04 November 2019

PDF version [451KB]

Dr Tyson Wils
Social Policy

The author would like to acknowledge the input that Adrian Makeham-Kirchner, from the Parliamentary Library’s Economic Policy section, had into the sections on ‘Financial governance’, ‘Transmission distribution services’, ‘Sale of goods’, and ‘Efficiency and savings’.

Executive summary

• This paper explores some of the debates about recent budget measures for the Australian Broadcasting Corporation (ABC), including efficiency measures and how these have been alternatively described and understood.
• One theme of this paper is that debates about funding the ABC from government appropriations can be traced back at least to the late 1940s when the Corporation was first directly funded from Consolidated Revenue. One aspect of this debate is whether dependence on government funding causes confusion about ABC’s independence from government, or even tension with the government of the day.
• Another theme is that there has been ongoing discussion about the effectiveness of the ABC Charter as a mechanism for measuring how well the ABC uses its funds.
• In order to provide context to these issues, the paper:
  • describes different aspects of governance and administration that shape funding for the ABC, focusing particularly on the Commonwealth Financial Framework, as well as the ABC Board and Charter and the role they play in determining the ABC’s independence
  • explains the various sources of funding for the ABC, including own-source revenues through commercial activities and government funding for operations
  • reviews some determinates to revenue, such as the triennial funding arrangement and
  • summarises contemporary and historical perspectives on the impact of budget measures on the ABC.

Contents

Executive summary

Introduction

Background

Financial governance
Role of the ABC Charter and the ABC Board
Funding and the ABC’s relationship with the Government

ABC revenue

General Operational Activities
Triennial funding
History of triennial funding
The triennial arrangement
The value of triennial funding
Transmission distribution services
Sale of goods

Operational funding, efficiency and the ABC Charter

Outcomes, outputs and the Charter
Efficiency and effectiveness of the ABC
Efficiency and savings
The Lewis efficiency review
Parliamentary debates about budget measures and changes to the profile of the ABC
Australian National Audit Office governance review
Charter objectives and accountability

Conclusion

 Introduction

Funding for Australia’s primary national public broadcaster, the Australian Broadcasting Corporation (ABC), has been a contentious and complex issue for many years. For instance, writing in 1980, Henry Mayer, Professor of Political Theory at the University of Sydney, stated:

ABC funding is a perennial ‘problem’. Given its very broad aims, given in the Act and arrived at by convention, given that priorities were not clear nor could be without offending important interests, given no easily available criteria for ABC ‘waste’ or ‘efficiency’, it is not easy to see how much money the ABC ‘really’ needs and how much ‘fat’ there is ... Endless disputes over funding and the use of funds are built into the system.[1]

Mayer was writing about the ABC when it was the Australian Broadcasting Commission. The Commission was established by the Australian Broadcasting Commission Act 1932, although there were a range of Acts introduced after 1932 that changed the functions and activities of the Commission (including the Broadcasting Act 1942, which repealed the 1932 Act).[2] The contemporary Australian Broadcasting Corporation was created in 1983 with the passage of the Australian Broadcasting Corporation Act 1983 (the ABC Act). The passage of this Act gave effect to recommendations of The ABC in Review: National Broadcasting in the 1980s (the Dix Report).[3] One reason for the review was a response to concerns that ‘the ABC's ability to hold its place as an essential and innovative force within Australian broadcasting was made difficult under the present broad terms of its charter, and a definitive description of the ABC's role and responsibility to the community was long overdue.’[4]

Some recommendations were designed to address what the Committee of Review of the Australian Broadcasting Commission, which produced the Dix Report, said were dilemmas in regards to the ABC’s role in the Australian broadcasting system—this included whether it should provide popular programs, specialised programs, or a combination of the two. One recommendation was to change the main function of the ABC, as it was expressed in the Broadcasting and Television Act 1942: this Act stated that the ABC was to supply ‘adequate and comprehensive programmes’ and ‘take in the interests of the community all such measures as, in the opinion of the Commission, are conducive to the full development of suitable broadcasting and television programmes.’[5] The Committee felt that the new function needed to better reflect the ABC’s dual role of being a national and niche broadcaster at the same time as being an innovative provider of information, entertainment and education for a diverse range of audiences (this is reflected in the ABC’s Charter as discussed later in this paper). The Committee believed that this change would help the ABC more easily achieve its stated objective to serve society as a whole with quality programs, which, the Committee said, was an integral part of the ABC’s role as a national publically funded broadcaster. Yet, as discussed in this paper, issues continue to be raised about the role of the ABC and how it spends its Australian Government funding to achieve its objectives. This includes in respect of the efficiency and effectiveness of the ABC in delivering against its Charter obligations.

In order to understand these issues, this paper will outline a number of recent developments and changes in regards to the operations of the ABC, particularly in respect of funding. The paper first provides some background information on the current administrative and governance features of the ABC, including the role of its Charter and Board in its operations. This includes a brief discussion of issues that have been raised in regards to funding and the relationship that the ABC has with the government of the day.

The paper then describes the sources of revenue for the ABC. This is important because understanding where the ABC gets its money from, and what it receives its money for, provides context to the funds it has available to achieve its objectives.

Finally, the paper discusses the ABC Charter in relation to operational funding and efficiency. The central role of the Charter in performance audits and funding submissions is described. The paper also outlines some recent debates about the efficiency of the ABC in performing its role and the relationship between budget measures and changes to its profile.

Background

Financial governance

The ABC is presently administered under the Communications, Cyber Safety and the Arts portfolio.[6] The entity is accounted for in the ‘general government sector’ (GGS) under the ‘recreation and culture’ functional classification of government expenditures in the federal budget.[7]

In 2013 the ABC became a Commonwealth corporate entity (CCE) under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).[8] The PGPA Act sets the standards of governance, performance and accountability for all Australian Government entities. As a CCE, and consistent with Division 2 of the PGPA Act, the ABC is required to prepare:

• a corporate plan
• budget estimates
• annual performance statements and
• annual financial statements.

As a CCE, the ABC is audited by the Auditor-General.

Annual funding by the Australian Government is determined under the appropriations framework. For 2019–20, for example, the Government has proposed that the Communications and Arts portfolio receive an administered appropriation for ‘payments to a corporate entity’ under Appropriation Bill (No. 1) 2019–20.[9] This is to fund the ABC’s delivery of ‘Outcome 1—Informed, educated and entertained audiences throughout Australia and overseas—through innovative and comprehensive media and related services.’[10]

Historically, the ABC, including as the Australian Broadcasting Commission (1932 to 1983), has been subject to changes in legislation, including variations to its statutory requirements. Similarly, there have been changes in arrangements for the regulation and administration of public money and resources within the Australian Government. Significant milestones have been the changes from the Audit Act 1901 to the Commonwealth Authorities and Companies Act 1997, and then to the Public Governance, Performance and Accountability Act 2013.

Role of the ABC Charter and the ABC Board

As already indicated, the passage of the ABC Act in 1983 gave effect to recommendations of the Dix Report, which included updating ‘the legislative description of the ABC’s broadcasting role’ with a new charter to reflect ‘changes in broadcasting in Australia’ and ‘developments in the community’s expectations of the mass media.’[11]

Box 1: The ABC Charter The Charter is set out in section 6 of the ABC Act. Part 1 of the Charter states that the functions of the ABC are: (a) to provide within Australia innovative and comprehensive broadcasting services of a high standard as part of the Australian broadcasting system consisting of national, commercial and community sectors and, without limiting the generality of the foregoing, to provide: (i) broadcasting programs that contribute to a sense of national identity and inform and entertain, and reflect the cultural diversity of, the Australian community; and (ii) broadcasting programs of an educational nature; (b) to transmit to countries outside Australia broadcasting programs of news, current affairs, entertainment and cultural enrichment that will: (i) encourage awareness of Australia and an international understanding of Australian attitudes on world affairs; and (ii) enable Australian citizens living or travelling outside Australia to obtain information about Australian affairs and Australian attitudes on world affairs; and (ba) to provide digital media services; and (c) to encourage and promote the musical, dramatic and other performing arts in Australia. Part 2 of the Charter says that when providing its broadcasting services within Australia the ABC must take account of a number of things, including: (i) the broadcasting services provided by the commercial and community sectors of the Australian  broadcasting system; (ii) the standards from time to time determined by the ACMA in respect of broadcasting services; (iii) the responsibility of the Corporation as the provider of an independent national broadcasting service to provide a balance between broadcasting programs of wide appeal and specialized broadcasting programs (iv) the multicultural character of the Australian community ...

