Senate debates

Wednesday, 9 November 2016


Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016; Second Reading

11:32 am

Photo of Deborah O'NeillDeborah O'Neill (NSW, Australian Labor Party) Share this | | Hansard source

The Broadcasting Legislation Licence Fee Bill (2016) proposes to amend the Television Licence Fees Act 1964 and the Radio Licence Fees Act 1964 to reduce the licence fees paid by commercial television and radio broadcasting licensees by 25 per cent. Labor supports the passage of this bill and considers the proposed reduction in licence fees to be a sensible step towards improving the international competitiveness of Australia's media sector and promoting the production of local content.

It is instructive to briefly revisit the history of broadcast licence fees to understand how things have changed and why the bill before parliament is important. As the Productivity Commission stated in the report of its inquiry into broadcasting in the year 2000, licence fees 'seek to recover some of the value inherent in commercial broadcasting licences from commercial broadcasters and provide a return to the public for their use of scarce radiofrequency spectrum'. Commercial television and commercial radio broadcasters are required to pay broadcasting licence fees, which are levied as a proportion of their gross earnings from broadcasting or televising, as the case may be, advertisements or other material or matter during the return period.

Under the Broadcasting Services Act 1992, a person or entity providing a commercial broadcasting service on radio or television must hold a commercial radio or television broadcasting licence. Under the Radio Licence Fees Act 1964 and the Television Licence Fees Act 1964, a licence fee is payable annually by the holder of a commercial radio broadcasting licence or a commercial television broadcasting licence respectively. The sector-specific licence fees levied on commercial broadcasters formed part of the 'social compact' that has been a central theme in how broadcasting policy and legislation has been approached in Australia. This compact provided broadcasters with privileged access to use 'the airwaves'—the radiofrequency spectrum—the highly valuable, finite and public asset that is used to transmit programming. It also afforded other market advantages that, in turn, provided commercial broadcasters with unique access to a mass market of television viewers and radio listeners across Australia.

Historically, this business model delivered strong revenue and profits in an environment that is less competitive than what we have today. In exchange for these privileges, broadcasters were required to pay licence fees and were also subject to regulation that aimed to promote a range of public interest objectives, such as: promoting a sense of Australian identity, character and cultural diversity; encouraging fair and accurate coverage of matters of public interest and appropriate coverage of matters of local significance; respecting community standards concerning program material; and protecting children from exposure to program material that may be harmful to them. In 2014-15, the Australian Communications Media Authority collected roughly $153.9 million in licence fees from the commercial television sector.

The rise of the internet as a channel to aggregate and distribute content has had a significant impact on the media landscape. The structure and economics of media are changing and broadcasters are facing increasing competition from new breeds of content providers who do not use the broadcasting spectrum or are not subject to the same level of regulation. For example, 'over-the-top' content providers such as Netflix, Google and Facebook do not pay tax in the same way as Australian media companies and they are not subject to detailed Australian media regulation, requiring investment in local content, talent or production staff.

As noted recently by Network Ten in their submission to the Senate's inquiry into this bill:

… Australian media companies are now competing directly against the foreign internet companies that are exempt from local media regulation, don't pay television licence fees, pay minimal corporate tax despite taking billions in advertising revenue in this market …

It was further noted by Network Ten in their comments to the Senate inquiry:

PwC forecasts that by 2020 internet advertising will dominate the advertising sector, reaching $10 billion, or approximately 50 per cent of the sector.

Unfortunately, local journalism and local production will not benefit from this growth, with an estimated 70 to 80 per cent of total Australian digital advertising revenue going overwhelmingly to two foreign technology companies, Google and Facebook …

The challenges facing the television sector were also noted by the Department of Communications. In a 2014 paper on media ownership and control, the department cites analysis by PricewaterhouseCoopers forecasting that the share of total advertising revenue for the commercial television sector will fall from 29 to 27 per cent between 2013 and 2017, while the internet share was forecast to rise from 27 to 37 per cent over the same period.

Commercial Radio Australia has also emphasised that the reduction in licence fees is a welcome relief to Australian radio broadcasters, who continue to carry regulatory obligations and costs well in excess of unregulated online competitors. The radio sector incurred roughly $24.83 million in licence fees across 273 licensees for the 2014-15 period. As noted by Commercial Radio Australia, it is important that the issue of the pricing of spectrum licences for commercial free-to-air radio broadcasters be considered 'in the broader context of heavy regulation, local and Australian music content requirements, advertising restrictions and mandatory tags required of radio broadcasters, as well as the key role of radio in emergency situations.'

When Labor was in government we recognised the convergence-driven challenges faced by commercial television broadcasters. The former Labor government announced a rebate of 33 per cent for 2010 and 50 per cent for 2011. The 50 per cent reduction was extended to the end of 2013 by regulation and confirmed in legislation at that time. In announcing the licence fee reductions in February 2010, then Minister Conroy conveyed that Labor was committed to reviewing the future role of licence fees in the face of significant change. He also articulated the importance of a strong and vibrant broadcasting sector in saying:

Broadcasters have a unique role in preserving our national culture and the commercial television sector invests hundreds of millions of dollars each year in the production of local content.

I think it is instructive at this point to revisit some of the comments made by Minister Conroy on 21 February 2010 on the Insiders program. He was asked by the host about how networks are struggling to meet their local content requirements. Then Minister Conroy said:

What we're seeing around the world is firstly that there is a long-term structural decline in commercial TV's business model. That's acknowledged around the world.

