1. INTRODUCTION
More than any other area, communications is changing fast as new technologies are developed. Australia has been badly served by past regulatory decisions -- for instance the delay of more than twenty years in introduction of VHF-FM radio caused by our unique television frequency allocation. Advanced telephone services familiar in other developed countries are barely known here. Australia Post provides a good service only by the low standards of government postal monopolies round the world.
The ABC is afflicted by all the ills that can be predicted for BBC-model, public-service-like national broadcasters: Byzantine administration, restrictive work practices, inefficiency, insufficient funding (in relation to its ambitions and efficiency), and subordination of production to administration. Much of its output, especially on radio, promotes with more or less subtlety a political agenda barely within the range of legitimate political debate in Australia, inimical to capitalism and liberal democracy, and therefore to Australian society as we know it. It has lost its sense of purpose; we argue below that its time is past, and that developments in communications technology mean that there will soon be no useful role for the ABC in its present form to play.
The hyper-cautious approach of past governments to television and radio licensing is a major cause of the concern many people feel about the so-called "media monopolies": if there were more television channels there would be less need to worry about the content of the programmes of any one or two of them. There is in any case no such thing as a media monopoly in Australia. Despite restrictive and confusing defamation laws, the press is free. As communist governments are well aware, modern technology makes the circulation of ideas and information as easy and cheap as ever before: photocopiers, cheap offset printing, audio and video tape, word processors, computer bulletin boards, etc. This book was edited, typeset and laid out with a computer costing no more than a family car. It is as easy and cheap as it has ever been to set oneself up as a publisher of booklets or newspapers. As mentioned above, the cause for concern is concentration of ownership of mass media, especially television; the policies in this chapter tackle this by increasing the number of channels and maintaining restrictions on multiple and cross-ownership. (1)
It is a truism that technologies of computing, telecommunications and broadcasting are "converging". Digital signals can equally encode text, illustrations, voice, music, television. Optical fibres have the bandwidth (carrying capacity) for huge numbers of channels. Satellites, cellular radio, and higher and higher frequencies mean that the electromagnetic spectrum is not as limited a resource as it used to seem.
There are two reasons, one important, one vital, why communications policy must not hamper these new developments, which will take place elsewhere in the world regardless of what happens here. The important reason is to allow Australian consumers and voters access to the new world of information. The vital reason is that we must not deny Australian manufacturers and exporters access to the technologies and the world-wide product markets that accompany it.
The remainder of this chapter is divided into four sections. The first, Converging Technologies, outlines some of the directions in which policymakers should be thinking now to ensure that Australian communications technology is not further behind the world in 1990 than it was in 1970. The remainder, Post and Telecommunications, Non-Government Broadcasting, and Government-Owned Broadcasting, contain short-term policies consistent with this goal.
2. CONVERGING TECHNOLOGIES
The most important long-term objective of communications policy is not to hamper economic growth by restricting the introduction of new technology so that Australian manufacturers miss their chances to compete in rapidly-developing world markets. The other main objective should be to enable the community to take best advantage of the new technologies. For example:
2.1 NON-OBSTRUCTIVE TECHNICAL STANDARDS
Technical standards should be set to facilitate rather than obstruct Australians' access to foreign (satellite) broadcasts, equipment, etc., and to maximise Australian firms' access to world markets.
2.2 NEW POSTAL SERVICES
Traditional postal services combine two functions which are becoming increasingly differentiated: carriage of information, and carriage of objects. Formerly, information was usually best conveyed by transporting objects embodying it (letters, books, contracts, films, blueprints, etc.) Telephones permitted only oral communication, and although telegraphy (including telex) separated text from paper its application was limited. New technologies (computer database services, electronic funds transfer, facsimile transmission, etc.) make electronic transfer of information much faster and more versatile, and will increasingly supplant traditional postal services for many private as well as business purposes. There is no reason why these purposes should not include dealing with government. Once this stage has been reached, there seems little rationale for a government-owned monopoly postal service.
2.3 FIBRE-OPTIC RETICULATION
The highly-urbanised Australian population would seem to offer excellent opportunities for a broadband common-carrier optical fibre system, taking the place of the present copper cable telephone network and carrying telecommunications, "broadcasts", cable TV and other information services. Establishment of such a system would free much of the substantial part of the always scarce electromagnetic spectrum now used for urban broadcasting; this could then be devoted to increasing the number of broadcast and other channels available in areas where "cabled" systems would be uneconomic. Even without a comprehensive "cable" system, there is scope for substantial increases in the number of channels by making use of the UHF band.