While there have been some changes to the Charter since its inception, it has remained largely unchanged. A relatively minor amendment in 1992 replaced ‘public sector’ with ‘community sector’ as a consequence of the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992 (to clarify the distinction between the ABC and community associations that operate radio stations).[12] A more substantive change was the insertion of ‘to provide digital media services’ in 2013 as result of the Broadcasting Legislation Amendment (Convergence Review and Other Measures) Act 2013.[13] This change reflected one of the recommendations of the 2012 Convergence Review: ‘... the charters of the ABC and the SBS [Special Broadcasting Services Corporation] be updated to expressly reflect the range of existing services, including online activities, currently provided.’[14]

The Charter has been described as a legislative instrument, which ‘sets out the functions and duties of the ABC’[15] and which provides the Corporation with ‘specified roles set ... by the Parliament’.[16] The ABC has said that it uses ‘government funding to deliver on its Charter obligations’[17] and that:

As a public broadcaster, the ABC is primarily funded through public appropriations. Its ability to fulfil its Charter obligations, as set out in the Australian Broadcasting Corporation Act 1983 ... is necessarily shaped by funding provided to it by Government’.[18]

The Dix Report also recommended that the structure of the Commission be replaced with ‘a new national broadcasting organisation’.[19] The proposal involved creating a Board of Directors. The duties of the Board are outlined in section 8 of the ABC Act and include:

• ensuring that ‘the functions of the Corporation are performed efficiently with maximum benefit to the people of Australia’
• maintaining the ‘independence and integrity’ of the ABC
• ensuring that ‘the gathering and presentation ... of news and information is accurate and impartial according to recognised standards of objective journalism’
• ensuring that the ABC complies with legislative and legal requirements and
• developing codes of practice in relation to programming and other matters.

The only changes that have occurred to the ‘Duties of the Board’ since the ABC Act was introduced in 1983 is the insertion of the following: ‘(e) to develop codes of practice relating to:
(i) programming matters; and (ii) if the Corporation has the function of providing a datacasting service under section 6A [of the ABC Act]—that service; and to notify those codes to the ACMA.’[20]

Generally, the Board has flexibility in how it interprets the Charter. One reason this is the case is because the ABC Act does not prescribe how the Board is meant to interpret the Charter. This reflects the conclusion of the Dix Review that while the ABC’s role needed to be better defined, it was important not to stipulate what kinds of programs the ABC should broadcast or the types of audiences it should serve: the ABC ‘should be allowed maximum flexibility in its programming within broad guidelines’.[21] At least one reason the Dix Review came to this view is because it felt that program standards and concepts would change in the future and there would be new forms of technology. In regards to program standards, the Committee said:

The question of appropriate standards in programming on the ABC, as elsewhere, is complex and not easily answerable even in terms of broad generality. Yet standards in a whole range of matters, such as depiction of violence or sex, use of language, and objectivity are of concern to particular sectors in the community, and no broadcaster can operate in isolation of public opinion and reaction. However, public taste and standards evolve in ways which cannot be clearly defined. Public attitudes are heterogeneous and fluid and will vary in time, place and context, making their application to programming in general, as well as to particular aspects of programming, extremely difficult.[22]

It concluded that ABC’s programming philosophy should be expressed in general terms so that whatever new functions it might develop in the future could ‘naturally flow’ out of its Charter.[23]

Another reason the Board has a great degree of latitude to interpret the Charter is because, in general, under the ABC Act, the Government does not have power to make directions to the ABC. An exception to this is that the relevant Minister may direct the ABC to broadcast particular matter if it is deemed to be in the national interest (section 78 of the ABC Act). Apart from this, subsection 78(6) of the ABC Act clarifies: ‘Except as provided by this section, or as expressly provided by a provision of another Act, the Corporation is not subject to direction by or on behalf of the Government of the Commonwealth.’ Further, subsection 78(7) specifies that the ABC is exempt from section 22 of the PGPA Act (‘which deals with the application of government policy to corporate Commonwealth entities’).[24]

The ABC has stated that ‘while the Board ... is given independence to make decisions on how the ABC spends its appropriation’,[25] and that the Corporation ‘does enjoy a degree of freedom in its programming decisions’,[26] it is subject to ‘a wide range of legislative restrictions and regulations’.[27] This includes ‘content imperatives in the ABC Act’, such as programming requirements in the ABC Charter and ‘the ABC’s Code of Practice (ABC Code) (which is notified to the ACMA) [Australian Communication and Media Authority]’.[28] The ABC has also said it is accountable to Parliament through Senate estimates hearings and parliamentary inquiries.[29] As already stated, under Division 2 of the PGPA Act, the ABC must also provide detailed annual reporting.

Funding and the ABC’s relationship with the Government

While, in general, the Government does not have power to make directions to the ABC, the issue of whether there are other ways that politics might shape or influence the affairs of the ABC has been raised numerous times throughout the national broadcaster’s history. This includes observations that there is tension in, or uncertainty about, the ABC’s relationship with the Government.

In his account of the formation and development of the Australian Broadcasting Commission, Alan Thomas, for instance, suggested that when the Chifley Government established a system under which the ABC would be funded directly from Consolidated Revenue, rather than from license fees, the autonomy of the Commission came under question in a new way: ‘A guaranteed share of the listener’s license fee had provided some semblance of independent income: now the ABC was totally dependent on government generosity.’[30]

There were a number of factors leading up to the Government’s decision in 1948 to directly fund the Commission through Consolidated Revenue, and the Government provided a number of reasons for why it was appropriate. For example, the Postmaster General, Donald Cameron, stated in the second reading speech for the Australian Broadcasting Bill 1948:

During the past three years, due to the expansion of the national broadcasting service and rising costs, it has not been practicable for the commission to operate within its normal income and it has been found necessary to make grants from Consolidated Revenue. In these circumstances, and as the fee charged to listeners does not necessarily have relationship to the services provided by the commission, it is proposed to adopt a system whereby the commission will be financed on the basis of the amount voted by the Parliament after consideration of the annual Estimates.[31]

It should be mentioned that the Committee of the Review of the Australian Broadcasting Commission commented in their report (the Dix Report) that licences fees were still collected up until 1974, but the revenue from those fees was paid into Consolidated Revenue and ‘the annual appropriation to the ABC bore no direct relationship to the amount collected’.[32] The Committee did not find that this arrangement provided a better guarantee of independence than the current system of no licence fees, and recommended that ‘the greater part of the ABC’s budget should continue to be funded through Parliamentary appropriation.’[33]

In his 1988 book, Breaking up the ABC, public policy academic, Glyn Davis, argued that one of the key structural links between the ABC and the Government is financial, and that while the ABC has independence from the Government it is also dependent on it for funding. He said that this means that, on the one hand, ‘the Corporation is expected to be neutral and “above politics”’, and, on the other, ‘it must lobby governments to guarantee its financial stability’.[34] In that same year, the Department of Transport and Communication’s discussion paper, The Role of Australia’s national broadcasters, suggested that ‘Governments naturally wish to set priorities for Budget-funded activities, including national broadcasting.’[35] However, because the budget concerns of the Government are related to the amount of money provided to organisations to spend on staff, materials and other assets, ‘there is considerable confusion’ in regards to institutions such as the ABC ‘between programming issues (where the Government of the day should play no part) and issues concerning the provision of resources (where the Government must be involved).’[36] 

Recently, the Senate referred allegations of political interference in the ABC to the Senate Environment and Communications References Committee for inquiry and report.[37] This was in response to events in September 2018 involving the ABC Chair, Justin Milne, and ABC Managing Director, Michelle Guthrie.[38]

The Senate Committee reported that during the inquiry submitters and witnesses raised two primary concerns in relation to the operational independence of the ABC. The first was the number of government inquiries and/or efficiency reviews conducted over the past two decades. The second was ‘the ABC’s reliance on the Australian Government for funding’.[39] In its submission to the inquiry, the ABC, for instance, noted that ‘while the Corporation has absolute discretion as to the application of ... funds available to it, as the majority of its funding is delivered through government appropriation there is an inexorable link between government and the Corporation.’[40]

ABC revenue

In addition to the administrative and governance framework within which the ABC operates, its sources of funding also provide context to debates about efficiency and savings.

In the 2015–16 Budget it was stated that appropriations for the ABC would be allocated in terms of a single outcome in the Portfolio Budget Statements (PBS). Prior to that ‘appropriations were ... allocated in relation to four Outcomes, including separate Outcomes 2, 3 and 4 for transmission’.[41] Under ‘Outcome 1—Informed, educated and entertained audiences—throughout Australia and overseas—through innovative and comprehensive media and related services’, the ABC is appropriated money for two programs: ‘ABC General Operational Activities’ and ‘ABC Transmission Distribution Services’.[42]

General Operational Activities 

ABC General Operational Activities includes base operational funding that is provided on a three-year rolling basis as well as additional operational funding that is granted outside the triennium, including payments that are sometimes described as being in addition to base funding.