In the UK in response to that a couple of years ago, they slashed licence fees. In Canada licence fees are around 1 per cent. So Australian commercial TVs are still paying the highest in the world even after this cut.

What we're seeing is the advent of IPTV that's coming on-stream as part of the national broadband network, but it's arriving on existing networks today. Enormous competition is coming to the commercial TV sector.

At the same time, the Government has taken from them an enormous amount of spectrum which we we'll be auctioning in the next few years which will be of enormous benefit both in a straight-dollar return from the auction, but more importantly, the productivity-enhancing boost that will come from allowing this spectrum to be used far more efficiently than it has been used in the last few years.

I contend those comments stand true today. Labor remains committed to preserving a strong and vibrant broadcasting industry and recognises the positive effect a competitive sector has on local jobs and our sense of Australian identity. We also recognise the competitive pressures facing the sector and the need for meaningful and effective measures by government to ensure broadcasters can continue to invest in local production and content.

This brings me to the reasons we consider justify supporting this bill. In light of revenue declines and the regulatory asymmetries I have outlined, commercial broadcasters have argued that the licence fees they pay are excessive. International comparisons have shown that the licence fees imposed on Australian broadcasters are indeed higher than comparable jurisdictions overseas—for example, licence fees in Australia are currently 4.5 per cent of revenue compared to 0.41 per cent in the UK, 0.27 per cent in New Zealand and only 0.05 per cent in the US. This bill proposes to reduce the fee by a further 25 per cent, which would bring it down from 4.5 per cent of gross revenue to 3.375 per cent. This reduction has been estimated to reduce the financial burden on industry by about $163 million over the forward estimates.

I note that the continuing spectrum review, which now appears to be continuing into another year, has been a source of ongoing concern for the broadcasting sector. There remains a lack of certainty about how the revised spectrum legislation will operate in practice and the arrangements for broadcast spectrum moving forward, particularly on matters of pricing. I urge the government to ensure that the legislative package it brings before parliament has cohesion and provides certainty for stakeholders moving forward. There is of course an argument that current licence fees reflect the value of spectrum and other advantages enjoyed by commercial free-to-air broadcasters. I am sure that this debate will continue for some time to come. Nonetheless, for the reasons that I have outlined, the current schedule of licence fees should be adjusted in a manner that is both sensible and proportionate.

As you well know, Madam Deputy President, the job of parliament is to promote the public interest. Given the centrality of the broadcasting sector to our system of democracy any substantive decision impacting this sector will require careful consideration that is both informed by evidence and guided by the enduring policy objectives we aim to promote. Labor is satisfied the evidence supports the proposed measure whilst preserving, and indeed promoting, the policy objects central to the Broadcasting Services Act 1992 through the provision of support for a sector that invests in local Australian content and local Australian jobs. For these reasons Labor supports the passage of this bill.

11:44 am

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | | Hansard source

I rise today to speak on the Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016 on behalf of the Australian Greens. I want to acknowledge the effort and work that my colleague Senator Ludlam has put into this particular area. I am hoping that my comments today will reflect his thoughts and concerns about this piece of legislation.

I am sure that we all recognise the challenges that Australia's commercial television and radio stations are facing, and we have just heard some of those outlined by the previous speaker: the challenges of convergence and fragmentation. Until not very long ago, if Australians were at home and they wanted to watch something on the screen, all they would have to do was put on the television. There was not really much else available. The main competition the three commercial television networks faced was from the public broadcasters—that is, the ABC and the SBS—and every now and again maybe the video.

For the better part of five decades Channel 7 and Channel 9 faced not much competition at all, except from each other, and then from what became Channel 10 in the mid-1960s and from pay TV in the mid-1990s. But, just as technological innovation has created the possibilities of commercial network television, further technological innovation began to present real challenges. For more than a decade, the commercial television networks have faced real and increasing competition from online alternatives facilitated by the increase in network bandwidth from users of the internet, and then, suddenly, they had access.

YouTube launched in 2005, and its user-generated possibilities were quickly realised by a generation of young and tech-savvy entrepreneurs. Very soon there were thousands of highly produced films and documentaries that competed for the eyeballs and the ideas of people who had been attentive viewers of content on the commercial networks. All of a sudden the world was open to them. To everyone's surprise it was not exactly expert produced content that did well on YouTube and other online platforms. It was not just that type of content; it was much broader. There were lots of videos of cats. The point is that there was much more choice for everyone, particularly the younger generations, for people who wanted to watch screens at home in their time—what they want; where they want.

With the arrival of online subscription-based streaming services, like Netflix, competition has become even more fierce. The networks have responded in kind by making their own content available on demand via their websites—a format pioneered, I point out here, by ABC's iview, which, in my opinion, is still one of the best in the country—and by partnering with other media companies in the cases of Stan and Presto.

The main policy issue here is that the spectrum, which the commercial networks have traditionally relied on to send their signals to TV sets across the country, is becoming less and less important and, therefore, less and less valuable. Once upon a time, the spectrum was just about the only way of delivering visual content to viewers. Now, content creators and providers can use the internet, which means they can bypass the audiovisual spectrum entirely.

