Thursday, 22 June 2017
Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017, Commercial Broadcasting (Tax) Bill 2017; Second Reading
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
The speeches read as follows—
BROADCASTING LEGISLATION AMENDMENT (BROADCASTING REFORM) BILL 2017
Australian media organisations play a pivotal role in our society, reflecting and representing Australian culture, informing local communities, and supporting our democratic processes. We've come to expect a lot of our media outlets, and the mastheads and networks we've grown up with are ingrained in our daily lives: at work, at home, and on the go.
But these organisations are under real pressure. Broadcasters and publishers are operating in an increasingly challenging environment, with intense competition for audiences and advertising revenue from other media companies, including online and on-demand operators and foreign technology companies.
The regulations governing our media companies don't allow them to meet these challenges on a level playing field. Figuratively speaking, they are in a fight with one hand tied behind their backs. Reform is essential if these companies are to have a future, and the Government is committed to implementing the necessary change.
The Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 contains a number of key elements of the Government's Broadcasting and Content Reform Package, which was announced on 6 May 2017. The Package represents an integrated set of reforms intended to modernise media regulation and help position the Australian media industry to deal with existing and future challenges more effectively.
The Package has the unanimous support of all sectors of the media industry and they consider it to be vital to their longevity and viability. It upholds important policy objectives, including protecting children from exposure to gambling advertising, supporting the creation of high quality Australian content and ensuring that the value of spectrum – an important public resource – is realised. However, it also removes regulatory barriers and burdens that achieve little from a public policy perspective and undermine the sustainability of Australian media organisations.
The Bill is being introduced today alongside the Commercial Broadcasting (Tax) Bill 2017, which will introduce a tax on the use of broadcasting spectrum. The commencement of the Tax Bill will be contingent upon the enactment of this Bill to ensure that these important reforms are implemented as a cohesive package.
A number of other measures forming part of the Package will be implemented through their own legislation and processes, including further restrictions on gambling advertising in live sporting events across all platforms, a comprehensive review of Australian and children's content and funding to support the broadcasting of under-represented, niche and women's sports. They are nonetheless an important part of the Government's overall reform agenda being put before the Parliament today with this Bill.
I now turn to the substantive measures in the Bill.
Broadcasting licence fees are a relic of an era of analogue media regulation. They were introduced when commercial broadcasters were in a privileged position to provide media content and there was limited demand for spectrum.
Today the opposite is true. Commercial television and radio broadcasters compete with a range of subscription and digital providers for audiences and advertising dollars.
Broadcasting revenues are flat or declining in real terms as online and on-demand services draw audiences away from traditional broadcast content. Simultaneously, costs are rising, and the capacity of broadcasters to contain further cost growth will be limited given the need to invest in programming and technology across multiple media platforms.
Licence fees and datacasting charges have no place in a modern regulatory framework for our media. The Bill will repeal these unwarranted taxes, starting with the payments that would otherwise be due in December 2017. In their place, the Government will introduce a transmitter licence tax for the spectrum in the broadcasting services bands to better reflect its use through the Commercial Broadcasting (Tax) Bill 2017.
The introduction of a transmitter licence tax and the abolition of broadcasting licence fees and datacasting charges will result in the vast majority of broadcasters paying considerably less in terms of their overall fee and tax burden. This relief will enable broadcasters to better compete with online competitors, invest in their businesses and produce Australian content.
However, a small number of broadcasters will face a net increase in overall charges. The Government will support these broadcasters to ensure that they are no worse off by providing a five year transitional support package.
The five year transitional support package will provide financial relief up to 30 June 2022. It supports 19 individual commercial broadcasters to transition to the new spectrum tax model and help optimise their business structures and support growth over the medium to long term.
Funding for the transitional support package has been set aside in the Budget. The proposed legislation identifies these particular broadcasters and establishes an annual entitlement to payment of a set amount subject to straightforward spend and reporting conditions and the company not having opted out. Identifying these broadcasters provides certainty of the support. The support package totals $4.6 million per year.
As a part of this package, the legislation will require the ACMA after 30 June 2019 to undertake a review and report on whether the new tax law should be repealed or amended on or before 1 July 2022. The ACMA will consult on the review, enabling broadcasters to input into the development of future tax arrangements. The report would be tabled in Parliament.
This review will be a valuable input into future spectrum taxing arrangements. In the meantime, the Government's policy is that broadcast spectrum taxes remain stable for the next five years to provide certainty. The Government acknowledges industry's desire for certainty beyond this period. While the broader spectrum management framework may change, this Government does not expect large increases in taxes for broadcast spectrum.