2.4 MORE BROADCAST CHANNELS, LESS MEDIA MONOPOLY
A large increase in the number of channels available for sound and TV "broadcasting" in the cabled areas would make it possible to end concern about media monopoly, so long as no one "broadcaster" was allowed to control most of the channels in any area. In addition, while market forces compel two or three competitors to go for the middle-ground mass audience, once there are more than a few competitors it becomes more attractive to aim for specialised minority audiences.
If there are many channels, and the use of each of them for a period of three or five years is sold at auction, the price of the last few channels is likely to be low enough to permit community groups and other outsiders to buy in. Such access can be assured by reserving a proportion of channels for non-commercial use. In such circumstances, little regulation should be imposed on "broadcasters". Censorship of programmes sent out en clair at hours when children are likely to be watching should continue; this restriction should be avoidable by "broadcasters" that encipher transmissions so that special parent-controlled equipment is required to view (the enciphering needs to be very good or it will be broken by twelve-year-old hackers). Otherwise content control should be left to the laws of sedition, defamation and obscenity; "broadcasters" should be required to keep tapes of all transmissions for a reasonable time and to allow access to these on reasonable terms.
2.5 DIRECT BROADCASTING FROM SATELLITES
Large-scale development of direct broadcasting from satellites (DBS) now seems inevitable. Satellite transmitters are becoming more powerful and receivers cheaper and more sensitive. More and more people are becoming able to afford the necessary aerial dish and black boxes, and they will go out and buy them unless they remain satisfied with domestic broadcast and "cable" programming.
No government can hope to control the content of incoming DBS programmes without resort to jamming (not easy and not nice) or illiberal and hard-to-enforce controls on who may own what sort of receiver. Multinational advertisers will be attracted to DBS by the chance of multinational audiences and of avoiding various governments' restrictions on advertising. Nevertheless, DBS receiving equipment seems likely to remain more expensive than ordinary or cable TV sets, and it will be some time before DBS can provide mass audiences. But DBS still means that governments will sooner or later lose control of the airwaves. Even international agreements will not cope with a company registered in Liberia with studios in Kenya and leasing a transponder in a Taiwanese satellite from a firm in Liechtenstein.
Deregulated broadcasting will come with DBS whether governments and existing broadcasters like it or not. The more restrictive domestic broadcasting policy is in the interim, the sooner DBS will become important. The choice is between deregulating domestically now, or having it forced upon us in a few years' time.
2.6 PAY T.V.
It is already feasible to encipher television signals before transmission (cabled or wireless) so that the programmes can only be viewed by people with special equipment. As well as possible uses for childproofing (section 2.4) the principle can be used to achieve "pay TV", in which the viewer pays directly for the programmes viewed and only for those. Widespread use of pay TV will dramatically change the economics of television: for the first time there will be a close link between the value viewers, not advertisers or ABC executives, put on a programme and its chances of being broadcast. It will become commercially possible to put on programmes that comparatively few people value highly.
To some extent a similar role is already being filled by videotape: as well as feature films and pornography, entrepreneurs are supplying demand for videos of opera and ballet, steam locomotives, antique aircraft, and who knows what else.
3. POSTS AND TELECOMMUNICATIONS (2)
3.1 INTRODUCTION
The "person to person" communications sector in Australia is marked by very heavy involvement of government, both as regulator and as operator. Apart from its influence as an owner and as the coercive force maintaining monopoly power, government regulates various aspects of the communications industry including employment conditions and pricing structures. It requires, and by protecting monopolies makes possible, large scale cross-subsidisation between users and between services.
Telecommunications services are in the main provided by the Australian Telecommunications Commission (Telecom), the Overseas Telecommunications Commission (OTC) and AUSSAT, which are all government-owned and together have a statutory monopoly over the provision of telecommunications networks. Telecom has a monopoly over the domestic network and OTC of the overseas connections. AUSSAT can connect "common interest" users, but these are not allowed to "sub-let" their networks. Leased Telecom capacity is similarly not allowed to be "sub-let". Private involvement is confined to some provision of terminal equipment (including telephones, answering machines, etc.) and to some services making use of the network on conditions determined mainly by Telecom.
In the case of postal services, Australia Post has a monopoly over standard mail but faces competition in other areas, although profits from its protected activities may be used to subsidise unfair competition against private-sector operators.