The same thing has happened with respect to commercial radio. The phenomenal growth of podcasting has created new life for commercially produced radio content, but it has also allowed a truly incredible range of really amazing material that can be produced cheaply and distributed widely. The result of all of this is that the spectrum is less valuable than it once was. If we are to acknowledge that, it makes sense to reduce the fees that the broadcasters pay across the spectrum.

In 2013, that is exactly what happened for television broadcasters. Their fees to access the spectrum were slashed by an incredible 50 per cent. The Greens, at that time, voted in favour of that reduction, because there was a case for a substantial fee reduction and because the bill was brought as part of a package which supported reforms that had come out of the quite exhaustive Convergence Review process.

As part of that package there were substantial improvements to the minimal local content requirement for commercial television networks. In particular, the commercial networks' secondary channels like GO and GEM, for example, were for the first time required to show a minimum of locally produced content—and so they should. It was not an entirely adequate amount of local content. It was much, much less than the 55 per cent quota that the networks had to meet on their primary channels, but nonetheless it is there. It was a start, and the package was passed. That package passed in 2013 and required the networks to increase local content to their secondary channels over the course of the following three years, and here we are.

In 2013, the package also did a number of other things. It legislated a 55 per cent local content quota on core primary FTA commercial channels. It legislated a local content quota on secondary FTA commercial channels, which is due to increase incrementally over the three years. It updated ABC and SBS channels to recognise their roles as providers of digital content, which has become invaluable. It implemented the then ALP government's decision that the ABC would be a sole provider of the international broadcasting services. Watching the US election unfold today shows just how important that service is. It required the minister to appoint at least one Indigenous non-executive director to SBS.

But now we are back here again debating a further 25 per cent cut. The argument that supports a further 25 per cent cut is the argument that I have already outlined. It is an argument that, taken to its logical conclusion, has a certain fatality about it. The Nick Xenophon Team have accepted that fatality holus-bolus and have pressed fast-forward on that logical conclusion with an amendment to abolish the licence fees altogether. This is what those commercial broadcasters want, and they want it badly. The Greens will not be supporting this amendment, because the networks are not the only groups with skin in the game here. Indeed, the commercial broadcasters and their mostly corporate shareholders are perhaps not even the main players who are affected by reforms in this area. As the Screen Producers association points out, it is the entire value chain, particularly for television content, that is under pressure because of audience fragmentation.

The Xenophon party amendments, and indeed the government's own substantive bill, would certainly relieve pressure at one end of that value chain, but there are other parts of that value chain that are also under significant pressure, and this bill does nothing to address those. We know the commercial broadcasters are in this place, lobbying hard to have the licence fee abolished entirely. But to abolish the licence fee entirely is to accept that the spectrum itself no longer has any value. That the value is less does not mean there is no value at all.

Some people argue that the broadcasting licence fee is comparable to the licence fees paid by taxis. Now that the digital revolution has allowed Uber and other companies to compete with taxis, it is fair to say that taxi licences, which were once incredibly valuable, are now not valuable at all—and governments in many jurisdictions are arranging to buy back those licences. But the litmus test to determine whether or not the spectrum retains value is surely the extent to which the commercial broadcasters are prepared to share the spectrum with new entrants. Of course, they are not at all prepared to do that. This is all about protecting them, to the extent that they managed to secure a legislative amendment in 2013 which guarantees that a fourth commercial broadcasting licence cannot be issued without parliamentary approval.

In a time of increasing audience fragmentation the value of the spectrum remains very substantial. Through what other medium does a content provider have an opportunity to reach 99 per cent of Australian households in a way that is to all intents and purposes free. Under what other spectrum is this available, from the point of view, of course, of the content consumer?

The taxi-Uber analogy would apply to the broadcasting industry only if taxis were effectively free for customers and if taxis could take you to certain places, such as certain major sporting events, that Uber and other competitors could not. On top of substantial regulatory protections, such as a ban on new licences, the broadcasters also enjoy the benefits of substantial media attention for their leading content, as well as TV guides which are included in most major newspapers, some popular magazines and across the internet.

If we accept that the broadcasting spectrum has a value, and it clearly does, then we must emphasise that the spectrum is a public good. The commercial broadcasters pay to access that public good in order to generate private revenue and profits. One predictable effect of a further substantial reduction in the licence fees paid by the commercial broadcasters to access the spectrum is that the money they save will simply be added to their bottom lines—of course it will—or to the very substantial war chests that they use to bid for major sporting events.

It is of course vitally important that Australians continue to get access to major sporting events on free-to-air television. I do note that there has been some significant slippage from that principle since the introduction of pay TV and I note also that we are likely to see 11 fewer AFL games on free-to-air TV next year. This is mostly an issue of anti-siphoning legislation, which this bill does not address but which is something we should be aware of nonetheless.

What we do know is that the commercial networks seem to be much more prepared to pay for sport than they are prepared to pay for drama and children's TV. During the three years leading up to 2012-13, the commercial free-to-air broadcasters increased their spending on sport by 23 per cent but decreased their spending on drama by six per cent. We accept the view of the Screen Producers Association and other groups along the production value chain that there are substantial issues with the regulation of local content. I do not think anyone could seriously suggest that the quality or substance of local content on free-to-air commercial TV has improved in recent years. There is a lot more reality TV, which is cheap to produce. There is a lot more content from New Zealand, which satisfies local content regulations and which is much cheaper to produce, given the higher tax offsets and generally lower costs of production in that country.

