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Select Committee into the Abbott Government's Budget Cuts - 12/12/2014

HUNT, Ms Sarah, Lead Organiser for Public Broadcasting, Community and Public Sector Union

MURPHY, Mr Paul Vincent, Director, Media, Media, Entertainment and Arts Alliance

TULL, Mr Michael, National President, Community and Public Sector Union

WARREN, Mr Christopher John, Federal Secretary, Media, Entertainment and Arts Alliance

ACTING CHAIR: Welcome and thanks for joining us. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you.

Senator LINES: Chair, I will put on the record that I worked for Uniting Voice a couple of years ago.

ACTING CHAIR: Thank you, Senator Lines; noted. I now invite any of you who wish to to make a short opening statement and, at the conclusion of your remarks, we will invite members of the committee to ask questions.

Mr Tull : Thank you to the committee, and we welcome the opportunity to address this important issue. The CPSU believes that the cuts to the ABC budget should absolutely be reversed. I will make a couple of short comments about that and provide plenty of space for questions.

The cuts are based on the notion that the ABC is an inefficient organisation and one that can absorb large cuts without impacts on audiences, and the government's case is that the ABC has not been subject to previous efficiency measures. That notion—what we call the inefficient ABC hypothesis—is really not supported by the facts. The facts are set out in the CPSU's submission—I will not go through them in detail.

The key points are these: the ABC is already subject to two forms of efficiency dividend; in fact real funding has declined by 22 per cent over 1985 levels in real terms and, during that period; and the ABC has been required to find internal savings to maintain existing content and cater for the growing audience demands for on-demand and online access to content.

That reinvestment model has given the public new and expanded services across a range of platforms. The ABC has now serviced a growing population and growing content demands with a declining budget with 23 per cent fewer staff over 1983 levels.

The Commonwealth has benefited too: in 1996, ABC budget accounted for 0.44 per cent of government expenditure and, by 2012, it had fallen to 0.28 per cent—a substantial reduction.

The bottom line is that the ABC does much more work with much less. It is in fact the definition of efficiency and productivity. This has come at a cost. The decline in real funding levels and the need to invest in new platforms and content to meet audience demand has inevitably faced pressure on content and, particularly, services to regional and rural communities. In particular, the decline of regional TV production has been a point of contention in the community. The CPSU has made previous submissions on that matter and there have been previous committee findings on that matter. The reality is that, in times of restricted budgets, rural and regional services are particularly vulnerable to cuts, as they are relatively more expensive than other services. This situation is clearly worsening as a result of the more recent cuts, with a whole suite of regional sites earmarked for closure and services to be reduced.

These budget cuts also have international ramifications. The axing of the Australia Network contract resulted in the abolition of a new modern, multiplatform international service that was of growing popularity and reach into our region. Accompanying that was the loss of experienced and committed international correspondents. Australia is the poorer for the decision to axe the Australia Network. In 2006 the then foreign minister, Alexander Downer, on awarding a five-year contract to the ABC for the Australia Network, said that that network provided 'an opportunity to project a dynamic Australia—our strengths, our skills and our values—to the region'. He was right, and I would submit that the recent decision to close the network is to the detriment of Australia's interests in our region.

I have a couple of further quick points to make. The ABC is an organisation that is already stretched. The recent cuts will compound the problem and will further erode the ABCs capacity to meet its charter obligations. The CPSU analysis of the Lewis report offers us no comfort at all that those cuts could be absorbed without audience impact. That is a fact now clear to the community. In particular, what is proposed for Adelaide—a complete close-down of local TV production—is a travesty and should not proceed, we say. There is more to be said about the Lewis report, but, for the moment, I will limit my comments to a couple of final key points.

The timetable of cuts announced by the government, moving from $20 million in the 2015-16 financial year up to $68 million in 2018-19, should in theory give the ABC time for a phased implementation of the cuts. However, the refusal of the government to provide funding to cover the ABCs redundancy costs, which we estimate to be at a minimum $30 million and possibly double that amount, has forced the ABC to bring forward all of the redundancies into this financial year. That is how we find ourselves in the situation where there are 300 workers who will potentially be made redundant on Christmas Eve. Where we would go with that is: we say that the government does need to provide funding to cover the redundancy costs, at a minimum.