The various restrictions on operation have led to an inappropriate structure, so that it is perhaps not surprising that the communications sector has not performed particularly well as regards economic efficiency. The overall level of prices is probably excessive, because of a general slackness of operation, and the divorce of prices from costs, made possible by monopoly and encouraged by political influence on pricing, leads to economic inefficiency. There is much room for improvement.
3.2 OBJECTIVES
Previous government policy has not included explicit objectives for this sector beyond vague references to efficiency and requirements for Telecom and Australia Post to take into account the special needs of people living outside the capital cities.
The Government should develop clear and detailed statements of objectives of communications policy compatible with the following points:
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3.3 REGULATORY REFORM
Government should preferably not intervene in communications unless there is clear evidence that intervention is in the interests of economic efficiency. This is only likely to occur in circumstances of "natural monopoly" where competition, actual or potential, cannot ensure economic efficiency; even then, government should not intervene unless it is certain that intervention would make things better, not worse.
The move from the present structure of government-regulated, government-owned, statutory monopolies to a competitive communications market should be gradual and well-coordinated. Sudden radical changes must be avoided, especially in telecommunications. Current prices are way out of line with costs and complex systems cannot be disturbed in a haphazard manner without unpredictable and probably undesirable consequences.
The specific policy recommendations below are a first and major step towards a liberalised communications sector which can be reached by a non-disruptive transition from the present interventionist regime.
3.3.1 Financial Structure
Australia Post, Telecom, OTC and AUSSAT should be placed on a |
This was recommended in the Bradley Report on postal services and the Davidson Report on telecommunications. (3) The charge for government-guaranteed loans introduced in the 1986 Commonwealth Budget is a step in the right direction.
3.3.2 Accountability
The major bodies (Australia Post, Telecom, OTC and AUSSAT) are often most reluctant to disclose information about various aspects of their operations. "Commercial -- in confidence" is no excuse for publicly-owned organisations protected by their statutory monopolies from commercial competition.
The Government should oblige Australia Post, Telecom, OTC and |
The organisations and their affairs should be goldfish bowls, not black boxes. In particular, they should be required to provide full details of financial performance in each of their areas of operation and details of how joint costs (overheads) have been allocated in arriving at the figures. This will make it possible to learn the extent and direction of cross-subsidies between users and between services.
3.3.3 More Competition
Both the Bradley and Davidson reports set out ways of increasing the degree of competition in communications (Davidson making far more radical recommendations for telecommunications than Bradley did for Australia Post).
3.3.4 Competition in Postal Services
Implement the Bradley Report recommendations for increased |
The Government should also carefully consider the pros and cons of ending Australia Post's monopoly of ordinary postal services in the light of the removal of "community obligations" on Australia Post to subsidise some services at the expense of others (see below).
The most important reform is to introduce true competition into the markets for terminal equipment and value-added services. This cannot be done while Telecom both runs the most important network and makes all the rules.
OFTEL's charter should include maximising the degree of competition in the supply, installation and maintenance of all types of equipment attached to the network.
The Government should remove Telecom's standard-setting role and A separate organisation, along the lines of the British Office of |
Once these bodies are in existence, OTC and AUSSAT should be freed to compete with Telecom, which should not be allowed to deny the access to its network needed for meaningful competition. Telecom's restrictions on leasing should be eased to allow competitors to set up rival networks and act as common carriers. AUSSAT is an obvious alternative long-distance carrier and serious consideration should be given to allowing private long-distance carriers to start up, with guaranteed fair access to the Telecom network.
There may also be scope for competition at the local exchange level, either by shared PABXs (private automatic branch exchanges) or resulting from current developments in cellular radio. Government should ensure that regulations and standards are not used to prevent the exploitation of such opportunities.
3.4 USE OF CONTRACTORS
Australia Post makes extensive use of private contractors, but Telecom uses them only to a small extent.
The Government should take steps to increase the use of private |
In particular, Australia Post should remove the asymmetry in its rules on official and unofficial post offices, and Telecom should make use of private contractors for functions such as cable-laying, installation of exchange equipment, and wiring buildings for telephone service.
3.5 COST-RELATED PRICING
Competition will force prices in the communications sector to reflect costs. If an organisation inflates prices of one service to allow it to subsidise others, it creates an opportunity for a competitor to move in and undercut it. This process will take time and will depend on how much anti-competitive regulation survives.
The Government should facilitate moves by Australia Post, Telecom |
Rational management in the communications monopolies will, once the coming of competition is accepted as inevitable, prepare for it by beginning the necessary realignment of prices.