We think that the whole issue of local content regulation has to be looked at in a considered fashion. We need to be seeing a package. Ultimately, it is actually in the broadcasters' long-term interest to invest in new locally produced drama and children's television, because those are their major points of differentiation in the converged market. Other providers will continue to screen overseas content and sport—of course—but the only way the local broadcasters can ultimately secure their relevance is to produce local drama and children's television.

There are additional, related issues. There are the anti-siphoning rules I referred to earlier. There is the issue of audio description services for the visually impaired, which currently do not exist as a regular feature of free-to-air TV in Australia. And there is the huge issue of community broadcasting, which the Turnbull government seems determined to kill off, mainly because the Prime Minister seems determined to speak only to the big commercial broadcasters and therefore keep himself wilfully ignorant of the real issues.

As legislators and regulators we have a real responsibility to make sure that regulation is, as much as possible, in the long-term interests of everyone along the value chain of Australian TV and radio production, including broadcasters, content producers and viewers. The government has flagged a content review, but we have not seen the details about when and how that will work. I look forward to hearing some clarification about that from the minister.

What we do not understand is why the government would effectively be giving away its major bargaining chip with the broadcasters, which is the substantial cut in the licence fee. You would not give it away for nothing. Surely the more sensible thing to do would be to withhold that cut and to defer this legislation, at least until a substantial content review has been conducted, perhaps in the form of an independent or parliamentary inquiry. As it is, this bill does not begin to address the core issues facing the broader industry. The ultimate policy goal should be to improve the quality of locally produced content, especially news and current affairs, drama and, a passion of mine, children's TV.

All this bill will do is effectively gift around $163 million to the commercial broadcasters without requiring anything in return. I must say, I would not want the government negotiating on my behalf, if this is the kind of deal they stump up. There must at least be consideration given to the view that out of $163.6 million some, or at least a substantial portion, of it could be reinvested in some way to create locally produced drama and children's television, in particular. We know that is where there is a need. We also know that we need increased audio description services for the visually impaired. It is also a complete mystery to me as to why a portion of this money could not go towards the maintenance of the immensely valuable community broadcasting sector. We know they need help and they need support. To that end, the Greens will be moving our own amendment. I foreshadow that now. It has been circulated in the chamber.

What this bill appears to be is a bandaid response to some aggressive lobbying by the commercial broadcasters. I am sorry to say it is not good policy, at least at this time and at least while it is separated from any broader industry considerations. We would be more than happy to consider these broader issues with the discussion of a review of content and the desire for more locally produced content. We urge the government: do not hand over your bargaining chips for free. I move:

At the end of the motion, add:

", but the Senate notes the savings for the commercial free-to-air television broadcasters resulting from the reduced licence fees and is of the opinion that those savings should be reinvested into Australian produced drama and children's television and increased audio description services for the visually impaired, including trial programs by each channel.".

12:01 pm

Photo of Malarndirri McCarthyMalarndirri McCarthy (NT, Australian Labor Party) Share this | | Hansard source

Labor has certainly offered support for elements of the Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016, but there are some concerns, and we certainly saw that in the inquiry here in the Senate. I would like to speak from my own experience in the television industry and about some of the things that came up as I was reading through reports, in particular, by some of the people who gave submissions to the Senate inquiry: Southern Cross Austereo, Nine Entertainment, PRIME Media Group, WIN Television and News Corp Australia—just to name a few.

I want to firstly go to the NSW Farmers' Association and their comment about the media needs of the region and the concerns for those in the remote regions across Australia. It is a concern for people in the bush who rely so much on the mainstream elements of communications here in Australia. When we go home—I certainly know when I head home at night, or even here in the parliament—it is good to be able to just flick on the channel and flick through programs to have a look at what is going on in the world, what is going on around the country and what is going on overseas. Today we see the election in the United States—just about every news outlet is following that, so we are not short of that—but what is happening in Borroloola today? What is happening in Tea Tree today? What is happening at Ali Curung and Yuendumu? These are the regional questions that I ask. I certainly know that many people who want to understand what is happening in our own country ask that. We look at the importance of that kind of communication tool.

When I was growing up—not having television in the Gulf of Carpentaria and then getting it in the eighties—the first images I saw were quite negative images of Aboriginal people. These images stay in your mind of your world view. I may not have been able to see too far out of the gulf region, but I was being taught through images; I was influenced by images and news stories that I would see. At that time, of course, it was only the ABC that was broadcasted in the regions. And thank goodness for the ABC and our public broadcasters SBS and National Indigenous Television for being able to provide Australians with the incredible diversity that we need to see more of on our stations.

When we come together to discuss this bill—it is just really for you, Minister—we need to keep in mind the importance around diversity and that we need to hear from the Indigenous groups. We have got the CAAMA Radio up in Central Australia. We have certainly got Imparja. We have got the Indigenous Remote Communications Association, which has done an enormous amount of work around the importance of the remote media sector and how governments can support the sector.