For example, the ‘Enhanced News Services’ initiative has been referred to as a form of ‘tied funding’ that is provided separately to ABC’s base funding.[43] The Enhanced News Services measure was announced in the 2013–14 Budget ‘to enable the Australian Broadcasting Corporation to place more journalists outside metropolitan cities, introduce youth focussed current affairs programming and expand regional participation in its programming’. It was stated that the Government would ‘provide $69.4 million over four years for the initiative’.[44]

In the 2016–17 Budget, the Government announced that it would extend the ‘terminating 2013‑14 Budget measure to support local news and current affairs services, particularly services located outside of capital cities’. It was stated that funding for the new period would be $41.4 million over three years.[45]

In the 2019–20 Budget, the ABC received a new round of funding for this initiative, worth $43.7 million over three years.[46] 

While such payments can be reported as being in addition to base funding, and may be stated in Budget Paper 2 as expense measures, they are still included in the total amount of ‘Revenue from Government for General Operational Activities’, which is provided in the PBS.

Triennial funding

Government funding for ABC’s operational activities is principally based on a three-year triennial funding arrangement. This arrangement commenced in 1989, although, according to Glyn Davis, since 1949 the ABC had been arguing ‘for some form of triennial funding’ because it felt it needed ‘to plan for three-year periods to accommodate the long project lead times of the technologically based broadcasting industry’.[47]

History of triennial funding

It would appear that a number of factors led to the Labor Government in 1988 agreeing to fund the ABC over a three-year cycle, including some of the suggestions made in the Review of National Broadcasting Policy, initiated by Labor Minister for Transport and Communications, Gareth Evans,[48] and what the ABC has described as its ‘major funding campaign’—the ‘eight cents a day campaign’—which was run during the early months of 1988.[49]

The Government agreed:

to index and maintain the real value of the ABC’s grant in 1987-88, less the efficiency dividend which is demanded of all statutory authorities. That commitment was formalised by a Cabinet decision which specifically identified a cash figure of $450 million for the 1988-89 financial year and made it clear that that particular cash figure would be indexed by the appropriate indicator so that a real rate of return would be achieved for the following years.[50]

As suggested by Minister Evan’s statement above, the ABC was not exempt from the efficiency dividend when the Hawke Government first applied it to the public service sector.[51]

Historian Ken Inglis pointed out that ‘inflation turned out to be higher than forecast’ and so ‘the parliamentary appropriation for 1988-89 turned out to be slightly down in real terms from the previous year’s’.[52] Minister Evans stated in August 1989:

The difficulty that has arisen is that the figure of $450m, which was identified in perfectly good faith by me, the Cabinet and the Government, was based on an estimated inflation factor rather than the actual outturn factor. In fact, the outturn figure was slightly higher than that which was applied when the original estimation was made ... I made it perfectly clear to the ABC at the time this matter was raised with me that some problem of this kind could arise if the 1988-89 inflation outturn figure proved to be different from that which drove the original estimate. I made it clear in response at that time that the ABC would have to live with that possibility, and that if it felt it was being disadvantaged it would have to approach the Government at a later stage.[53]

The triennial arrangement

In June 1997, a senior official from the Department of Finance described the triennial arrangements made with the ABC in the following terms:

... government will sit down and think three years out what the appropriate level of funding might be and then commit to that funding for that period. There is no legal contract and there is not a multi-year appropriation but there is a compact or understanding between the executive government and the agency about the level of funding that can be reasonably expected over a three-year period.[54]

In its submission to the 2018–19 inquiry into the allegations of political interference in the Australian Broadcasting Corporation, the ABC stated: ‘By convention, since 1989 the ABC has been funded through a triennial cycle. However, since such funding decisions are an exercise of ministerial power or government policy decisions, they are discretionary’.[55] One effect of this, it was suggested, is that ‘the funding amount and timing of such appropriation is unilaterally made by the government of the day.’[56] As suggested by the inauguration of triennial funding in 1989, this can include what estimation the Government makes in regards to inflation. While the ABC made this statement in the context of the inquiry’s investigation of possible political influence over ABC editorial decision making, it does provide one perspective on what the triennial funding arrangement entails.

The value of triennial funding

Since the inauguration of triennial funding, the ABC has provided various reasons why three-year periods are important and what they allow the Corporation to achieve. Some recent examples include: 

• the ABC noted in its 2017 response to the Independent Review of the PGPA Act that it ‘operates on a triennial funding basis that acknowledges the planning and production requirements of running a sophisticated media business’[57]
• in its 2015 annual report, the ABC stated that the triennial funding arrangement ‘is important in providing certainty .... [and] a platform for assessing audience and industry trends and opportunities for new policy investment’[58] and
• in 2014, ABC Managing Director, Mark Scott, said in a lecture at the University of Melbourne that triennial funding enables ‘the ABC to undertake multi-year contracts and plan with some certainty, most importantly in program production areas, with a secure income stream.’[59]

Support for triennial funding has also come from third parties. For example, in 1997 Bob Mansfield, former Chief Executive of John Fairfax Holdings, recommended in his review of the ABC that it was important that the Government provide the ABC with ‘long-term funding certainty’ by ‘reinstating triennial funding from 1 July 1997’.[60] This, he added, would provide ‘staff with much needed motivation and direction to meet future challenges’.[61] Mansfield made this and other recommendations in the context of thinking about the long-term planning requirements for the ABC, particularly the ‘need to make considerable capital investment in new technology’.[62] He also made his recommendations in relation to the announcements made in August of the previous year that in the 1996–97 Budget the ABC would have its funding reduced by $55 million for each year of the new triennial period, beginning in 1996–97 and concluding in 1999–00.[63] Treasurer Peter Costello confirmed this by announcing that ‘funding from, and including, 1996-97’ for the ABC would be ‘subject to the 2 per cent general reduction in running costs (applying across all portfolios and agencies except Defence)’—a one-off efficiency dividend. [64]  

All kinds of information and requests can be included in ABC’s triennial proposals.[65] For example:

• for the 2016–17 to 2018–19 triennial period, the ABC said that it ‘specifically sought the continuation of funding for the Enhanced Newsgathering program, first provided in 2013–14’[66] and
• for the 2013–14 to 2015–16 triennial period, the ABC said it would seek ‘funding necessary to ensure the ABC’s sustainability and adaptability so that it can continue to provide Australians with access to independent news, cultural production and quality local content on the platforms of their choice.’[67]

In its submissions, the ABC may request funding that it considers will help support program development that extends beyond the triennial period. For example, the ABC said that for the 2009–10 to 2011–12 triennial period a number of initiatives were proposed to help position the ABC ‘to maximise the public benefit it delivers to the Australian people over both the course of the next funding triennium and over the next decade.’[68] It said that these proposals were informed from public consultations with the ‘audiences and communities that the Corporation serves’, and also by its strategy for digital public broadcasting, articulated most fully in the document The ABC in the Digital Age—Towards 2020.[69] Government funding was requested in order to provide a range of different services, including:

a dedicated, non-commercial children’s channel, ABC3; a public affairs channel, ABC4, carrying live feeds of major events, press conferences and Parliament both online and on digital television; and through the introduction of digital radio, a suite of at least 12 radio services.^[70]

The fact the ABC proposes to Government that it should be funded to deliver services over the course of a decade, suggests the ABC thinks strategically about how to maintain and develop program and support activities over a number of triennial periods.

Transmission distribution services  

The ABC is appropriated funds in order for it to enter into contracts with third party providers to transmit its analog and digital radio services and digital television services in Australia. It does not broadcast over its own transmission network.

Prior to 1992, transmission services were provided by Telecom and the 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. During this period, the ABC reported transmission services as a ‘resource received free of charge’, which is different from an appropriation to the ABC.[71]

In the 1996–97 Annual Report, the ABC Board noted this would affect the way it receives government funding, observing:

The ABC does not own or operate the transmitters which carry its domestic television and radio and international radio programs. They are currently operated by the [NTA]. The Federal Government has indicated that this situation will change in the future, with the ABC being provided with funding for transition and the NTA Transmitter network being sold.[72]

Since 1996–97, the ABC has received transitional and total appropriations to purchase transmission services, primarily from NTL Australia Pty Ltd (the purchasers of the NTA network), which was rebranded Broadcast Australia in 2002 after Macquarie Bank Ltd acquired NTL Australia.

The ABC has received an identified appropriation for transmission since at least 1999–2000 to cover the costs of long-term contracts that the ABC enters with transmission and broadcast providers.

In early 2014, Minister for Communications, Malcolm Turnbull, requested the Department of Communications undertake an efficiency study into the ABC and SBS. The Department was to be assisted by Mr Peter Lewis, ex-Chief Financial Officer of Seven West Media. While most of the broadcasters’ transmission arrangements stood outside the terms of reference of the study, it did nonetheless suggest that:

The ABC and SBS current terrestrial transmission arrangements with Broadcast Australia create a limited incentive for the national broadcasters to achieve efficiencies in this area ... it may be preferable for the ABC and SBS to share in the benefits of savings in transmission costs rather than the current funding arrangement which requires any savings (from digital and certain analog transmission services) to be returned to budget.[73]

In November 2014, a change to the way transmission funding is allocated was proposed by Minister Turnbull: he explained, ‘Currently ABC and SBS receive tied funding earmarked exclusively for transmission costs’ and he announced that, as of the release of the 2014–15 MYEFO, transmission funding would ‘be rolled into the ABC and SBS’s broader operational funding’. [74] One thing this meant is that the structure of the appropriations for both broadcasters would change: operating costs and transmission costs would no longer be in separate appropriations. It also meant that the broadcasters would be able to retain any savings generated from making a better deal negotiated for their transmission services, rather than return these savings to budget. In other words, some money earmarked for transmission could be rolled over into revenue for ABC operations, that is, cross-subsidised.