As I mentioned previously, it is important for all of the Government's media reforms to progress as a unified package. Only together can these reforms provide greater freedom and flexibility to the Australian media, so that they can configure their businesses in ways that support their ongoing viability. That is why this Bill includes the changes to the media control and ownership rules that are currently before the Senate in the Broadcasting Legislation Amendment (Media Reform) Bill 2016.
Our media ownership laws are outdated and need to be reformed in order to unshackle Australia's media industry and enable it to respond to intensifying competition. The Bill will repeal two control and ownership rules that no longer make sense in the digital media environment: the '75 per cent audience reach rule' and the '2 out of 3 cross-media control rule'.
The '75 per cent audience reach' rule prohibits a person, either in their own right or as a director of one or more companies, from being in a position to exercise control of commercial television broadcasting licences whose combined reach exceeds 75 per cent of the Australian population. The rule is redundant and does little to support media diversity. Audiences across the country receive essentially the same broadcast content due to affiliation agreements between the metropolitan and regional networks, and all three metropolitan television broadcasters and ABC stream some or all of their channels online to 100 per cent of the population. A merger between a metropolitan and regional commercial television network would effectively result in the replacement of one media 'voice' with another, with no diminution of diversity in these areas.
The Bill also abolishes the '2 out of 3 cross-media control rule' that prevents a person being in a position to exercise control of more than two of the three regulated traditional platforms in any one commercial radio licence area.
The rule has little impact in terms of supporting diversity in regional and remote markets as there is no associated newspaper operating in the majority of these areas, and many cross media transactions would be prevented by the '5/4 rule'. This rule provides that at least five independent media groups must at all times be present in metropolitan commercial licence areas and four such groups in regional commercial radio licence areas, and will not be altered by this Bill. Any consolidation that may arise from the removal of the '2 out of 3 rule' would therefore be limited to the metropolitan and larger regional markets, where diversity issues are unlikely to arise given the greater numbers of media outlets in operation.
It needs to be remembered that online media is no longer viewed as something distinct from the more traditional media platforms. Audiences in Australia and overseas now discover and access news from multiple sources across a range of media platforms, including online, social media, television, radio and newspapers. It is no longer appropriate that commercial television, commercial radio and associated newspapers be restricted by this rule when unregulated platforms are free to consolidate and adapt their businesses as much as they see fit, subject to wider considerations like competition rules.
Removing these rules will enable media companies to consolidate and build integrated media companies on a larger scale. This reality is widely acknowledged across the media industry and the Bill has been developed following extensive consultations with these parties, including regional and metropolitan broadcasters who strongly support the package.
The remaining media control rules: the 5/4 rule, and the one-to-a-market rule and two-to-a-market rules (which provide that a person, either in their own right or as a director of one or more companies, must not be in a position to exercise control of more than one commercial television licence in a licence area, or more than two commercial radio licences in a licence area), will be retained. Media transactions will also continue to be subject to scrutiny under the Competition and Consumer Act 2010 and the Foreign Acquisition and Takeovers Act 1975.
These two ownership and control rules are working as handbrakes on the ability of Australian media companies to remain viable and competitive. A failure by the Parliament to support their repeal would leave our local media companies hamstrung by redundant rules from a pre-internet era.
The Bill also includes a range of measures to ensure the availability of local content in regional areas and strengthen links between local content and the communities it is broadcast to. In the absence of regulation, the high costs of local content production and the structural changes underway in the media more broadly will create incentives for broadcasters to achieve efficiencies, placing pressure on the continued supply of local programming at current levels.
Currently, the Broadcasting Services Act 1992 requires regional commercial television licensees in certain types of markets to provide local content – termed material of local significance in the Act – within specified areas. Under the current arrangements, regional commercial television licensees in aggregated markets and Tasmania are required to provide approximately 120 points of material of local significance per week to local areas within the licence areas.
Material of local significance is material that is broadcast to a local area and relates directly to either the local area or the licence area. The aggregated markets comprise Northern New South Wales, Southern New South Wales, Regional Victoria and Regional Queensland.
The Bills will extend and increase local content obligations for regional commercial television licensees where there is a 'trigger event'. The new obligations will apply to regional commercial television broadcasting licences which, as a result of a change in control, become part of a group of commercial television broadcasting licences whose combined licence area populations exceed 75 per cent of the Australian population. The additional local content obligations will commence six months after the Bill receives Royal Assent.
The requirement for the licensee to be part of a commercial television group that reaches over 75 per cent of the population ensures that the additional local content obligations are only 'triggered' after the licensee is in a position to benefit from the additional scale and efficiency that the media reforms will allow.