Various interest groups will attempt to preserve present patterns of cross-subsidy. An unholy alliance of trade unions, conservative rural groups, urban "consumer" groups, and opportunist politicians is likely to form and will be able to put a good deal of pressure on the Government.
The Government must on no account succumb to the pressure for cross- |
If the political pressure for subsidy is irresistible, the subsidy should be implemented in a way in which the cost clearly appears in the Commonwealth Budget. Among the ways of doing this are direct payment to Australia Post or Telecom, or welfare payments or tax relief to the intended beneficiaries. Either way, the effect is to concentrate the minds of Cabinet (and, with good management, of all taxpayers) on the cost and merits of the subsidy every year at Budget time; cross-subsidies within large and secretive organisations, on the other hand, can be forgotten about for decades.
3.6 REMOVAL OF "PUBLIC SERVICE" RESTRICTIONS
In association with the other changes recommended above, but only |
Successful operation in a dynamic, competitive market requires maximum flexibility and management discretion. On the other hand, as long as the organisations retain their statutory monopolies and ability to milk captive markets, removal of restrictions on management offers grave risks of further exploitation of consumers for the benefit of management and workforces.
4. NON-GOVERNMENT BROADCASTING
4.1 COMMERCIAL TELEVISION
4.1.1 The Cities
The saga (4) of the third Perth commercial television licence demonstrates what is wrong with the present system. In Perth, the two existing commercial stations naturally stood to lose from the advent of a third competitor, so they did their very best to prove, in the terms of the broadcasting control system, first that the criteria for a third station were not in fact met, and second that none of the actual applicants complied or would comply with the criteria for a licensee. Even though they failed in these contentions, the existing stations' substantial investment of time and lawyers' fees in the protracted licence hearings and associated litigation was repaid or at worst offset by the additional profits attributable to the delay they caused in the third station coming on air. The fact that an unsuccessful applicant had undertaken the further legal costs of an appeal suggests that the expected profits from the new licence are very large.
In deciding the licence application, the Broadcasting Tribunal was required by legislation to consider a wide range of matters including the viability of the third station, its effects on the viability of the others, the content and quality of its programmes, and the resources and character of the applicants. It is reasonable that when a commercial TV licence provides the holder with an ability to influence the public denied to all but a handful of other organisations, as well as almost guaranteed profits, the nation should be careful who is given these privileges. It is not clear, however, that a TV licence need be the source of such privileges.
The problem of concentration of media ownership and lack of diversity is better tackled by increasing the number of outlets rather than by increasingly detailed regulation of a small number. In particular, competition theory (and common sense) shows that two or three competitors in a market will tend to produce almost identical output in the course of competing for the centre ground, while with a greater number of competitors some at least will find it to their advantage to abandon the fight for the middle ground and concentrate on developing a loyal minority market. In addition, the more outlets there are, the less important is the political, religious or other stance of any one of them.
The Hawke Government's revision of the rules on ownership of two or more televisions stations (November 1986) was a small step in the right direction but must be coupled with an increase in the number of stations if the "media monopoly" problem is to be minimised.
The Government should rapidly increase the number of TV channels in |
Although there is little room left in the VHF band, especially if more FM radio stations are to be developed, there is room for many more UHF stations in every area. Licences for use of each channel for three or five years should be sold at auction (the price payable in annual or quarterly instalments). The licences should be tradeable. No more than ordinary commercial enquiry need be made as to bidders' means: if payments fall into arrears the licence should be revoked and a new auction held. Restriction on ownership of licences should be confined to prohibiting significant common or cross ownership of more than one licence in any area. (E.g. if firm X has a Sydney licence it may not own more than say 5 per cent of Y which has another Sydney licence; if Z owns more than 10 per cent of X it may not own more than 10 per cent of Y.)
Other conditions attached to licences should be as few as possible. With more competitors, market forces will operate more effectively: for instance, most viewers do not like too many commercials, so some stations will make a feature of "less advertising" (as already happens on commercial radio). It is to be hoped also that Australian audiences do like Australian programmes: if so, there should be no need for Australian content requirements. The Government should if possible have at least a trial period without local content requirements to see what happens.
Controls on programme content should be eased or abolished, and such matters left to the stations, their viewers, and the operation of market forces and the laws on obscenity and sedition. Classification of programmes by content (violence, sex) is useful, especially to concerned parents, and should continue, preferably voluntarily. Controls on programme and advertising content in children's viewing times should continue.