The other point I would make is that the funding cuts are deeper than the government has stated and much more than recommended by the Lewis report. The CPSU estimates that, by 2018-19, funding cuts will in fact be in the order of $458 million, a far greater amount than the $254 million headline figure announced by the government. Cuts of that size will have a lasting impact on the ability of the ABC to meet its charter obligations and audience demands. The funding cuts should be reversed altogether. If the cuts are to proceed, the CPSU recommends that the government should, as an absolute minimum, provide up-front funding of redundancy costs. That could be conditional on the ABC stopping its current action to close Adelaide production facilities, reduce regional services and cut content to fund future digital development.

So we oppose the cuts. They should be reversed. If they are to proceed, the financial reality is that the structure of the cuts, the failure to provide redundancy funding, brings it all forward to this financial year—unnecessarily.

Mr Warren : Thanks for the opportunity to talk to you today. As I am sure you know, the Media, Entertainment and Arts Alliance is the voice for Australia's creative professionals, and we represent people working in areas as diverse as reporters, camera operators, editors, producers, engineers, technicians, performers, musicians and crew generally. They work online and in broadcast in the cities and towns across Australia. They are proud, passionate and fiercely loyal to the Australian Broadcasting Corporation. More importantly, they are determined to produce the highest quality work possible for the audiences they serve. That means serving communities right across the continent, from the most remote communities in the bush through to the biggest of the urban centres and the nation as a whole.

A week ago, the corporation's journalists won 12 Walkley awards for excellence in journalism, out of a total of 32—more than any other media organisation. Those awards, which included the Gold Walkley award, were won for groundbreaking, important stories that better informed our communities and helped support a healthy, functioning democracy. A number of them were stories that have resulted in the corporation being publicly attacked by government ministers. The managing director, Mark Scott, said at the time that the 12 wins represent a great result for public broadcasting. I am not sure I would say that. I think actually what they reflect is the day-to-day excellence that is public broadcasting in Australia.

We need to be clear about what the cuts to the ABC represent. The cuts undermine the ABC's obligations under its charter. They meant a loss of Australian voices, of Australian stories, of Australian performances. For years it has been abundantly clear to those of us who work in or around the ABC that the ABC has already been forced to become an efficiently run public institution. Successive governments starving it of funds and managements that have demanded the corporation keep pace with the digital transformation have both seen to that. At the same time, with an 84 per cent approval rating according to surveys by Essential Media, it is also a much loved and trusted Australian institution. It is a great success story of public broadcasting, admired and respected not only in Australia but around the world, and it is tragic that these kinds of cuts will see an independent voice muffled by taking more funds from its operations. The casualties from these cuts are not just the ABC jobs that have been lost. Audiences have been punished because of a government dictate to extract cash from the ABC.

I have been surprised that some people have been surprised that these so-called efficiencies are resulting in consolidation of operations. That is the inevitable result of these cuts, and that is why these cuts are not what rural and regional communities want—communities that are increasingly starved of local news, entertainment and information because of the decline and consolidation of commercial media outlets in regions and, indeed, in most cities outside Sydney and Melbourne. We have seen in the past what cuts of this nature mean, when up until about seven or eight years ago the ABC was in a position where it produced absolutely no drama. Despite that, a campaign that came off the back of that to ensure the ABC was adequately funded to produce 100 hours a year of drama means we have seen almost a flowering of Australian audiovisual dramatic production on the ABC, which has pushed Australian drama and Australian drama production into new, exciting and diverse areas. Cuts of this nature will inevitably mean that there will be less facility for the ABC to do that because that is what happened last time. Drama production is an easy area for cuts to be made, and that is what happened last time. It is almost inevitable that these cuts, which are heavily back-ended as we know—that is, they will get worse over time—will result in less drama production.

The ABC has already used its efficiencies to extract funds from other areas of operation to create new services. It is unfortunate that at the same time management is again pursuing that same path, but this time doing it by shutting down services, closing facilities, silencing voices and robbing communities of not only their own ABC, but also throwing hundreds of highly skilled and experienced media workers on the scrapheap.

The funding cuts, which were driven in part by the Lewis review, have been imposed with a commercial media background applying a commercial media mindset to extract commercial media efficiency from something that is not a commercial media. The way the commercial media have managed their reduction in revenues over the past decade has been by consolidating and centralising their operations—so much so that most commercial media operations have virtually nothing outside Sydney and Melbourne, other than a news room and sales staff. So, again, we should not be surprised that the inevitable result of these efficiencies, driven by a commercial broadcasting model, result in consolidation in Sydney and Melbourne of the ABC's operations. But that is not what the ABC is supposed to be doing; the ABC has a broader, more complex and greater responsibility. It is not just the Australian Broadcasting Corporation, it is also the 'Geelong broadcasting corporation' or the 'Alice Springs broadcasting corporation', and it is presumptive and flawed to apply a commercial programing approach—or, I should say, to think you can apply the efficiencies that have applied in commercial media to the ABC without damaging the ABC's localism and regionalism.