Under the Broadcasting Services Act and Broadcasting Services (Additional Television Licence Condition) Notice 2014, local programming targets are currently expressed as 'points' where each minute of material of local significance is worth one point, and each minute of news that relates directly to the local area is worth two points.
Where a trigger event takes place the Bill will:
The additional obligations are aimed at ensuring that there is a local content obligation in nearly all regional licence areas following a change in control, including those where there is none currently. Where there is no trigger event, existing local content obligations for aggregated markets will continue to apply.
The effects of Australia's outdated legislative framework for media extend to the regulation of broadcasting through the anti-siphoning scheme. The anti-siphoning scheme was established in 1994, and regulates the acquisition of broadcast rights for sporting and other events of cultural significance or national importance.
It seeks to ensure that events on the 'anti-siphoning list' remain freely available to Australian viewers. While the Government continues to support the principle that nationally significant events should be available on free-to-air television, the anti-siphoning scheme is outdated and needs reform to better reflect today's media environment.
The Bills will remove the 'multichannelling rule', which prevents free-to-air broadcasters from televising events first, or exclusively, on their digital multichannels. The rationale behind the introduction of the rule in 2006 was to prevent consumers who had yet to make the switch to digital television, or those living in areas where digital television was yet to be rolled out, from being disenfranchised by events being televised on digital-only channels which they were unable to receive.
With the completion of digital switchover in 2013, this rule is now redundant. Repealing the multichannelling rule will provide flexibility for free-to-air television broadcasters to optimise television coverage of listed events to the benefit of audiences across the country.
The period from which events are automatically removed – or delisted – from the anti-siphoning list will be extended from 12 to 26 weeks. This will ensure the automatic delisting period is better aligned with the commercial reality of rights acquisition, where the bulk of major sports rights contracts are settled between six months and two years from the commencement of the first event to be played as part of a competition or tournament.
This will still ensure that free-to-air broadcasters retain the opportunity to acquire sports rights first, while providing greater opportunities for subscription broadcasters to acquire rights where free-to-air broadcasters don't intend to do so.
The Bill will also rationalise the number of events contained in the current anti-siphoning list through amendments to the Broadcasting Services (Events) Notice (No. 1) 2010.
The current list is excessively long, encompassing between 1,200 and 1,300 events per year. The Bills will remove those events where the history of right's acquisition by broadcasters and audience viewing patterns no longer warrant their inclusion on the list.
Most of those events coming off the list are those which are no longer broadcast on free-to-air television, garner small audiences, or are events where the relationship to Australia is remote or non-existent (i.e. FA Cup Final and the US Masters golf).
Iconic events such as the Olympics, the Commonwealth Games, all AFL and NRL Premiership matches (including finals), the Bledisloe Cup, international cricket matches played in Australia along with Ashes test cricket matches, the Australian Formula One Grand Prix, the Australian Open tennis, the Melbourne Cup, the semi-finals and finals of the Netball World Cup involving the senior Australian representative team and the Bathurst 1000, will remain on the list.
Importantly, this does not mean that events that are not on the list will necessarily end up on subscription television. There are currently events that are broadcast on free-to-air television that are not, and have never been, on the anti-siphoning list.
The suite of changes to the anti-siphoning scheme will enable it to operate more effectively in a digital media environment while ensuring that events of national and cultural significance continue to be available on free-to-air television.
As I've already alluded, the Australian media industry is at a crossroad. It is incumbent upon the Parliament to ensure the industry isn't tethered to an outdated analogue regulatory framework that no longer serves a policy purpose and does nothing other than hold this important Australian industry back.
The measures contained in this Bill represent a comprehensive set of reforms. They give our traditional media operators the flexibility to grow and adapt in the changing media landscape, invest in their businesses and in Australian content, and better compete with online providers.
These reforms have the unanimous support of industry and are the end result of extensive consultation with the sector. It is a package that is unabashedly and unashamedly pro-Australian media.
The Government has done its part by taking media reform out of the long grass and bringing forward a comprehensive and holistic package. The industry has done its part by engaging constructively and in good faith to help shape this package. Each part of the industry has shown leadership by putting their own legitimate commercial self-interest to one side to come together in recognition that this package as a whole delivers substantial and important benefits to the entire sector.
It is now time for the Parliament to do its part. To put an Australian industry and Australian jobs above partisanship and politics. To secure a strong and viable future for an industry that not only makes an important economic and cultural contribution, but serves as a vital underpinning of our democracy. To seize this historic opportunity to deliver comprehensive and holistic reform for the Australian media industry to ensure that those strong Australian voices continue.