The industry has identified the need for serious policy development work to be done in the Indigenous media sector. Policy in this area is really lagging behind, with no real update since the 1990s. In fact, the most major reform I can recall in that space was the BRACS program, the Broadcasting for Remote Aboriginal Communities Scheme. Again, so many communities did receive the ability to have media communications and to have radio stations, but in my community at Borroloola we did not receive it—we missed out. As a result of that I spent the next couple of years trying to establish community radio in the Gulf Country. I was able to set up, in 1996, the first radio station in the Gulf Country called B102.9 FM, 'The voice of the Gulf'. It had a short radius, probably about 50 kilometres, but it was a start. The local community could then start to hear language and they could start to hear the stories that were important locally.

Again, these are just things I would like to put on the table as part of your consideration going forward with this. Indigenous media is vital in supporting maintenance of culture, language, stories and it also provides important economic opportunities in communities. We need jobs in this country. We certainly need them across our regional areas and in Indigenous communities in particular.

Contemporary issues need to be incorporated into policy development, digital convergence, digital inclusion, organisational and industry inclusion and sustainability. These are very real issues for the Indigenous media sector. There is a growing divide between remote and urban organisations due to access to technology and digital services. Indigenous media organisations currently seem to be seen as vehicles for delivering government messages. Whether that is a good thing or a not so good thing, the important thing here is that people are being informed.

We talk about competition from offshore such as Facebook, Google and Netflix. I have had to spend years trying to communicate with gulf families and the other language groups across the Northern Territory in particular One thing I can certainly say is that with Facebook, for the first time, the people who once did not have a voice have a voice. Once they could not communicate. We communicated through radio in the early days. We did not have telephones straight off the bat. And now, with Facebook, I can receive messages straightaway here in Parliament House about something that is happening up in Arnhem Land or on the Tiwi Islands. I would urge the parliament to take into strong consideration the importance of diversity, the importance of black voices in the mainstream media/communication industry, the importance of making sure that we value diversity in this country, especially the first nations Australians, and the importance of making sure that any ongoing communications engagement always includes the Indigenous media.

12:08 pm

Photo of Stirling GriffStirling Griff (SA, Nick Xenophon Team) Share this | | Hansard source

I rise to speak on the Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016. At the outset, I foreshadow that during the committee stage I will be moving amendments aimed at providing permanent relief from licence fees for commercial television broadcasters and radio broadcasters. I do so on the basis that these fees are no longer justified and are jeopardising the viability of our free-to-air broadcasting services. This should come as no surprise to the government, especially given that the minister himself is on record as stating:

[Licence fees] were, if you like, the original super profits tax. There was no other broadcast media so TV and radio were in a very strong and dominant position there. Obviously things have changed a lot since then. There are a larger range of options for people.

I think it is fair to say that the minister's acknowledgement of this issue comes off the back of serious and protracted lobbying by commercial free-to-air broadcasters, who currently pay licence fees of 3.375 per cent of gross revenue, which equates to around $115 million per annum. The government has failed to address the fact that network advertising revenue has gone backwards due primarily to advertising on social and alternative media. The key players are of course Google, the world's fourth biggest company, and Facebook. Both have a huge competitive advantage over free-to-air television and broadcasters. That competitive advantage exists not only through their market reach but also because they spend absolutely nothing on local production and contribute very little by way of Australian taxes.

In May of this year the West Australian reported that Facebook paid a dismal $814,000 in tax for the 2014-15 financial year. This is despite earning a whopping $33.5 million. During that same period, according to Morgan Stanley, the multinational company, valued at $468 billion, earned between $500 million and $600 million from advertising in the Australian market alone. This is a company that in the US reported a $2.04 billion profit for the three months to the end of March this year. For the year ahead, Facebook's revenue figures are expected to rise significantly as it no longer books its local revenue in Ireland. This is because Facebook restructured its local business to meet the government's multinational anti-avoidance legislation that took effect this year. Google is no different. According to the Australian Taxation Office's corporate tax transparency report for the 2013-14 income year, Google Australia paid over $920,000 of tax on an income of $360 million. In the US the Google conglomerate is valued at a mind-boggling $527 billion. These are companies that are vying to reach the $1 trillion value mark. Collectively, they already do that.

According to PwC Australia's forecast, by 2019 the internet advertising market will be bigger than free-to-air television, newspapers and radio combined. And unlike commercial free-to-air broadcasting this is an area with no taxes, no licence fees, no regulation, no local news—or limited local news—and certainly no regional employment opportunities. In addition to arguing that their licence fees are the highest in the world and do not reflect competitive audience pressures from unregulated digital reforms, television networks have also highlighted the fact that Google and Facebook employ very few Australian employees. As far as we can tell, Facebook is said to employ about 75 people in Australia, primarily in sales. And it is not just these large multinationals that commercial free-to-air broadcasters are competing with. There is also Foxtel, Foxtel on Demand, YouTube, YouTube Kids, Quickflix, Presto, Netflix, Quality Cinema on Demand, Telstra TV, GO, Optus Yes, Amazon, BigPond Movies, iTunes and so forth—and not one of these digital platforms pays licence fees of any kind.

As highlighted by Free TV Australia, evolving technologies have disrupted traditional media business models and opened the door to increased competition, which has fundamentally altered the economics and profitability of the broadcasting industry. Is it any wonder that the networks have been lobbying for some serious change in this space? Despite the massive profits of the Australian arms of digital platforms there is little regard by the government for the fact that 80 per cent of viewing in Australian homes is actually through free-to-air television and not pay television or even online viewing. There is even less regard for the fact that the fees collected through licence fees could otherwise be going back into local production and local jobs.