Sale of goods

In addition to funding from government, the ABC also receives revenues from other sources, most notably from commercial activities. The Communications and the Arts Portfolio Budget Statements 2019–20 noted:

Own-source revenues are principally comprised of revenues from ABC Commercial activities, as well as other minor amounts from co-production arrangements, facilities hire, services provided, interest and commissions.[75]

The ABC has reported commercial activities at least since 1974. Between 1974 and 2007 the activity was reported as ABC Enterprises. Since 2007 the activities have been reported as ABC Commercial. ABC Commercial supplements government funding for the Corporation by managing a ‘range of media businesses which create, market and license products, content and services related to the programming and Charter activities of the ABC.’[76] The ABC says that all profits made by ABC Commercial are returned to the Corporation and used for developing and distributing content.[77] It should be noted that expenses can be incurred in generating independent revenue and so only the profit on such revenue represents actual additional money for the Corporation. As stated in the 2018-19 PBS, ABC’s own-source revenues ‘... are largely offset by related costs of sales or represent recoveries of costs incurred’.[78] For example, the payment of royalties constitutes an expense for ABC Commercial.[79] 

The composition of ABC commercial activity, including subsidiary businesses, has changed significantly over time. For example, since 2015 some of the retail units within ABC’s commercial businesses have been removed. The ABC opened its first ‘ABC Shop’ in 1974.[80] Over time the shop became a familiar retail outlet selling ABC and licensed products direct to the market, contributing significant own source revenues. The ABC Shop network was part of the Retail portfolio within ABC Commercial and as of July 2015 the ABC Shop network comprised 50 leased shop sites.[81] In October 2015 the ABC announced that the ABC Shop network would be closed by February 2016.[82] It was stated that due to ‘a decline in the profitability of ABC Retail as a result of structural changes in the retail sector, particularly reduced demand for CDs and DVDs’, it was no longer possible to sustain the shop network.[83] The ABC also said at the time they had  ‘begun to develop a revised model, with a focus on ABC Shop Online and ABC-branded outlets in other retailers’—the ABC Centres.[84] In 2016 the ABC announced that the ABC Shop network had closed in April of that year.[85]

Subsequently, in August 2018 ABC Commercial announced a proposal to exit two more areas of ABC Retail—the ABC Shop Online business and bricks and mortar in-store ABC Centres.[86] ABC Shop Online was first established in 1995 and it sold products ‘across DVD, music, magazines, books, toys, clothing and novelty items.’[87] ABC Commercial stated that the proposal:

directly responds to the changing market, in particular consumers’ shift to digital delivery of audio and visual content. Coupled with the intensifying global competition affecting the entire retail sector, the resulting decline in physical sales means the retail business is becoming increasingly unviable.[88]

ABC Commercial retains several activities. As at June 2018, ABC Commercial had five main commercial business units: content sales and distribution; music; publishing; retail (online); and studio media productions.[89]

Operational funding, efficiency and the ABC Charter

The paper will now discuss the ABC Charter in relation to operational funding and efficiency. It will outline some recent debates about the Charter and how to define efficiency. It will also outline one issue that has been raised in Parliament about staff reductions and other changes to the operational profile of the Corporation.

Outcomes, outputs and the Charter

From 1999–2000 to 2008–09, agencies presented information in their portfolio budget statements and annual reports in an outcomes and outputs framework, but starting with the 2009–10 Budget, general government sector agencies began reporting on an outcomes and programs basis. The Parliamentary Library explains:

Planned outcomes are the results or consequences for the community that the government seeks to achieve. Programs are the means by which outcomes are attained.

...

The focus of the outcomes/output framework—and of the outcomes/program framework—is planned outcomes.[90]

The ABC PBS Outcome statement since the 2016–17 budget year has stated that both Program 1.1 ‘ABC General Operational Activities’ and Program 1.2 ‘ABC Transmission and Distribution Services’ are mapped to the purpose of fulfilling the ABC’s ‘functions as set out in the ABC Act, particularly the ABC Charter’.[91] In other words, the ABC Charter is an essential element in the ABC’s performance framework. 

The current performance criteria for Program 1.1 are the ‘net reach of ABC services in Australia’ and the ‘percentage of Australians who value the ABC’.[92] The Australian National Audit Office (ANAO) has said that ‘the extent to which the outputs and outcomes set for the ABC in its Charter are achieved depends, in large measure, on the extent to which Australians use the ABC’s services’.[93] The Corporation’s performance against these criteria is reported annually in its annual report and in its corporate plan documents.[94] According to the 2014 Department of Communications Efficiency Review, they are also ‘evaluated as part of its triennium funding submission when the ABC submits its Cost and Performance report to the Minister for Communications’.[95]

In 2016, an official from the Department of Communications and the Arts testified in Senate estimates hearings:

Usually with the triennial funding process, the ABC and SBS themselves undertake quite a considerable amount of work internally to look at how their funding is matching their charter obligations, whether there are new issues that are emerging that they want to address and whether there are terminating programs where the funding is completing. So they spend quite a bit of time doing a thorough investigation of their finances. They provide that to the government and then the government will consider that in the budget.[96]

In 2014, the Department of Communications efficiency review also found:

The scope of current functions of both broadcasters, as well as requests for additional funding and debates around the ‘adequacy’ of national broadcaster funding, are often justified in terms of Charter obligations. For example, broadcasters may justify everything from production of Australian drama and major news gathering resources, through to broadcasting of a local sporting competition in a state or region as being consistent with Charter obligations.[97]

As discussed below in the section on efficiency, issues have been raised regarding the role of the ABC Charter in the Budget process. The main criticisms concern whether the Charter provides specific enough guidance to the Corporation as well as whether it makes the ABC accountable enough given that the Charter outlines obligations on the ABC that the ABC Board, which has responsibility for the operations of the ABC, can interpret largely as it sees fit. Any alleged ‘breach’ of the Charter does not result in enforcement action.

Efficiency and effectiveness of the ABC

Specific funding mechanisms, such as triennial funding arrangements, influence the amount of funding the ABC receives, while other mechanisms are employed in relation to the expenditures of the entity. These include mechanisms that go to the efficiency and effectiveness of the ABC in delivering against its Charter obligations.

Efficiency and savings

The Australian Government has operated a general efficiency dividend program since 1987.[98] The ABC has not always been included in this program, although a one-off efficiency dividend was imposed in 1987–88 and 1996–97, as noted above.

In the context of the findings and suggestions of the efficiency study that Minister for Communications, Malcolm Turnbull, requested the Department of Communications to undertake in early 2014, the Government released its five-year funding arrangements for the ABC and Special Broadcasting Service (SBS) in November 2014. This involved budget savings of $254.0 million and $25.0 million respectively. For the ABC specifically, this meant it would ‘receive $5.2 billion over five years rather than $5.5 billion—a saving of $254 million or 4.6 per cent.’[99] These efficiency savings incorporated the ‘one per cent reduction in the base funding’ of both public broadcasters, estimated to deliver ‘$43.5 million over four years’, that was announced in the 2014–15 Budget.[100]

Former Chief Financial Officer for the ABC, Louise Higgins, has said that the main way the ABC has been able to realise the $254 million in savings is by renegotiating ‘transmission and satellite contracts.’[101] This includes the ‘new television transmission contract’ that was signed with Broadcast Australia in 2016, which ‘provided significant additional savings to the Corporation’.[102] However, as noted below, ABC’s Managing Director, Mark Scott, announced a package of proposals at the end of 2014, which included different initiatives to fund the Government’s required savings.