One objection often heard to an increase in the number of channels is that if total advertising revenue were divided among more broadcasters, none would be able to afford either to buy major overseas productions or to produce high-class programmes in Australia. The first objection is easily dismissed: prices for Australian broadcast rights of overseas programmes are determined by what the market will bear, and sales will continue as long as Australian buyers can offer prices greater than the marginal cost.
The cost of local production is more of a problem. It is possible that only a few large networks will have the resources to make expensive drama series (as is the case today); but if Australian viewers want to watch Australian programmes the market will have to respond. Independent production companies that can produce good programmes cheaply can expect a boom. There will also be increased interest in international co-productions.
4.1.2 Regional and Country Television
All sorts of red herrings are brought out when it comes to discussing how to regulate commercial television services away from the big cities. The important consideration is easily forgotten. It is that country people deserve as good a choice of TV channels as city people unless there is a very good reason to deny it them.
At present, regional commercial TV shows much the same mix of local and imported programmes as its city counterparts, with local news programmes and a small amount of other local production, largely sport. The quality of the local production is often low, sometimes because owners of the stations are unwilling to provide the resources necessary for the expensive business of quality TV production and TV news coverage over a wide area, and sometimes because even if willing it is too expensive for them. They are mostly content to do the minimum needed not to jeopardise renewal of their licences. Compared with a situation in which city stations were networked to the country, the viewers gain mediocre local news and sport programmes and lose the choice of commercial programmes offered in the city. It is not clear that this is the trade-off they would choose for themselves.
The Hawke Government's equalisation plan for regional TV addresses the problem of choice by "aggregating" two or more of the regions currently each served by a single licensee and having the licensees in the aggregated region compete to serve the whole region. This tends to maintain the distinction between city and country broadcasters, and by increasing the area to be cove red by each broadcaster will not much help with local news and sport coverage.
The obvious solution, of allowing city broadcasters to compete in the country, might lead to a disproportionate reduction in advertising revenue for country broadcasters, as major advertisers would be able to buy coverage in city and country from the same broadcaster. If this forced a country broadcaster out of existence, a consequence would be a reduction in country businesses' access to TV for their advertising: city TV rates are not economic for advertising to country viewers.
In the long term, this sort of problem will have to be faced anyway with the spread of DBS. Once a significant number of viewers have satellite receiving equipment, advertisers will consider transferring custom to satellite channels that cover the continent or the whole south Pacific/south-east Asian region, with possible consequences for city broadcasters similar to those we have mentioned for country broadcasters. In the short term, we are dealing with regional and country TV services, and, as we have said, it is the viewers that matter.
The Government should ask country viewers what they want. |
It should commission (after competitive tendering) polling and market research firms to investigate the preferences of regional and country TV viewers, based on options like these:
- the Hawke Government's aggregation plan;
- allowing holders of other licences (city or regional) to expand into regional areas and compete with existing licensees (by applying the licence auction system outlined in 4.1.1 to all regions rather than just the big cities);
- same as (2) but with conditions relating to local programmes and advertising.
4.2 NON-COMMERCIAL TELEVISION
When the number of TV channels is not artificially restricted it will be unreasonable to deny access to the airwaves to groups wishing to provide non-commercial independent TV broadcasts. Such groups should be allowed to bid for licences in the ordinary way (or to combine in a bid). If the Government can buy a useful amount of political support by doing so, there is little harm in reserving one channel in each area for such use. The Government should not, however, be talked into subsidising "community broadcasters".
4.3 NON-GOVERNMENT RADIO
As with television, the aim should be to maximise choice and diversity by increasing the number of broadcasters. The medium wave (AM) bands are pretty full, at least near the cities, but there is still plenty of room on VHF (FM) and there will be more once TV broadcasts have been cleared from the band.
The Government should introduce a licence auction scheme for radio |
Radio is a very much cheaper medium than television, and there is much more scope for local, community, and educational broadcasters. If the Government wishes to encourage these it should establish two separate auction licensing schemes, with (say) three fifths of available non-ABC frequencies in an area available to all comers, and the remainder reserved for "non-commercial" broadcasters (with strict limits on sponsorship and advertising). If the "non-commercial" licences attract lower bids than the "commercial" ones, then the Government is in effect subsidising non-commercial broadcasting by the amount of the lost revenue.