I commend the Bill to the Chamber.
COMMERCIAL BROADCASTING (TAX) BILL 2017
The Commercial Broadcasting (Tax) Bill 2017 implements a key component of the Government's Broadcasting and Content Reform Package – the introduction of tax on the use of broadcasting spectrum. Along with the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 (the Broadcasting Reform Bill), this Bill will help to modernise media regulation and position the Australian media industry to deal with existing and future challenges more effectively.
With the abolition of broadcasting licence fees and datacasting charges contained in the Broadcasting Reform Bill, the new taxation arrangements in this Bill will provide significant overall fee relief for broadcasters as part of an integrated package of reforms. This relief will enable broadcasters to better compete with online competitors, invest in their businesses and produce Australian content.
The Bill recognises that spectrum is a valuable resource, essential to a digitally networked economy and a critical enabler of services. Like all scarce public resources, it needs to be managed and its commercial value recognised. The Bill balances industry concern about remaining competitive, the obligations placed on them by government, and the need to value spectrum appropriately. These tax arrangements complement the longer term reform to the spectrum management framework the Government committed to in the 2015 Spectrum Review.
Importantly, the Government Broadcasting and Content Reform package – including the new spectrum tax – has the unanimous support of all sectors of the media industry. To ensure these important reforms are implemented as a cohesive package, the commencement of this Bill will be contingent upon the enactment of the Broadcasting Reform Bill.
I now turn to the substantive measures in this Bill.
The new tax structure set out in this Bill is intended to provide certainty to broadcasters while the Government implements longer-term reform to the spectrum management framework. The Bill is intended to implement key reforms in the overall media package. As such, the tax, as proposed under this Bill, would come into legal operation on 1 July 2017, but only if the Broadcasting Reform Bill is also passed and receives the Royal Assent. In the event the Bill is not enacted by 1 July 2017, the tax will come into effect from that date on a retrospective basis. The retrospectivity of the tax in that event ensures that it is payable from the commencement of the 2017-18 financial year and is consistent with the removal of the existing apparatus tax imposed on broadcasters and the abolition of broadcasting licence fees and datacasting charges, as proposed by the Broadcasting Reform Bill. This is intended to provide for a clean switchover from the old fee and tax arrangements to the new tax structure.
The Bill sets out upper caps for the tax which are based on classes of transmitters, and also includes a ministerial determination power to set lower tax amounts and provide for rebates.
The new spectrum tax for television and radio is expected to raise a total of around $40 million in revenue per annum. Unlike the antiquated broadcasting licence fees, the spectrum tax is not based on revenue. Rather, the amount takes account of the power level of the transmitter, the particular band of spectrum used and amount of spectrum used. The use of parameters to determine a tax is a similar approach to that which applies to a number of other spectrum users, such as land mobile operators.
The tax methodology also supports regional broadcasters with the use of the power parameter. Generally, lower powered transmitters are situated in regional Australia, as distinct from high powered transmitters in metropolitan areas. Given there is less demand for spectrum in regional Australia, use of this spectrum attracts a significantly lower fee. For example, a broadcaster in regional Queensland would pay 99% lower taxes for their use of the same amount of spectrum than a broadcaster in Brisbane.
Overall, the vast majority of broadcasters will pay considerably less in spectrum tax than they currently pay in broadcasting licence fees and charges. This fee relief will enable broadcasters to better manage their business operations and compete in this rapidly evolving market.
However, a small number of broadcasters will face a net increase in overall charges. Through the Broadcasting Reform Bill, the Government will support these broadcasters to ensure that they are no worse off by providing a five year transitional support package ending 30 June 2022.
This Bill is an essential plank in the Government's overall media reform package, unabashedly designed to support the Australian media industry. The Government has also kept its eye on the long-game, making sure spectrum is recognised as a valuable resource. As technology advances we will no doubt draw more heavily on this resource.
Changing taxation arrangements is rarely an easy path, yet industry has done its part by engaging constructively and in good faith to help shape this package. These reforms have the unanimous support of industry and are the end result of extensive consultation with the sector. The package provides certainty for five years on the taxation arrangements and beyond that, this Government does not expect large increases in taxes for broadcast spectrum.
Together with the Broadcasting Reform Bill, this Bill will secure a strong and viable future for the media industry in Australia. Parliament has before it an historic opportunity to deliver comprehensive and holistic reform for the Australian media to ensure that strong Australian voices continue to be heard.
I commend this Bill to the Chamber.
That the resumption of the debate be an order of the day for a later hour.
Question agreed to.