Following the Department of Communications review, the ABC commissioned PricewaterhouseCoopers (PwC) to conduct an efficiency review in 2014. The Corporation then did its own internal review in 2017—the ABC Strategy Review.[103] In the 2018–19 Budget, the Coalition Government announced a new efficiency review of the ABC and SBS, the National Broadcasters Efficiency Review, which commenced in August 2018.[104] It was stated that the review would ‘examine the current operations of the ABC and SBS, having regard to the findings of the Lewis Review (see below), to make recommendations on areas where greater efficiency could be achieved’ leading up to the next funding triennium.[105] The review has not yet been publically released; however, ‘according to media reports, the review commented that some content—such as the ABC Life program—is not core to the ABC’s Charter responsibilities.’[106]

The Efficiency Review was in addition to the pause in indexation of the ABC’s operational funding that was announced in the 2018 Budget.[107] The Government said that it anticipates that the pause in indexation ‘will result in savings to the Budget of $83.7 million over three years’.[108] The Secretary for the Department of the Communications and the Arts has stated that the anticipated saving of $83.7 million from the pause in indexation is ‘based on essentially looking at the indexation that would otherwise be applied’ to ABC’s general operational revenue, not to its transmission funding, which is based on fixed contracts.[109]

The PBS for 2018–19 reported that the $83.7 million is based on increased savings each year of the three-year period, noting the savings measure ‘... reduces funding to the ABC by $14.623 million in 2019-20; $27.842 million in 2020-21; and $41.284 million in 2021-22’.[110]

The 2014 efficiency review

In a speech, entitled ‘The Future of Our Public Broadcasters’, delivered in November 2014, Minister for Communications, Malcolm Turnbull, stated:

After working closely with the broadcasters for the last 8 or 9 months it is clear that there is a great opportunity for them to modernise their businesses without reducing the resources they have available for programming; in other words without reducing the quantity or quality of what Australians view and listen to on ABC or SBS.

I asked the Department of Communications to undertake an Efficiency Study to identify savings that could be made by improving efficiencies in the back of house departments of the ABC, in other words savings that could be made without reducing the resources available for programming.

This was a very deliberate move on my part. The easiest way to cut costs in a television network is simply to cancel programmes - and replace them with cheaper ones.  More difficult is to go through the way the business operates, line by line and ask can we do this more efficiently, with fewer people, with fewer fixed assets or other expensive resources.[111]

The Department of Communications efficiency review identified a number of areas that it said could ‘lead to significant operational efficiencies or savings’ for the ABC, including ‘modernising the business’ by ‘purchasing production facilities and services from private sources,’ ‘reallocating resources by selling property and investing the proceeds into other areas of the business’ and finding ‘revenue opportunities’ by renting ‘underutilised’ office spaces. [112]

It was stated in the review that a broad definition of efficiency had been adopted:

encompassing traditional definitions of efficiency (the same output with less input, or more output with the same input) but also options which involve increased revenue generation, or which could involve re-allocation of resources between priorities to ensure that the existing cost base is able to respond to the changing economic, market or technological landscape without escalating demands on public funding.[113]

The Secretary of the Department of Communications, Drew Clarke, said in November 2014 that the Lewis review did not consider ‘programming matters’ and that ‘the design of the efficiency measure was ... predicated on savings that would not impact on programming [or] content’. [114] In other words, from the perspective of the Department, the quality of ABC’s outputs should not be affected by any decisions the Corporation might make in regards to generating the back-office savings identified in the review.

The Department’s position can be understood in several contexts, including the expectation that the ABC could phase in various types of savings over time rather than find them in one period. According to the Secretary of the Department of Communications:

Shortly after the budget, the minister provided the broadcasters with a draft of the efficiency study—the so-called Lewis study—that looked at the opportunities for saving, and in the months that followed, up until the recent pre-MYEFO consideration, there has been a lot of discussion with the broadcasters around the feasibility, impact et cetera of those savings ... So it was judged that the ability to achieve these savings, in some cases, required investment. In some cases it would cost money in the first years in order to achieve savings in the out years. In some cases some of the savings would come in big lumps. In other cases they would be underlying operational.[115]

In addition, the Department said that the ABC had flexibility to act on whatever savings suggestions made by the review that it wanted to and that the way the savings were to be realised was a matter for the broadcasters’ themselves.

ABC Managing Director, Mark Scott, said in May 2014 that while he welcomed the review to help the ABC continue to pursue efficiencies, he also thought:

... one of the interesting debates is around the definition of 'efficiency'. One of the things I would say about broadcasting is that I am not sure you can always just separate out that - that is to do with efficiency and that is to do with content. Choices you make around efficiency have an impact on the content choices you can make. It is one thing to outsource your payroll, for example. But if in fact you outsource your production studios or you get rid of your OB vans [Outside Broadcasting vans] or you sell off some of your property, that does have an impact on the choices that you can make.[116]

He also suggested that because there is an interconnection between ‘back-of-office’ operations and output, there are different ways of calculating what percentage of total ABC costs are back-of-office costs. He proposed, for example, that ‘studio capacities’ could be considered ‘content charges’ or ‘back office charges’ depending on where they are counted.[117] This comment suggests that there may be different ways of examining ABC funding, particularly in respect of what savings measures are made and where.

Parliamentary debates about budget measures and changes to the profile of the ABC

One recent debate in Parliament has been about how to work out what recent changes to the ABC—including reduction and redeployment of staff, closure of radio posts, and changes to programming—are tied to savings measures introduced by the Government, and which ones are related to decisions made by the ABC Board and management for reasons independent (wholly or part) of these measures. For example, Drew Clarke, Secretary of the Department of Communications, disputed in November 2014 whether a ‘direct link’ could be made between the various savings targets canvassed in the Department’s efficiency review and the ‘content or programming changes’ announced by ABC Managing Director Mark Scott on 24 November 2014, which included closing the Adelaide television production studio as part of a broader strategy to work more ‘with the independent sector on programming’.[118] Minister for Communications and the Arts, Mitch Fifield, made similar claims in May 2018, suggesting that it is important not to have:

... an impression ... that the ABC’s staffing profile would have remained unaltered over the last five or more years if the ABC’s funding profile had remained unaltered. ABC management look at the staff they need on an ongoing basis. I wouldn’t want the impression to be that each and every decision that ABC management have ever made about staffing is tied to government efficiency reviews and changes to resourcing ... you can’t draw a direct line between the ABC management’s decisions about the employment profile of the organisation and the government’s funding profile for the organisation.[119]

Minister Fifield made this comment in the context of a number of questions in Senate estimates hearings from Labor senators Kristina Keneally and Anne Urquhart, and Greens Senator Sarah Hanson-Young, about links between the reduction in staff at the ABC since 2014 and recent government savings measures, including the Department of Communications’ efficiency review.

Parliamentary discussions about links between government funding measures for the ABC and ABC programming decisions have occurred on other occasions. For example, in August 1991, in response to a Question without Notice regarding ‘claims by the ABC that funding cuts imposed by the Federal Government are causing cuts to staff and programs in the sports department of the ABC’, Labor Minister for Transport and Communications, Kim Beazley, responded:

I am getting a bit tired of the campaign regarding ABC funding and the suggestion that changes in programming are in some way related to policies pursued by the Government cutting ABC funds.

I would not concede that the Federal Government had been cutting the funds of the ABC to this point ... [and] the ABC, like one or two other government agencies, has [now] been exempted from the efficiency dividend.

There is nothing now being imposed upon the ABC that in any way, shape or form amounts to a cut in its resources. Whatever is occurring inside the ABC is a product of choices it is taking itself.[120]

Australian National Audit Office governance review

Probably the most explicit attempt to measure the performance of the ABC against its Charter was the 2002 Australian National Audit Office (ANAO) report, Corporate Governance in the Australian Broadcasting Corporation, which noted:

The audit was undertaken following advice from the Joint Committee of Public Accounts and Audit (JCPAA) to the Auditor-General that assurance that ABC programming adequately reflects the ABC’s Charter was an audit priority of Parliament. The objective of the audit is to provide Parliament with this assurance. The focus of the audit was on the governance arrangements of the ABC Board and management that enable the ABC to demonstrate the extent to which it is achieving its Charter obligations, and other related statutory requirements, efficiently and effectively.[121]

The audit:

- reviewed ‘the ABC’s corporate governance framework against better practice models’

- examined ‘the ABC Board’s approach to the interpretation of the Charter requirements of the ABC and the setting of strategic directions, and management’s administrative arrangements for implementing the strategic directions established by the Board’ and

- examined ‘the ABC’s performance information framework, the development, documentation and use of performance measures in relation to targets and/or objectives, the monitoring and reporting of performance and its inter-relationship with the corporate planning and budgetary processes, particularly in relation to the strategic directions set by the Board.’[122]

The audit ‘did not disclose any evidence to indicate that the ABC does not comply with its Charter requirements’.[123] However, it did find that ‘there was significant scope for the ABC to improve its strategic planning and measurement so that the Corporation can demonstrate just how well it is performing against its Charter requirements’.[124] It said: ‘In particular, the PBS does not provide a clear and understandable account of the extent to which the Board expects to achieve the Charter obligations during the year by means of the proposed appropriations.’[125]

Two years later, a follow-up audit was published.[126] This report examined the ABC’s implementation of recommendations from both the 2002 audit report and a report tabled by the Joint Committee of Public Accounts and Audit (JCPAA) in December 2002, ‘which reviewed aspects of the ANAO’s 2002 audit’.[127] The 2003–04 audit report found that the ABC had ‘made considerable progress to address all recommendations from the 2002 audit and the JCPAA report’.[128] In respect of recommendations that involved the ABC Charter in the reporting and measurement of achievements, the follow-up audit found that while the ABC had developed and implemented mechanisms for measuring performance data, and published specific information relevant to corporate governance, there was still work to be done to strengthen the link between the Charter, annual report, corporate plan and the Portfolio Budget Statements. The passage of the PGPA Act in 2013, and associated governance requirements for corporate Commonwealth entities (CCEs), may have addressed many of the concerns raised by the ANAO.

