’.[19]

To what extent a relatively balanced approach to public service broadcasting continues, is likely to be dependent on two further measures of efficiency: first, how the Lewis inquiry recommendations are implemented by the broadcasters; second, how the Government deals with the NCoA’s recommendation that the broadcasters should be benchmarked against each other and the commercial broadcasters.

The NCoA considered benchmarking ‘should provide a sense of the efficiency of operations and the potential savings that could be achieved without compromising the capacity of the public [service] broadcasters to deliver services including to remote and regional Australia’.[20] Whether this would be the case is debateable. Many would question what benchmarking will actually mean, and many would argue that it is an impossible task given that the ‘great virtue’ of public service broadcasters is that they are not commercial.[21]

Australia Network

In addition to the efficiency savings imposed on the ABC, this budget has also removed control of the Australia Network Asian broadcasting service—the so called ‘soft diplomacy’ service—from the national broadcaster.[22] The Government will pay $10.6 million in compensation to the ABC in 2014–15 for breaking the Australia Network contract, which gave the running of the Network to the ABC for an initial ten-year period, but will save $196.8 million over the nine years that the contract will be void.

The Government has criticised the Network for what it has seen as overly negative representation of Australia. It has also expressed concern that the ABC broadcaster was not fulfilling the terms of its contract and that it was using some of the Australia Network funding to ‘cross-subsidise’ other activities. The NCoA was also disparaging of the Network, labelling it expensive, ‘given its limited outreach’, for meeting the diplomatic objectives of promoting Australia and building regional and cultural understanding.[23]

Mark Scott commented in his response to the Budget that the Government’s decision ‘runs counter to the approach adopted by the vast majority of G-20 countries who are putting media at the centre of public diplomacy strategies to engage citizens in other countries’.[24]

Prior to the Budget announcement veteran media buyer Harold Mitchell, a long-time supporter of the Australia Network, also expressed concern that without the Network, Australia would not be properly represented in the booming Asian economy.[25] A Lowry report in 2010 also noted the value of the Australia Network to international diplomacy. The report made the points: Australian Governments of both sides ‘have failed to grasp the importance of either public diplomacy or international broadcasting’ and despite impressive international achievement ‘the budgets of Australia’s international broadcasting services‘ have been periodically affected by threatened closure and slashed budgets’.[26]

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