This also extends to international film production, which receives more generous producer offsets and tax write-offs, often at the expense of the Australian film industry. Producer offsets are, as we know, a rebate for producers on the cost of making Australian film and television programs. Currently, the offset is worth 40 per cent of qualifying production costs for feature films but only 20 per cent for television programs and documentaries. Networks have argued, quite rightly, that the inequality between film and television makes very little sense, especially given that more Australians watch local television dramas than watch feature films, and that commercial free-to-air is—often by far—the largest contributor to domestic content production.

Offset support is also currently capped at 65 per cent of commercial broadcast hours for a television production. This cap penalises successful Australian dramas, which have to be fully funded once the cap has been reached. Channel 10's popular series Offspring is a good example of how crazy the system is. While audiences were shattered by the thought that the last season would not come to fruition, they had little concept that the network would have to absorb significantly higher costs to continue filming. Fortunately for Offspring fans, Channel 10 made the decision to fully fund the last season of the series, but we know of several other popular TV series that had to be cancelled as a direct result of reaching the offset.

We know also that international film producers are offered a location offset to entice $15 million-plus film productions to Australia. That location offset is in addition to any promises of direct funding by the Australian government. Last year at around this time, it was widely publicised that the government had reached agreement with 20th Century Fox and Marvel Studios to bring at least two productions to Australia, at a cost of around $47.25 million in direct government funding. According to an article in The Guardian newspaper in 2014, there were 56 applications for the location offset and PDV—that is, postdigital and visual effects—offset which led to production expenditure in Australia of $356.73 million. The rebates payable for those offsets totalled $69.4 million. Those figures certainly demonstrate why the government is so keen to offer offsets to international film producers. They also allow companies to invest in equipment and training which can then be used on Australian productions, leading to a better-quality Australian product.

That is all very positive, and something we should all support. But I think the point that local networks make is that these offsets should not come at the expense of local production and, if there is scope to offer incentives to overseas film producers, then certainly more should be done to support local free-to-air broadcasters—who, as we know, contribute hundreds of millions of dollars into our local economy every year. The reality is that both feature film and TV production draw from the same pool of creative and technical talent. And, as highlighted by one network, without the volume of production funded by free-to-air broadcasters and the training and employment provided by TV work, the skills would not exist to enable big feature films in Australia. It is probably also worth mentioning that you would be hard-pressed to point to any Australian actor who has made it big in Hollywood who did not get their big break on local Australian TV, especially through Channel 10's Neighbours and Channel 7's Home and Away, both equally popular Australian TV series.

According to Free TV Australia, commercial free-to-air television broadcasters spend over $1.5 billion on domestic programming. They account for $6 out of every $10 spent on Australian production and employ 15,000 people, directly and indirectly, across the country. In the three years since the initial licence fee cuts came into effect, free-to-air broadcasters have spent an incremental $345 million on local content and an aggregate of $4.39 billion for that period. That innovation includes bringing additional free services and other streaming and catch-up services to the Australian public. They have reinvested 150 per cent of the savings into local content and technology to improve the viewing experience.

While Australian licence fees remain at a crippling level, internationally there has been a concerted effort by governments to reduce free-to-air licence fees in order to protect local production. For instance, in the UK the government reduced licence fees by 97 per cent, from $543 million down to just $60 million, between 1995 and 2011. Broadcasters there are said to be thriving. In New Zealand, broadcasters pay 0.26 per cent as a percentage of their revenue and licence fees. In Canada, they pay 0.25 per cent. In Hong Kong, they pay 0.09 per cent. And in Italy, they pay 0.06 per cent. All of the stakeholders that I have consulted with—and they include representatives from all of the commercial free-to-air television broadcasters—have expressed concern over the uncertainty that exists around licensing fees, and the difficulty that this brings to creating budgets and looking at forward business plans. For some, this issue is now very critical. Based on an analysis of the economics of the Australian film and television industry conducted by Deloitte Access Economics, undertaken for Screen Australia, there is the potential to increase local television and production jobs by over 1,000. Australian GDP could grow by as much as $140 million to $150 million.

If Australia is to continue to have a vibrant and competitive media industry, and if the government is serious about supporting our local television industry, supporting our local actors, and supporting job growth and creation, then it needs to follow the international lead of countries such as the UK and provide real and permanent relief from licence fees. It needs to give serious consideration to the amendments that my colleagues and I will be proposing to level up the playing field for traditional, free-to-air television broadcasters. I am sure that, if the government is stuck for ideas as to how and where it could claw back some of these levies, my colleague Nick Xenophon would be more than pleased to make out the case for a turnover tax for those multinational companies that are earning tens of millions of dollars at the expense of our local industry and our local economy. With that, I look forward to the committee stage of the bill.

12:21 pm

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

I rise to speak on this bill, the Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016, and to make a contribution in one rather specific area—that is, around accessibility for people with hearing and vision impairments. More specifically, I want to address the issues around audio description for those with vision loss or vision impairment. While I think there is room for improvement on captioning, particularly for some of the additional programming and multichannels which some of the free-to-air channels have, at least we have a level of captioning on free-to-air TV. At this stage, however, there are no requirements for audio description to be included on free-to-air television, and currently none of the free-to-air networks provide this service.