5. GOVERNMENT-OWNED BROADCASTING
5.1 THE AUSTRALIAN BROADCASTING CORPORATION
The ABC has lost its sense of identity and purpose and has serious internal dissension. Management has long appeared out of touch and unwilling to exert control, accounting has been lax (according to the Auditor-General), the growth of administration confirms Parkinson's Law, and programmes are made to please producers and their superiors rather than viewers and listeners. It would be a brave or foolish Minister who crossed his heart and said that the ABC was worth its cost of some $450 million a year (including its transmitting facilities which are provided by Telecom and appear separately in the Budget), or about $75 per taxpayer. Waste and irresponsibility in the ABC have reached the stage where a Government should have little difficulty in mobilising public support for reform.
Nor is it clear that Australia needs a national broadcaster at all in the late twentieth century. The United States has never had one. The ABC's own self-doubt shows that there is no clear role for one to fill and that the present ABC structure is not appropriate. Decades ago, the ABC helped conquer the tyranny of distance and helped make Australians feel one nation; nowadays, it is only government regulation that prevents the development of several commercial national broadcasting networks. If the ABC competes with commercial broadcasters for mass audiences it might as well be commercialised; if it concentrates on minority audiences it cannot hope to serve them all and therefore begs the question "Is it in the national interest that these particular minority tastes be subsidised?". In fact a good case can be made for the ABC being largely a middle-class rip-off: the working classes watch commercial television and listen to commercial radio while paying taxes to provide entertainment for a minority of the middle class. Nor can the ABC resolve the dilemma that if it imitates commercial broadcasters to attract mass audiences it is redundant, while if it concentrates exclusively on minorities the majority of taxpayers will start to ask what value they are getting for their $450 million.
Future deregulation of communications markets (which, as explained in section 2, is inevitable) will increase the number of channels and further reduce the need for a national broadcaster: two or three commercial competitors are forced to a sameness of output as they compete for the centre of the mass audience, but as the number of competitors increases some will find it to their advantage to tailor their output to appeal to specific minority audiences. There are already viable alternatives to traditional broadcasting: video producers are catering for minorities such as lovers of opera, dog-training, Spitfires and Messerschmidts, flagellation, etc. Pay TV (section 2.6) will make it still easier to satisfy minority tastes. Within a few years, the argument that the ABC is needed to cater for minorities will be untenable.
What is more, any national broadcaster on the ABC/BBC model can be expected to be a liability in the long run. Some of the problems are predicted by public choice theory to occur in any bureaucratic organisation where there is no close link between production (programmes transmitted) and income (grants from Government). An independent, publicly-funded national broadcasting organisation is a tempting target for Gramsciian (5) infiltration by political activists, and this has taken place. Baker, McAdam and others have demonstrated the extent to which the output of parts of the ABC conforms to the agenda of the radical left. (6) Harder to demonstrate is the anti-western, anti-capitalist, anti-liberal-democratic slant of many ostensibly non-political programmes. We do not speak of "anti-Liberal" or "pro-Labor" bias: much ABC output implies views well to the left of mainstream Labor. What is objectionable is not that far-left views should be expressed, but that they should be expressed at the taxpayer's expense. A liberal society must permit the expression of heterodox views, but is under no obligation to compel taxpayers to subsidise it.
5.1.1 Long-Term Plans for the ABC
The tradition of ABC independence from government makes it very difficult for politicians to intervene. The public-service employment structure makes it hard for management to control programme-makers and the divorce of production from income means that there is little incentive for it to do so. Attempts by both Fraser and Hawke governments to solve the ABC problem by reorganisation and board appointments failed, and would only have provided temporary relief had they succeeded. The appointment of Mr David Hill as chief executive was at the time of writing too recent to be judged; it cannot make the ABC's fundamental problems go away.
The time has come for government to start tackling the ABC. Much of its output duplicates that of commercial broadcasters and as such is a waste of taxpayers' money. Another substantial part, especially on "Radio National", is hostile to the liberal-democratic consensus at the heart of Australian society, and it is stupid and immoral for government to make taxpayers support it. In earlier days the ABC was a great and worthwhile institution, but society and technology have both changed. In its present form the ABC is no longer needed; it must either evolve or become extinct. The best way to force the evolution is to forge a closer link between funding and audience satisfaction.
The objective should be a self-financing ABC by 1995. |
A "self-financing ABC" may sound like a contradiction in terms. It is not: the ABC will change as its sources of funds change. It will have to pay much more attention to what audiences want. It is very unlikely to turn into just another commercial broadcaster: ABC tradition militates against this, and if funding and ownership structures are different from traditional commercial broadcasting, programming will remain distinct too. Several sources of finance should be exploited, including:
- Sponsorship: this already happens (Esso Night at the Opera, etc., and, de facto, televised sporting events). It can be extended to practically all programme areas except perhaps current affairs. Even in current affairs programmes, bias in favour of a known sponsor is no worse, and easier for the viewer or listener to allow for, than bias in favour of programme-makers' undeclared social or political beliefs. Commercial TV experience suggests that many firms would pay well for their names to be tastefully associated with prestigious programmes even if these only appealed to a small, if select, audience.