Charter objectives and accountability

Since the publication of these audits, there have been some issues raised regarding the function of the Charter in producing and measuring outcomes. For example, the 2014 Department of Communications efficiency review said that ‘a fundamental question’ the ‘study team’ asked was ‘how the ABC and SBS make decisions around resource allocation to achieve Charter objectives’.[129] The team found ‘the Charters themselves offer little direct guidance as they are broad statements of Parliamentary intent designed to accommodate changing audience demands’ and, as such, interpreting the particular roles that the Charters set for each broadcaster ‘and “converting” them into business plans is an ongoing challenge’.[130]

Referring to this review finding, former Director of ABC Television, Kim Dalton, said in his 2017 paper, Missing in Action: The ABC and Australia’s Screen Culture, that while discussions about ‘the level and nature of Australian content’ have been happening on an ongoing basis within the ABC:

The parameters of that discussion have been mostly confined to the role and expectations of the ABC as a public broadcaster; and ... referenced back to the Charter. Quantity and quality are discussed, debated and assessed solely against what may or may not be good public broadcasting practice or statements drawn from the Charter. Politicians, journalists and commentators and the FABC [Friends of the ABC] all agree on a regular basis that as a public broadcaster the ABC should prioritise Australian content; should have a commitment to Australian stories and Australian drama; should show quality programs ... However, what any of this means in practice, how it should be measured or assessed, how the ABC should be held to account, is rarely addressed. [131]

For Dalton, instruments such as the Charter provide ‘no more than a list of high level intentions based on a view of public broadcasting, public good and public purpose’.[132] He also said that the ABC is able to refer to the Charter ‘in the most general of terms to create its own self-referential virtuous circle that lacks any transparency’.[133]

In March 2018, the Inquiry into the competitive neutrality of the national broadcasters was established to ‘examine whether the ABC and SBS are operating in a manner consistent with the general principles of competitive neutrality.’[134] The broadcasters’ charters were not a main focus of the inquiry; nonetheless, the inquiry’s Expert Panel said it ‘found it hard to conceive of an activity or program that could not arguably be fitted under the Charters as they are currently written.’[135] Moreover, the Expert Panel stated that as long as the ABC and the SBS ‘operate in line with their Charters they are operating in the public interest as defined by their statutes.’[136] At the same time, the Panel did also suggest that it is difficult to conclusively prove that the broadcasters always operate within their charters because the Charters:

- are written very broadly and there is no opportunity for Charter complaints to be addressed [137]

- open to interpretation by the Boards[138] and

- reporting and accountability about Charter performance does not seem ... to be sufficiently detailed or robust enough.[139]

As discussed earlier, the broadness of the Charter was recommended in the Dix Review. The intention of this recommendation was to ensure that any new functions that might develop for the ABC in the future could be accommodated within the terms of the existing Charter. Since the government of the day is limited in regards to the powers it has to direct the Board, it could also be argued that the great degree of latitude that the Board has to interpret the Charter is one way the independence of the ABC is currently expressed.

Conclusion

This paper has shown how issues continue to be raised about the role of the ABC and how it spends its government funds. It has reviewed some of the debates about the ABC’s independence from the Government and about the impact of Budget measures on the profile of the organisation. It has also discussed the ABC Charter, since this is crucial in disputes about ABC funding. As pointed out, the Charter is often referred to when issues are raised about how efficiently or effectively the ABC achieves its outputs and outcomes. In order to provide context to these debates this paper has described the administrative and governance framework within which the ABC operates and also explained the ABC’s different sources of revenue.

At the time of writing some of the issues discussed in this paper have been raised again with the Australian Broadcasting Corporation Amendment (Rural and Regional Measures) Bill 2019, which was introduced by the Government into the House of Representatives on 31 July 2019.[140] One of the Bill’s key measures is to amend the ABC Charter to include the requirement that ABC programs contribute to a sense of regional identity and reflect the geographic diversity of the Australian community. In his second reading speech for the Bill, Minister for Communications, Cyber Safety and the Arts, Paul Fletcher, stated:

One of the functions of the ABC, as stipulated by its charter, is to provide broadcasting programs that contribute to a sense of national identity and inform and entertain, and reflect the cultural diversity of, the Australian community.

The bill will broaden that mandate to ensure the charter makes specific reference to the function for the ABC's broadcasting programs to contribute to a sense of regional as well as national identity, and reflect the geographic as well as cultural diversity of the Australian community.[141]

Various stakeholders, including the ABC, are opposed to the Bill.[142] The Parliamentary Library has suggested the Bill ‘raises broader issues such as the adequacy of the ABC’s coverage of regional areas, the extent to which the ABC should be regarded as a “market failure” broadcaster and whether the Bill represents “legislative interference” in the operations of the ABC’.[143]

It is likely disputes about the use of ABC funds will continue into the future.

---

[1].   H Mayer, ‘Media’, in H Mayer and H Nelson, eds., Australian politics: a fifth reader, Longman Cheshire, Melbourne, 1980, p. 551.

[2].   For a review of these Acts see: Committee of Review of the Australian Broadcasting Commission, The ABC in review: national broadcasting in the 1980s, vol. 2, Australian Government Publishing Service (AGPS), Canberra, 1981, pp. 62–70.

[3].   Ibid., pp. 6–43.

[4].   A Staley, ‘Ministerial statement: Australian Broadcasting Commission’, House of Representatives, Debates, 23 May 1979. See also: Postal and Telecommunications Department, Australian broadcasting: a report on the structure of the Australian broadcasting system and associated matters, (the Green report), Parl. Paper 358, Canberra, 1976.

[5].   Broadcasting and Television Act 1942 (Cth), section 59.

[6].   Australian Government (AG), ‘Directory: Communications and the Arts’, AG website.

[7].   Department of Finance (DoF),’Resource management glossary—general government sector (GCS)’, DoF website. For more details, refer to T Wils,’ Broadcasting, arts, sports and parks’, Budget review 2019-20, Research paper series, 2018–19, Parliamentary Library, Canberra, 2019.

[8].   DoF, ‘Flipchart of Commonwealth entities and companies’, DoF website. 

[9].   Appropriation Bill (No. 1) 2019–20, Schedule 1.

[10].   Appropriation Bill (No. 1) 2019–20, Schedule 1, p. 43. As discussed later in this paper, appropriation has been made to the ABC for this single outcome since the 2014–15 Mid-year Economic and Fiscal Outlook (MYEFO).

[11].   Committee of Review of the Australian Broadcasting Commission, The ABC in review: national broadcasting in the 1980s, vol. 1, AGPS, Canberra, 1981, p. 7.

[12].   Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992 (Cth), section 30, Schedule 2.

[13]. Broadcasting Legislation Amendment (Convergence Review and other Measures) Act 2013 (Cth), Schedule 1, Part 2.

[14].   Convergence Review Committee, Convergence Review: final report, Department of Broadband, Communications and the Digital Economy, Canberra, 2012, p. xv.

[15].   Australian National Audit Office (ANAO), Corporate governance in the Australian Broadcasting Corporation—follow-up audit, Audit Report, 38, 2003–04, ANAO, Canberra, 2004, p. 29.

[16].   Department of Communications, ABC and SBS Efficiency Study: draft report, April 2014, p. 101.

[17].   Australian Broadcasting Corporation (ABC), ABC submission: Inquiry into the Competitive Neutrality of the National Broadcasters, 29 June 2018, p. 6.

[18].   ABC, Submission to the House of Representatives Standing Committee on Communications and the Arts, Inquiry into the importance of public and commercial broadcasting, online content and live production to rural and regional Australia, including the arts, news and other services, Submission 9, February 2016, p. 2. For similar statements, see: ABC, Submission to the Australian Government Australian and Children's Screen Content Review, September 2017, pp. 12–13.

[19].   Committee of Review of the Australian Broadcasting Commission, op. cit., [vol. 2], pp. 4, 7.

[20].   Australian Broadcasting Corporation Act 1983 (Cth), paragraph 8(1)(e). The first amendment to Section 8 was in 1992 with the Broadcasting Services (Transitional Provisions and Consequential Amendments) Act 1992, which added ‘to develop codes of practice relating to programming matters and to notify those codes to the Australian Broadcasting Authority (ABA)’.The ABA was Australia’s broadcasting regulator between 1992 and 2005. It merged with the Australian Communications Authority in July 2005 to form the Australian Communications and Media Authority (ACMA). With passage of the Australian Communications and Media Authority (Consequential and Transitional Provisions) Act 2005, the ABC Board was required to notify its codes of practice to the ACMA. Under certain conditions, the ACMA can investigate complaints alleging the ABC has breached its codes of practice (for more details see ‘Regulatory framework’ in the ABC’s Code of Practice (& associated standards) and Part 11, Division 2, of the Broadcasting Services Act 1992).