For those who do not know what audio description is, it is delivered as a narration on a separate track to describe visual elements of a television program during natural pauses in the dialogue. A number of senators in this place in fact will have experienced audio description when various organisations, such as Vision Australia, who have been campaigning very hard on this issue, have been in Parliament House and run demonstrations. I encourage people, if they ever get an opportunity, to experience a show without audio description and then experience one with audio description. You get a sense of how important audio description is for someone with vision loss or vision impairment.

My colleague Senator Hanson-Young moved a second reading amendment in her contribution to the debate. I will not go over the issue she raised about investment in local programming, but part of that second reading amendment was about using some of the money that the free-to-air stations will save as a result of this legislation to invest in ensuring audio description is part of the service they deliver, including trialling of the program. There has been a trial of audio description through the ABC, and I have talked about that in this place previously.

Australia is behind many other developed and developing nations in providing this service on free-to-air television. Vision Australia have done research that indicates up to two-thirds of their clients do not have access to the internet and just 17 per cent use a smart phone. They say that relying on online streaming to deliver audio-description content in Australia is a second-class service and burdens pensioners with the cost of accessing programs that anybody else can enjoy for free and in real time. There is very strong concern that people with vision loss and vision impairment are missing out on being able to access free-to-air TV, and I would say that that is discrimination against people with vision loss and vision impairment. There has been a very strong campaign to get audio description on all our TV channels but in particular free-to-air TV, which, as I said, does not occur at the moment.

ACCAN, which is the Australian Communications Consumer Action Network, is calling for the free-to-air networks to commit to extra funding for these accessibility features on their TV channels so that all consumers can have equal access to content in news and current affairs programs. ACCAN would like to see audio description introduced on the free-to-air primary channels so that consumers who are not online and who actually do not find the online service effective can get access to audio-description content. This should be happening. I agree with Vision Australia, who say it is embarrassing that we are behind so many other countries. That is why the Greens are moving a second reading amendment: to get some of the money that will be saved in this process invested in audio description so that people with vision loss and vision impairment are no longer being discriminated against and can access the same programs, the same current affairs and news content, as everybody else—that is, equal access. I encourage the Senate to support our second reading amendment to ensure there is investment from free-to-air TV in audio description.

12:26 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I join in supporting the Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016 but I echo the sentiments and views expressed by my colleague Senator Griff, who articulated the position of the Nick Xenophon Team very well in respect of this. That position is that free-to-air broadcasters are paying too much in broadcasting fees. We are out of kilter with other countries. We have not taken into account the fact that the media landscape has changed, that these licence fees are very much an anachronism, and that the free-to-air networks have been getting hit for six as a result of the likes of Facebook and Google, who have been able to soak up a lot of the advertising revenue. These are issues that ought to be taken into account.

As Senator Griff pointed out, the government could, with political will, say to the free-to-air networks: 'We will slash your production fees. We will do more for you in encouraging local production in terms of the production offset going from 20 per cent to 40 per cent, as it is for international movie production companies, so that television production that tells Australian stories with an Australian voice can be encouraged to thrive here in Australia.' We have a situation in this country where the free-to-air networks have been hit very hard by the likes of Facebook and Google and are suffering as a result. Facebook and Google can pick up other media content—they get it basically for free—and they can build an advertising base around that. If the government wants to continue with its history of innovation in terms of multinational tax avoidance—the reforms which former Treasurer Joe Hockey, now His Excellency Joe Hockey, Australian Ambassador to the United States, quite rightly pushed for—we can and should do better. There is real scope here for a turnover tax, which would ensure that these licence fees can be brought to zero. That would make a huge difference to the free-to-air networks, who have been doing it tough in relation to this.

I point to the amendments I moved in the last parliament in the context of financial disclosure. They were about the difference between general-purpose accounts and special-purpose accounts, which require more transparency from those multinational companies that have a base here in Australia but are effectively domiciled elsewhere—and this would apply to Google, Facebook and other large multinationals. There will be greater requirements for transparency about the level of accounting detail provided here in Australia. I call that the Michael West amendment after the investigative financial journalist who has long been campaigning for these issues. I understand he has his own website and his own online publishing business now since he has left Fairfax. Michael West was right and the parliament was right to support those amendments. We have an opportunity here to assist those free-to-air networks in a way that is tangible both in terms of the production offset and particularly with respect to licence fees.

The other issue I want to point out—something about which the minister has been very gracious with the time he has given to me and Senator Griff—relates to the issue of community television and community radio. I do not think we ought to have a debate about free-to-air broadcasters without considering the broader picture of community radio and community television. I just want to put on the record again that they are part of the media landscape and they perform a valuable role. They train hundreds and hundreds of generally young people and some not-so-young people in the arts of broadcasting radio and television. They can provide, in some cases, a very niche broadcasting experience in relation to youth broadcasting or particular ethnic groups. They play a valuable role. I hope to be able to continue, with my colleague Senator Griff, a discussion with the minister about the importance of community television being given a reprieve from their death sentence of 31 December this year in terms of a spectrum that I do not think the government actually needs any time soon and also in terms of community broadcasting and community radio broadcasters. I just think we should not have any discussion about free-to-air networks without also considering the importance of community radio and community television.