So we believe that this assault on this great Australian institution is misguided, ill informed and unnecessary. It denies communities much-needed news, information and entertainment at a time when they are already being denied access to these services due to the decline of other rural, regional and remote commercial media outlets. It throws some of the best and most experienced, and indeed most professional, media professionals out of work at a time when they are producing some of the finest work imaginable—work that is listened to and viewed by an appreciative audience.

I have gone on, but I do that because I am angry about this and I hope that you are as well. I urge you to seek to have the government rethink these cuts, because the damage being done to the ABC harms us all. It damages a great Australian public institution that is performing at its very best right now, and I do not think any of us who have any responsibility in this area can allow that institution to be savaged by mindless cost cutting at a time when, more than ever, independent public service media absolutely needs to be put in a position where it is allowed to survive and thrive, not be under attack.

ACTING CHAIR: Thank you both for your opening statements.

Senator LINES: Thanks very much to both unions for appearing here today, and particularly the CPSU, because I know that you are under attack across all areas of government and you have made many, many appearances at a number of Senate inquiries and you have put a lot of effort into submissions. I just want to give you a bit of background, because obviously Mr Mark Scott was here this morning, and I know that you have been in negotiations with him also. He said there were 200 known redundancies and there were another 100 to come out of a pool of 300. So what I pulled out from that is that there are no voluntary redundancies, because the 100 are going to be chosen by some scheme that, certainly, we were not privy to, but perhaps you can shed some light on that. So my first question to you is: why is the ABC going down the track of forced redundancies when we have seen in the commercial media similarly sized redundancies that have been, as I understand it, voluntary? I am wondering if either union can shed any light on that.

You might also want to put this into the mix: Mr Tull, in your submission, at point 4 in your executive summary, is the CPSU saying that, if the ABC had taken a considered approach, we would not have had the closures we have seen to regional and remote broadcasting and to the ABC in South Australia and so on? If you want to, pursue that question as well. I know we have limited time.

Ms Hunt : I will leave that second question to Michael, but we will talk briefly about voluntary redundancies. It is absolutely unnecessary for the ABC to go with the program of forced redundancies that they are planning. I would really like to address the public statements that ABC management has made about those redundancies. We are aware that this morning, in answer to a question about the ABC's proposed redundancy process, Mr Scott told the committee, 'We don't have voluntary redundancy provisions in our industrial agreement.'

Senator LINES: Yes, he did say that.

Ms Hunt : That is not correct. The ABC agreement 2013 to 2016 does make provision for voluntary redundancies to be used at the discretion of management.

Senator LINES: Thank you.

Ms Hunt : I draw your attention to clause 55.5.1. It states:

At any time after likely redundancies have been identified, the ABC may at its discretion canvas interest for voluntary redundancies from unaffected employees in substitution for affected employees …

So the ABC agreement provides every opportunity for management to avoid forcing out employees whose positions have been identified for redundancy but who are committed to remaining with the ABC. Management may choose not to use that opportunity, but for Mr Scott to say that it does not exist is misleading. We can only surmise that he has been incorrectly advised on that aspect of the enterprise agreement. Would you like to add further?

Mr Tull : The issue around the funding of redundancies and how that impacts on the scope and pace of the ABC's decision making is relatively simply this: the ABC is attempting to make 300 people redundant; that will produce, on a rough average, an annual salary saving of about $30 million. In financial year 2015-16, its budget will be trimmed by $20 million; the year after that, $62 million; then $58 million; and then $68 million, et cetera. That illustrates for you that these redundancies are not the end of the matter. They do not go anywhere near covering off the amount of the savings that has been required. But because the redundancies are not funded, the ABC is desperate to get as many people out the door as quickly as it can so that it can start its savings program early. As it is, if they proceed with all 300 redundancies, they will have some benefit of that for half of this financial year et cetera, but they will have to fund the cost of redundancies on top of that. The cost of redundancies is itself at least $30 million, and quite possibly more than that. It could be double that amount, depending on the employees they force out the door—their age and years of service.

