Why have an ABC at all?

Alan Kohler makes an important point about the on-going Finkelstein media inquiry.  It is all about making life uncomfortable for News Ltd and providing some or other intellectual underpinnings for government support of the ABC.

In my last article for The Drum I indicated that there was no reason for the Australia Network to be put for tender because the government already had an agency to do the work.  I also indicated that perhaps the whole of the ABC could be put out for tender.

That latter line caused some consternation in the comments.  Many readers were outraged.  But putting the ABC up for tender simply raises a more fundamental issue -- why have an ABC at all?

A lot of people think of the ABC as being a public good.  By that they usually mean a good provided by the government on behalf of the public.  People also tend to think of schools and hospitals and the like in the same terms.  Other times people think of public goods as being those things that are good for the public.

Economists, however, have a somewhat different definition of public goods.  To qualify as a public good the good or service must be both non-excludable and non-rival.  So nobody can stop you from using a particular good or service and my use of the good or service doesn't prevent others from using it too.  There are remarkably few goods and services that meet those criteria.  Remember, to qualify as a public good both conditions must be met.

National security and the rule of law are usually held out as examples of public goods.  Public broadcasting, however, may be good for the public but it isn't a public good.  Of course, that shouldn't be the end of the discussion.  That is just quibbling over definitions.

Adam Smith had a less technical and more intuitive definition of public good.  Those goods and services, ''which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain.''

That suggests a two-prong test;  a public good must be advantageous to a great society but must be inherently unprofitable.  Note there is a difference between being a non-profit organisation and being inherently unprofitable.  The ABC is the former but, perhaps, not the latter.  No doubt there are many who would argue that the ABC passes the ''advantageous to a great society'' test.  The ABC has some excellent programming and many fine employees.  Yet so too do its competitors.  Therein lies the rub.

There may well have been a time when the provision of broadcast media was too expensive for the private sector and required some level of government ownership and/or subsidy.  If there ever was such a time it has long since passed.

But perhaps it isn't the organisation itself that is important, but rather the content.  For example, it may well be that the ABC carries material that the for-profit media will not broadcast.  Those niche markets that we deem to be important for non-economic reasons could be covered by the ABC.  To be fair, there are some areas where the ABC does perform well -- lawn bowls on a Saturday afternoon, and coverage of religion on a Sunday are niches that other might not cover.

Yet are these niche markets enough to justify the entire organisation?  A cheaper solution might be the restructure existing local content rules that the government already imposes on all other media.  Conversely to lift those rules on the private media and insist the ABC undertakes more of those activities.

If the government wants intellectual support for its ownership and funding of the ABC it should think carefully about what needs doing that the private sector either can't do, or won't do.  That approach rather than a private media bashing exercise will result in better policy outcomes.

Right now the best argument for the ABC is that it already exists.  While status quo is a powerful argument for preservation of any institution, the point remains that the ABC is a billion-dollar government program.  Getting the best value for money requires more careful thought than simply following a more of the same policy.

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