With those remarks, we support the second reading of this bill. We support the bill broadly, but we also feel that the government should go further. We hope to be able to engage with the government on having a fair dinkum turnover tax for some of those organisations that are essentially based overseas. They are not like Seven West Media, the Ten Network or the Nine Network and their holding companies, which are very much strongly Australian focused and Australian based companies. My message to Minister Fifield, whom I have enormous regard for, is that we are here to help from the crossbench. We are here to help. We want to help you raise some more money and in the process help Australian broadcasting. I know it is causing some mirth amongst your advisers, but we are fair dinkum about it and we hope the government can be too. Here is an opportunity to put that turnover tax on Facebook and Google and make a real difference to Australian broadcasting and Australian voices being heard in this country.

12:32 pm

Photo of Mitch FifieldMitch Fifield (Victoria, Liberal Party, Manager of Government Business in the Senate) Share this | | Hansard source

In the absence of any other colleagues wishing to make a contribution, can I thank those senators who have contributed what I think we can characterise as particularly thoughtful contributions, as would be expected in this place.

When Senator O'Neill was speaking and describing very well the changed landscape and how technology is offering consumers a wider range of options as to how they consume their media, I was half expecting at the end of her contribution that she was going to declare the need to abolish the two-out-of-three rule as well as the 75 per cent audience reach rule. I might wait for another day for that, Senator O'Neill.

Senator Hanson-Young made important observations about the need for investment in our local production industry. In fact, one of the arguments put forward by the free to airs for licence relief is that they want to invest more in local content and that local content rates. From the point of view of their businesses it makes good commercial sense to invest in local content. Senator Hanson-Young also spoke about the importance of further examining audio description services. As a former minister for disabilities, that is something I am very sympathetic towards. ABC have concluded a trial of audio description services. The results of that are something that we will be looking at in the near future. As for the issues that Senator Hanson-Young has raised in a second reading amendment that has been circulated, I will not be proposing that the Senate divide on that. The contents of the second reading amendment do not constitute government policy. Nevertheless, we take the free to airs at face value that they do want to invest further in local content and other good things for Australian consumers.

Senator McCarthy mentioned the importance of making sure that television reflects the diversity of Australia and, in particular, Indigenous Australians and their role. One of the things I am very happy about with the new managing director of the ABC is that she is keen for the ABC to be more diverse in terms of its staff and its presenters. Commitment to Indigenous broadcasting is something that she has a renewed commitment to. It is a commitment we are well aware that SBS also has.

Senators Griff and Xenophon, as always, were very charming in their contributions. We have had some good discussions over recent weeks about the media landscape. I do note the proposition that they are putting forward to reduce TV licence fees to zero. I think in proposing that both of them are very keen to try to get a Gold Logie at the next awards. I am sure that has been noted by Free TV Australia, Senator Griff! I should note that, with the 50 per cent reduction in TV licence fees that the then Senator Conroy put in place and this proposition for a 25 per cent reduction, there will have been a 62.5 per cent reduction in TV licence fees over the last few years.

So the parliament, this government and the previous government have recognised, as Senator Griff accurately quoted me, that TV licence fees were indeed introduced as the super profits tax of their time, and that the changing media landscape and the greater competition there is for free-to-airs is something that has been and is being recognised through this particular piece of legislation. I should also acknowledge Senator Siewert and her support for audio description. Senator Siewert has been a ceaseless advocate for Australians with disability, and I want to acknowledge that.

The purpose of this bill is to give effect to a commitment in the last budget, which was to reduce TV and radio licence fees by 25 per cent. We were able initially to reduce TV licence fees by 25 per cent by way of regulation. That option by way of regulation is not available to us for radio, so this bill seeks to give permanent effect to a 25 per cent reduction for both radio and TV.

I should indicate that I am a little disappointed in one respect, in terms of colleagues' contributions. I was hoping that they were going to out themselves about how their own viewing habits have changed over recent years. But, given that colleagues have not done that—

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

What do you watch?

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

Yes! Tell us what you watch!

Photo of Mitch FifieldMitch Fifield (Victoria, Liberal Party, Manager of Government Business in the Senate) Share this | | Hansard source

I will lead by example! I do consume through Netflix and other over-the-top providers, as well as free-to-air TV. I tend to do it on a binge basis. Dystopian dramas are my particular favourite—The Walking Dead and Falling Skies, both of which I am sure you are very familiar with, Mr Acting Deputy President Back! But I have not caught up with the start of season 6 of The Walking Dead, so please—spoiler alert!—no-one tell me what happens at the very start of that episode.

Just in conclusion, Senator Griff did talk about the importance of our domestic production industry and drama for Australian actors. And not just for Australian actors but for others who work on film sets and in film production. It is not just Home and Away, Neighbours and similar programs which have given people their start; TV ads themselves are also an important part of the production sector. Cate Blanchett got her start about 20 years ago as the Tim Tam girl, in the ad with the genie. She was asked for three wishes, and one of her three wishes was for a packet of Tim Tams that never runs out. There are worse things to wish for! But I also wanted to acknowledge the important role that ads play in developing Australian talent. With those remarks, I commend the bill to my colleagues.

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

The question is that the amendment moved by Senator Hanson-Young be agreed to.

Question agreed to.

12:45 pm

Photo of Alex GallacherAlex Gallacher (SA, Australian Labor Party) Share this | | Hansard source

The question is that the bill be now read a second time.