So, because of that, the ABC is desperate to get in front on the savings stuff and start paying back its redundancy money as quickly as it can. That leads to a situation where we find that the ABC is making decisions—Adelaide is a good example—that do not need to be made now. Most importantly, the ABC talks about how they have a process in mind for further developing their digital content. They have new ideas coming, et cetera, that they say will replace what is being lost out of Adelaide. The reality is that that is on the never-never; we do not know when that is going to occur, and neither do they. Their preference, and the sensible solution, would be to maintain the regional services that you have now as your content mix and platform mix currently changes, with redundancies funded—which is a common thing elsewhere in the service, and CSIRO is a very good example. If the government were to fund the redundancies—which does not impact on the cuts; it is a separate transaction, essentially a loan—it would give the ABC the space to make some more considered decisions. And particularly some of the more contentious decisions could be held off. Of course, the government would need to agree, and we would need the ABC to commit that if that was provided then that is the way they would act.

Senator LINES: And certainly I do not want to fall into the government's rhetoric here of blaming the ABC, because nevertheless the government has made a savage cut to the ABC, as illustrated by Mr Warren and yourself in your opening statement. So, the savage cut is there. If the ABC was funded for redundancy, what does that then look like?

Mr Murphy : We would hope that that would give the ABC more time to consult over their proposed changes. At the moment the situation we are in is that they are saying that there are about 100 positions to come out of the news area, for example. There are 70 new positions to come into that area, but they cannot tell us what those positions are, what each of them entails or indeed even when they are going to be able to give us that information, which from our perspective makes it very difficult for our members to receive a fair process to have the maximum opportunity to be able to be redeployed to other positions in the organisation. If there are 70 new positions coming and we do not know what they are, it makes that opportunity for redeployment non-existent.

Senator LINES: How do you take 100 out and put 70 in? That does not make sense to me.

Mr Warren : It may be useful if I just explain, for example, how the pools process—

Senator LINES: Perhaps I can give you another example. We have just seen in the media that earlier this week the tax office made 3,000 staff redundant, and it is now rehiring. Is that what we are likely to see with the ABC? It sounds a bit bizarre, that we take 100 out and we put 70 in.

Mr Warren : You asked a question about the logic of the pools, and I think it is an important question—not one that I think I can answer, but I think it is an important question. If we look at a newsreader, for example, there are about 900 to 1,000 people working in news and current affairs at the ABC; it is the largest single area of the ABC. About a quarter of those people—about 258—have been put into about 25 pools. Now those pools do not necessarily have any operational logic—some do; some do not. For example, one of the pools is senior reporters in New South Wales and there is no real operational logic in that. Of those 258 people who have been put in pools, I think 58 will be made redundant. That is what they propose. So that is what the Hunger Games season looks like. There are 25 match ups and about one in five people in those match ups will be leaving the ABC. As I said, there is some operational logic in some of them, but there is not automatic operational logic and that is because we believe that part of this process is a desire by the ABC management to manage their costs by making redundant high-paid experienced people and replacing them with lower paid people.

Senator LINES: So that 70 will represent also savings because they will be newer staff?

Mr Warren : That is right.

Ms Hunt : With staff who are not necessarily employed on an ongoing basis—

Senator LINES: So contract staff as well?

Mr Warren : Yes.

Ms Hunt : Correct.

Senator LINES: So in those pools who is making the final decision about whether I am redundant or somebody else is redundant? Who is making that decision?

Mr Warren : The ABC's proposal is that the line manager responsible for managing the pool, for want of a better phrase, or who has been given responsibility for the pool.

Mr Murphy : Yes, that is right, but one of the concerns of a large number of staff is that, because the pools had been established in such a contrived fashion, the manager nominally in charge of doing the assessment of their pool does not actually know them or know their work, so there is the possibility of inherent unfairness in that selection process as a result of that.

Senator LINES: Were the unions consulted about the establishment of the pools?

Mr Murphy : No. We have had consultations endeavouring to get enough information out of the ABC over the last three weeks to try to construct some alternative proposals.

Ms Hunt : The proposal for the pools was fully developed before consultation began and it was handed to us—

Senator LINES: Okay, so it was a fait accompli.

Mr Warren : Although ABC management have said that these are subject to consultation, there has been no—

Senator LINES: Can we just establish, because Ms Hunt has indicated that Mr Scott got the enterprise agreement incorrect in terms of voluntary redundancy, whether this is an agreement that covers MEAA and the CPSU.

Ms Hunt : Yes.

Senator LINES: So indeed that voluntary clause applies to your members as well, Mr Warren?

Mr Warren : Yes.

Senator LINES: Thanks. Sorry, go on.