- Direct payment by viewers (pay TV: see section 2.6): this will permit broadcasting programmes of minority interest without the majority having to pay. The Commonwealth should facilitate the introduction of enciphered pay TV broadcasting, by encouraging the establishment of technical standards (but not letting Telecom take over in its self-serving way), grants to the ABC for equipment, and initial exemption from sales tax (or its successor) of the deciphering and charging units.
- Commercial activities: the ABC is budgeted to earn nearly $30 million in 1986-87 from its concerts and sales of goods. This could be substantially increased over time.
In the course of the next few years a decision should be taken about future ownership of the ABC. A suitable approach might be to turn it into one or more public companies. The terms of flotation could be biased to encourage individual ABC viewers and listeners to take up shares and increase their influence on ABC policies, or shares could be given away to all Australians, or all taxpayers. Articles of association could be written to preclude takeover by other media conglomerates. Alternatively, an explicitly non-profit structure could be devised. What matters is that the taxpayer be relieved of the burden of a large, expensive, inefficient, and unnecessary national broadcaster. There is no a priori reason why the future ABC should unite the same combination of functions as the present one. In particular, there is a case for detaching the orchestras into separate, State-based organisations. No opinion is expressed here on whether government funding of the orchestras should continue. (7)
5.1.2 Short-Term Action
In its first term, the Government should begin the long process of turning the ABC into an organisation financially and politically independent of government. It must also reduce the tremendous waste of taxpayers' money revealed in the Auditor-General's reports, and (in view of current budgetary circumstances) reduce spending on national broadcasting, which has increased over 30 per cent in real terms since 1980-81.
The Government should prepare guidelines for commercial Funding of the ABC should be reduced to $300 million a year |
Sponsorship and guidelines may require amendment of the ABC legislation. The $300 million will return ABC funding to the real levels of 1979 to 1981, and give a powerful incentive to reduce waste and look for sponsorship. It will also provide an incentive for the ABC bureaucrats to respond in traditional public service fashion by making cuts to provide the maximum unpopularity for the Government. With good management, however, the Government should be able to turn such a gambit against the ABC. Ministers can remind the public how much the ABC costs and how scathing the Auditor-General's comments were, secure in the knowledge that the smaller and less satisfied the ABC's audiences are the weaker the ABC's position becomes. (8) They can also make constructive suggestions about where expenditure can be cut, including closure of one radio network:
The ABC should be encouraged to close Radio National. If it does so, it |
Radio National carries most of the anti-Western, anti-liberal-democratic output of the ABC. It mostly attracts very small audiences, and these appear from the ratings to be declining. The use of its frequencies should be sold at auction (see section 4.3). It would probably be more popular to restrict the auctions to would-be non-commercial broadcasters. With a single AM network, the obligation to broadcast Parliament would be extremely onerous. (9)
5.1.3 ABC Staff
The ABC is overstaffed in many areas, especially in administration, although some programme-making units function with surprisingly few staff. The main reason for the overstaffing is the ABC's public-service internal structure and controls. As discussed in the Government and Administration chapter, these are necessary in an organisation running on government money, but as the ABC takes more responsibility for its own funding, they can be done away with. Even before then, the ABC should be encouraged to reduce staff numbers. If closing Radio National is to achieve a significant saving it will involve shedding staff.
The Government should provide golden handshakes for people made |
The scheme should be set up so as to make it easier for the ABC to reduce the size of its administrative bureaucracy and to encourage the ABC to use private-sector contractors wherever possible (including enterprises established by former ABC staff).
5.2 THE SPECIAL BROADCASTING SERVICE
Set up by the Eraser government to attract the "ethnic" vote, the SBS was soon captured by middle-class lovers of foreign films. Thanks to its limited resources it has a good news service (forced to rely largely on footage from international agencies), but its current affairs programmes are often even worse than the ABC's. In format it is not unlike the commercial stations (apart from languages and subtitles): sport, soap operas, movies, even commercials advertising welfare benefits and the International Year of Peace, but with occasional delightful surprises. Nevertheless, it has not made a major contribution to the quality of Australian cultural life. It is by no means universally approved of among the ethnic communities. It is a luxury, and although the cost (under $50 million a year) is peanuts compared with the ABC it is still significant.