[21].   Committee of Review of the Australian Broadcasting Commission, vol. 2, op. cit., p. 411.

[22]. Ibid., p. 119.

[23].   Ibid., p. 52.

[24].   While not a power to direct the ABC, subsection 8(2) of the ABC Act requires the ABC Board to give consideration to a statement of government policy provided by the Minister: ‘If the Minister at any time furnishes to the Board a statement of the policy of the Commonwealth Government on any matter relating to broadcasting or digital media services, or any matter of administration, that is relevant to the performance of the functions of the Corporation and requests the Board to consider that policy in the performance of its functions, the Board shall ensure that consideration is given to that policy.’

[25].   ABC submission: Inquiry into the Competitive Neutrality of the National Broadcasters, op. cit., p. 16.

[26].   Ibid., p. 54.

[27].   Ibid., p. 7. The ABC’s legislative framework and its internal policies, codes, and corporate social responsibility principles are set out on its website, ‘What governs and guides us’.

[28].   ABC submission: Inquiry into the Competitive Neutrality of the National Broadcasters, op. cit., p 55.

[29].   Ibid., p. 16.

[30]. A Thomas, Broadcast and be damned: the ABC’s first two decades, Melbourne University Press, Melbourne, 1980, p. 166.

[31]. D Cameron, ‘Second reading speech: Australian Broadcasting Bill 1948’, Senate, Debates, 27 October 19848. The decision to finance the Commission out of Consolidated Revenue was one of a number of measures introduced in 1948 by the Government, including the creation of the Australian Broadcasting Control Board. Part of the background to the Government’s measures was the Fifteenth Report of the Parliamentary Standing Committee on Broadcasting relating to the financing of the National Broadcasting System (May 1947), which discussed issues with financing the national broadcasting system through licence fees and also different viewpoints about drawing on Consolidated Revenue to fund the ABC.

[32].   Committee of Review of the Australian Broadcasting Commission, vol. 2, op. cit., p. 487.

[33].   Ibid., p. 26.

[34].   G Davis, Breaking up the ABC, Allen & Unwin, Sydney, 1988, p. 56.

[35].   Department of Transport and Communications (DTC), The role of Australia’s national broadcasters, Policy discussion paper 1, Review of National Broadcasting Policy, p. 12, in Review of National Broadcasting Policy, Discussion papers—Australian Broadcasting Corporation, DTC, 1988.

[36].   Ibid., p. 12.

[37].   Senate Standing Committees on Environment and Communications, ‘The allegations of political interference in the Australian Broadcasting Corporation (ABC)’.

[38].   The Senate Committee’s report stated: ‘In this inquiry, much attention focussed on recent events in which it was alleged that the former ABC Chair, Mr Justin Milne, politically interfered or sought to interfere in the ABC because of funding considerations ... specifically in relation to a digital transformation project known as Project Jetstream.’ Senate Environment and Communications References Committee, Allegations of political interference in the Australian Broadcasting Corporation, April 2019, p. 45.

[39].   Ibid., p. 44.

[40].   ABC, Submission to Senate Environment and Communications References Committee, The allegations of political interference in the Australian Broadcasting Corporation (ABC), Submission 2, 13 November 2018, [p. 2].

[41].   Australian Government, Portfolio budget statements 2015–16: budget related paper no. 1.3: Communications Portfolio, p. 48.

[42].   Australian Government, Portfolio budget statements 2019–20: budget related paper no. 1.3: Communications and the Arts Portfolio, p. 76. The ABC does sometimes receive small loans from the Government, which it has to pay back. For example, in the ABC’s Annual Report 2018 (Volume 11, p. 197), it is stated that the Corporation has a loan with the Department of Finance to finance ‘the construction of a purpose-built facility in Southbank, Victoria.’

[43].   See, for example, C Knowlton, ‘ABC dealt a flesh wound, but not a killing blow’, Crikey, 4 May 2016.

[44].   Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2013–14, p. 98.

[45].   T Wils, ‘Funding for the national broadcasters’, Budget Review 2018–19, Research paper series 2017–18, Parliamentary Library, Canberra, 2018.

[46].   T Wils, Broadcasting, arts, sports and parks’, Budget Review 2019–20, Research paper series 2018–19, Parliamentary Library, Canberra, 2019.

[47].   Breaking up the ABC, op. cit., p. 60.

[48].   Review of National Broadcasting Policy, Discussion papers—Australian Broadcasting Corporation, DTC, 1988. In the context of rethinking the role of public broadcasting in Australia, including differentiating the ABC’s main purposes into Charter and non-Charter responsibilities, it is stated in the Review’s discussion paper, The Role of Australia’s National Broadcasters (op. cit., p. 31), that: ‘it would seem appropriate for the Government not only to commit itself to not reducing the level of funding for the ABC and SBS in the short term, but also to guaranteeing that it would fund the current level of activity for (say) a three year period’.

[49].   The ABC Board also resolved in February 1988 that it had ‘experienced a continual erosion of funding for more than a decade’ and that it could ‘no longer fulfil its obligations under the Charter set down by the Federal Parliament’. ABC, Annual report 1987/1988, p. 5. Historian Ken Inglis has said that the idea that it only cost each member of the Australia public ‘eight cents a day’ to run the ABC was spread widely by ABC staff as part of a broader push for more funding. The ABC’s Managing Director, David Hill, and other ABC staff, campaigned in the media and at public meetings. KS Inglis, Whose ABC? The Australian Broadcasting Corporation 1983–2006, Black Inc., Melbourne, 2006.

[50].   G Evans, ‘Answer to Question without notice: Australian Broadcasting Corporation: budget allocation’, [Questioner: R Alston], Senate, Debates, 18 August 1989.

[51]. In September 1986, Prime Minister Hawke announced a range of public service efficiency reforms, including an annual efficiency dividend of 1.0 per cent on departments and agencies for three years commencing in 1987–88: B Hawke, ‘Ministerial statement: reform of the Australian public service’, House of Representatives, Debates, 25 September 1986. In May 1987, the Government announced that the annual dividend rate instead would be 1.25 per cent over the 1987–90 period: P Keating (Treasurer), 1987–88 Budget initial measures, May 1987, p. 54; Australian Government, Budget measures: budget paper no. 1: 1987–88, p. 80). The ABC was exempted from the efficiency dividend beginning in the first year of its second triennial funding agreement: ABC, Annual report 1991–92, p. 13; Australian Government, Budget statements 1992–93: budget paper no. 1, p. 3.137, and Budget statements 1993–94: budget paper no. 1, pp. 3.139–3.140.

[52].   KS Inglis, op. cit., p. 170.

[53].   G Evans, ‘Answer to Question without notice: Australian Broadcasting Corporation: budget allocation’, op. cit.

[54].   Evidence to House of Representatives Standing Committee on Communications, Transport and Microeconomic Reform, Inquiry into federal road funding, 26 June 1997.

[55].   ABC, Submission to Senate Environment and Communications References Committee, The allegations of political interference in the Australian Broadcasting Corporation (ABC), op. cit.

[56].   Ibid.

[57].   ABC, Submission to the Independent Review of the Public Governance, Performance and Accountability Act 2013 (PGPA Act), November 2017.

[58].   ABC, All about audiences: annual report 2015, p. 22.

[59].   M Scott (Managing Director, ABC), Present challenges, future audiences, speech, University of Melbourne, 13 October 2014.

[60].   B Mansfield, The challenge of a better ABC: volume 1: a review of the role and functions of the ABC, Australian Government Publishing service, 1997, p. 7.

[61].   Ibid.

[62].   Ibid.

[63].   Australian Government, ‘Part 1. Budget outlays overview: features of the 1996–97 budget’, Budget statement 3: 1996–97.

[64].   P Costello (Treasurer), Budget 1996–97: meeting our commitments, Australian Government Publishing Service, 20 August 1996.

[65].   It should be noted that the ABC’s triennial submissions form part of the Government’s budget deliberations and as such are classified ‘Protected’. As per usual budget deliberation material, these submissions are not publicly released.

[66]. ABC, Annual report 2016. From the everyday to the extraordinary, 2016, p. 15.

[67].   It was also stated that ‘the ABC triennial funding agreement 2009–12 came to an end on 30 June 2012. In the May 2012 Federal Budget, the Government did not announce a new triennial agreement. Consideration of the ABC’s funding requirements was deferred by one year to allow the process to take account of the outcomes of the Convergence Review. ABC, Annual report 2012. Now more than ever, 2012, p. 25.

[68].   ABC, Submission to Department of Broadband, Communications and the Digital Economy discussion paper, ABC and SBS: towards a digital future, December 2008, p. 2.

[69].   Ibid.

[70].   Ibid., p. 4.

[71].   See, for example, ABC, 1996–97 annual report, p. 81.

[72].   Ibid., p. 62.

[73]. ABC and SBS Efficiency Study: draft report, op. cit., p. 106.

[74].   M Turnbull (Minister for Communications), The future of our public broadcasters, speech, 19 November 2014.

[75].   Australian Government, Portfolio budget statements 2019–20: budget related paper no. 1.3: Communications and the Arts Portfolio, p. 79.

[76]. ABC, Investing in audiences: annual report 2017, Volume 1, p. 80. See also, for example, ABC and SBS Efficiency Study: draft report, op. cit., p. 64.

[77]. ABC, The cost of being the ABC: delivering the best and most efficient broadcasting service, June 2018, p. 9. See also ABC’s 2015 annual report, which states that ABC Commercial generates ‘revenue for reinvestment into ABC programming’. ABC, All about audiences: annual report 2015, p. 63.

[78].   ABC, Portfolio budget statements 2019–20, op. cit.

[79].   See, for example, ABC’s 2015 annual report, op. cit., and 2016 annual report, op. cit., p. 73.

[80].   ABC, Annual report 2001–2002, p. 22.

[81].   ABC, New strategy for ABC retail, media release, 23 July 2015.

[82].   ABC, 2015 annual report, op. cit., p. 134.

[83].   Ibid., p. 15.

[84].   Ibid., p. 63.

[85].   ABC, 2016 annual report, op. cit., p. 15.

[86].   ABC Commercial, ABC Commercial announcement on retail activity, media release, 15 August 2018.

[87].   ABC, ABC Shop named as Australia’s best online retailer, media release, 9 July 2010.

[88].   ABC Commercial, op. cit.

[89].   ABC submission: Inquiry into the Competitive Neutrality of the National Broadcasters, op. cit., p. 22.

[90].   R Webb, The Commonwealth Budget: process and presentation (updated April 2010), Research paper, 16, 2009–10, Parliamentary Library, Canberra, 27 April 2010.

[91]. Australian Government, Portfolio budget statements 2016–17: budget related paper no. 1.3: Communications and the Arts Portfolio, p. 80.

[92]. Portfolio budget statements 2019–20, op. cit., p. 77.

[93]. ANAO, Corporative governance in the Australian Broadcasting Corporation, Audit report, 50, 2001–02, ANAO, 2002, p. 29.

[94]. See for example ABC Corporate Plan 2019–20.

[95]. ABC and SBS Efficiency Study: draft report, op. cit., p. 84.

[96]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 18 October 2016.

[97]. ABC and SBS Efficiency Study: draft report, op. cit., p. 71.

[98]. N Horne, The Commonwealth efficiency dividend: an overview, Background note, Parliamentary Library, Canberra, 13 December 2012.

[99]. M Turnbull (Minister for Communications), National broadcasters to implement efficiency measures, media release, 19 November 2014.

[100]. Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2014–15, p. 66.

[101]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 23 May 2018, p. 155.

[102]. ABC, Annual report 2016, op. cit., p. 15.

[103]. The cost of being the ABC, op. cit., p. 28.

[104]. M Fifield (Minister for Communications and the Arts), ABC and SBS efficiency review, media release, 13 August 2018.

[105]. Department of Communications and the Arts, Efficiency review—ABC and SBS—terms of reference, p. 1.

[106]. Allegations of political interference in the Australian Broadcasting Corporation, op. cit., pp. 53–54. The report states that the new Managing Director of the ABC, David Anderson, received the Efficiency Review in March 2019.

[107]. T Wils, ‘Funding for the national broadcasters’, op. cit. According to a report in The Sydney Morning Herald, the ABC and SBS Efficiency Review was provided to the ABC and SBS in March 2019. J Duke and F Hunter, ‘ABC and SBS to defend “core” content’, The Sydney Morning Herald, 6 March 2019.

[108]. M Fifield (Minster for Communications and the Arts), Strengthening Australia’s connectivity, creativity and cultural heritage, media release, 8 May 2018.

[109]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 23 May 2018, p. 175.

[110]. Australian Government, Portfolio budget statements: budget related paper 1.3: Communications and the Arts Portfolio:
2018–19, p 72.

[111]. M Turnbull (Minister for Communications), The future of our public broadcasters, op. cit.

[112]. ABC and SBS Efficiency Study: draft report, op. cit., pp. 7, 9, 10.

[113]. Ibid., p. 15.

[114]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 25 November 2014, pp. 12, 14.

[115]. Ibid., pp. 10–11.

[116]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 28 May 2014, p. 52. ABC’s Managing Director, Mark Scott, also explained in November 2014: ‘Our aim in delivering the savings required by the Federal Government is to focus primarily on overheads and back-office functions. But, as I have stressed repeatedly over the past few months, there is no simple quarantining formula for cost-cutting. The very nature of the media business means that some savings inevitably impact content’. C Pash, ‘Here’s Mark Scott’s 3000-word email to ABC staff explaining the job cuts announced today’, Business Insider Australia, 24 November 2014.

[117]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 28 May 2014, p. 52.

[118]. Senate Environment and Communications Legislation Committee, Official committee Hansard, 25 November 2014, p. 15; ‘Here’s Mark Scott’s 3000-word email to ABC staff explaining the job cuts announced today’, op. cit.

[119]. Senate Environment and Communications legislation Committee, Official committee Hansard, 23 May 2018, p. 163.

[120]. K Beazley, ‘Answer to Question without notice: Australian Broadcasting Corporation’, [Questioner: R Edwards], House of Representatives, Debates, 22 August 1991.

[121]. ANAO, Corporate governance in the Australian Broadcasting Corporation, Audit Report, 40, 2001-02, ANAO, 2002, p. 11.

[122]. Ibid., pp. 11–12.

[123]. Ibid., p. 12.

[124]. Ibid.

[125]. Ibid., p. 19.

[126]. Corporate governance in the Australian Broadcasting Corporation—follow-up audit, op. cit.

[127].  Ibid., p. 11.

[128]. Ibid.

[129]. ABC and SBS Efficiency Study: draft report, op. cit., p. 71.

[130]. Ibid.

[131].  K Dalton, ‘Missing in action: the ABC and Australia’s screen culture’, Platform Papers: Quarterly Essays on the Performing Arts, 51, Currency House, May 2017, pp. 36, 37.

[132]. Ibid., p. 50.

[133]. Ibid., p. 36.

[134]. Department of Communications and the Arts, Inquiry into the Competitive Neutrality of the National Broadcasters: issues paper, 26 April 2018, p. 4.

[135]. Department of Communications and the Arts, Inquiry into the Competitive Neutrality of the National Broadcasters—report by the Expert Panel, September 2018, p. 116.

[136]. Ibid., p. 18.

[137]. Ibid., p. 11.

[138]. Ibid., p. 24.

[139]. Ibid., p. 18.

[140]. Parliament of Australia, ‘Australian Broadcasting Corporation Amendment (Rural and Regional Measures) Bill 2019 homepage’, Australia Parliament website. This Bill is equivalent to the Australian Broadcasting Corporation Amendment (Rural and Regional Measures) Bill 2017, which lapsed at the end of the 45th Parliament.

[141]. P Fletcher, ‘Second reading speech: Australian Broadcasting Corporation Amendment (Rural and Regional Measures) Bill 2019’ House of Representatives, Debates, 31 July 2019.

[142]. L Buckmaster and T Wils, Australian Broadcasting Corporation Amendment (Rural and Regional Measures) Bill 2019, Bills digest, 20, 2019–20, Parliamentary Library, Canberra, 2019.

[143]. Ibid., p. 3. The issue of whether the ABC should be a ‘market failure broadcaster’ has been raised before in various contexts. Fairfax Media, for example, argued in 2018 that ‘in order to maintain the diversity of media required for a functioning democracy, we believe that the government funded ABC Online needs to refocus its content on distinctive, high quality content, that is not ratings driven, but that contributes to the national identity and addresses market failure, for example in regional areas that lack scale.’ Fairfax Media, [Submission to the Inquiry into the Competitive Neutrality of the National Broadcasters], June 2018, p. 9. In the context of the publication of Chris Berg’s and Sinclair Davidson’s Against Public Broadcasting: Why and How We Should Privatise the ABC (Connor Court Publishing, West End, Qld, 2018), and a motion passed by the Liberal Federal Council in June 2018 to privatise the ABC ‘except for services into regional areas that are not commercially viable’, ABC Managing Director, Michelle Guthrie, said in a Melbourne Press Club speech in June 2018 that one fallacy about the ABC is that it ‘should be stripped back to servicing gaps in the media market, basically becoming a market failure operator .... [the purpose of the ABC] is definitely not to play the role of a market failure operator.’

 

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