The Government should put the fate of SBS in the hands of its |
It should set up a "Multicultural Broadcasting Trust" with an impeccably ethnic board of trustees, with businessmen and professionals outnumbering multicultural activists, and phase out Government funding over three years except perhaps for grants towards equipment costs. If SBS is to continue, the trustees will have to persuade ethnic communities to pay for it. The rules should allow SBS to accept commercial sponsorship of programmes on similar terms to the ABC.
5.3 RADIO AUSTRALIA
Radio Australia is the Australian external broadcasting service. It broadcasts in many languages to a very large audience, and manages to run with a proportionately much smaller staff than the ABC itself.
The world's external broadcasters cover a very wide range from the government propaganda machines of the communist world through to a few, like Radio Australia, which are subject to very little government control. There is no doubt that listeners can tell the difference, and that the respect accorded to such as the BBC World Service and Radio Australia was earned by years of steadfast honesty and independence and could be lost by comparatively little government interference.
Here lies a dilemma. The usefulness of Radio Australia, its power as a tool of diplomacy for Australia (and the democratic world), lies in the trust of its listeners in its accuracy and independence. If it is overtly used as such a tool, its power is diminished or destroyed; yet if it is not put to such use, the money spent on it is wasted. The mere existence of an organisation like Radio Australia, not controlled by government, is a demonstration of the freedom and confidence of liberal democracy; yet that very freedom includes freedom to act in ways that embarrass the Government or harm the national interest (the Government must always try to remember that the first of these does not necessarily include the second).
In short, Radio Australia must pick its way along a narrow path between useless servility and counterproductive over-independence. There are reasons for thinking it does not try hard enough to do this, particularly its contribution to the difficulties in Australia's relationship with Indonesia in recent years. It is true that Radio Australia would not be doing its job if it merely duplicated the Indonesian media, but it is equally true that it is not doing its job if it lowers the esteem in which Australia is held by its neighbours.
The Prime Minister, Foreign Minister and Minister for Communications |
If this does not work (and the first test will be the manner in which Radio Australia reports the discussion), the Government should close Radio Australia and save the taxpayers' money.
ENDNOTES
1. All the more relevant in the light of the takeover battle for the Herald and Weekly Times group that was in progress as this book went to print.
2. This section owes much to Robert Albon, but opinions expressed in it should not be assumed to be his.
3. Report of the Committee of Inquiry into the Monopoly Position of the Australian Postal Commission (the Bradley Report), Canberra, AGPS, 1982; Report of the Committee of Inquiry into Telecommunications Services in Australia (the Davidson Report), Canberra, AGPS, 1982.
4. Unfinished at the time of writing. As this book went to press, the Tribunal was also applying its quasi-judicial procedures to the question of whether still photographs used in TV commercials should be exempt from the 80 per cent Australian content requirement applied to most aspects of commercials.
5. Antonio Gramsci, 1891-1937, Italian Marxist theoretician, according to whom an important task of the revolutionary intellectual is to infiltrate institutions such as universities, the church, the media, and turn their influence to undermining the status quo.
6. See e.g. K. Baker, "Bias in the ABC?", Review, Winter 1983, and "Four Corners: the Pattern of Bias", Review, Winter 1985; A. McAdam, "The Anatomy of an ABC Current Affairs Show", Quadrant, August 1983, "Reflections of a Media Critic", Quadrant, January-February 1984 (pp 10-11), R. Manne, "David and Goliath: the Media and Mr Combe", Quadrant, October 1984; A.N. Cowan, "Bias on the ABC's Second Network", Quadrant, June 1985.
7. Government subsidies to "the arts" share some of the fundamental problems of government-funded broadcasting: should taxpayers be compelled to subsidise cultural activities they do not patronise voluntarily? This question cannot be examined here, but will be addressed in some future publications.
8. The Machiavellian approach to the ABC problem would be to maintain a moderate squeeze on funds, and fill the ABC Board with staff representatives, radical feminists, "peace workers", and well-meaning nonentities. The result in a few years would be an ABC so irrelevant to the needs and desires of ordinary Australians that its abolition would receive popular acclaim.
9. Audio feed from Parliament should continue to be available to broadcasters. If Parliamentary broadcasts are wanted enough by enough people, someone will devise a way of supplying them in the deregulated market (commercial breaks while the division bells are ringing?).
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