Mr Murphy : I think it is an important point to make too—and, unfortunately, we have had a lot of experience dealing with large-scale redundancy programs in the media industry in recent years—that the ABC is unique in the way it is approaching this process. Network 10, News Corporation and Fairfax have all been through significant redundancy programs—each on two or more occasions in recent years. They have all commenced with a voluntary process and gone on from there. Some of those rounds have been achieved entirely through voluntary redundancies, others have involved a mix of voluntary and forced but there has always been the option across the whole affected area for people to put their hands up. They have not been restricted to particular pools in most cases. It has been a voluntary process.

Senator LINES: Right.

Mr Warren : And that is because—and, in fact, I had this put to me by Mark Scott when we were negotiating redundancies with him in an earlier job—there is a large generic component to journalists' work and for 90 per cent of journalists at the ABC. Yes, a lot of them have special skills or special areas of knowledge but there is also a large degree of generic skills that they bring, which is why you can have a process—and to call it voluntary is not quite strictly correct—that perhaps has a voluntary component because it will always been accepted by all the employers we deal with in the commercial sector that, although they ask people to volunteer—

Senator LINES: To put in an expression of interest?

Mr Warren : Yes, that is right—it does not necessarily follow and a large number of people are rejected.

Senator LINES: It creates a pool of those who have put their hands up voluntarily, as opposed to the seemingly cruel situation that the ABC has created, which people have arbitrarily been put into.

Mr Warren : And many people have no idea why they are in a particular pool. That causes immense distress for them. They can draw one of two conclusions from that. One is that they are there because they have been targeted—they have been put into a pool so they can be targeted—or they are there to be used as a competitor to justify getting rid of someone else. So, in either case it puts them in a terrible position.

Mr Tull : I have some very quick comments about the process. Sadly, with the CPSU having so much experience in recent years with redundancies—in many cases large-scale scale redundancies—one of the things we know very well, and this is also borne out in our experience in commercial broadcasting, is that redundancies are always awful. They are always a difficult circumstance. But the method by which the employer goes about the process has a lasting impact on how people feel about the organisation—and, in fact, the basic culture and functioning of the organisation. One of the things that is so difficult for ABC staff to accept at the moment is not just the fact that many of them and their colleagues are targeted for redundancies that they do not want, but that they see their employer going about that process in a way that is fundamentally at odds with ABC values. The ABC has a strong set of values as an organisation. People talk about it all the time. And they see this as being a step aside.

I will just say this. In addition to voluntary redundancy being expressly provided for in that agreement, there is also in that agreement what we would call substitutions, which is a very effective process. If I have been potentially made redundant and somebody else has not been and if I do not want to go—I want to keep my job—and a package would suit this person, we can swap. Skills being roughly equal et cetera, we can swap. That is a great way of getting to the voluntary process. The ABC looks very reluctant to go down that path, as well.

It also highlights the impact on a place like Adelaide, where the eight per cent or nine per cent budget cut leads to 100 per cent of a particular work type being cut out of that office and that work centralised elsewhere. There is no opportunity, or very limited opportunity, for people in those circumstances to exercise the substitutions. It is out of proportion and totally unfair.

Mr Warren : As you would know, Senator—and as, I am sure Senator Ruston would understand as well—if you take those jobs or those functions out of a place like Perth or Adelaide it will inevitably have an impact on all that other creative infrastructure that is around. To use just a very small example of these cuts, the cuts to broadcasting of orchestral performances by Classic FM are almost totally going to be felt in Adelaide and Perth. And that will have a real impact on the sustainability of the orchestras in those states. I know that they are very worried about what that is going to mean.

The ABC of course does not live in a vacuum; it is part of a creative infrastructure. If you consolidate that creative infrastructure—which this proposal does—then that has very serious ramifications not just for the ABC but for the broader community creative infrastructure in a place.

Senator LINES: Mr Tull, you said that this was not the end of it, and that the ABC had gone further than the Lewis recommendations. I am also concerned that you have alerted us to the fact that there are already a number of non-ongoing contracts. So paint us a picture in 12 months' time because of these government cuts.

Mr Tull : For the next financial year in the ABC's budget they will be trying to find $20 million of savings to cope with the cuts, as well as paying off whatever their redundancy costs are. If those costs are not met by government that will put them in a difficult spot. The following financial year they will be looking at savings of around $60 million. At the moment they have got $30 million worth of planned savings. That is the 300 redundancies. There is a further $30 million in the 2016-17 financial year which will need to be found. It is a very large amount and the plans that we see referred to in the Lewis report and elsewhere do not go anywhere near addressing that gap. If cuts of that size and in that timetable remain, there must be further deep impacts to come. The ABC will be chopping into its skilled and experienced staff at the moment.

These cuts will have a real impact on the ABC's capacity and particularly an impact on its capacity to train up new people, as the ABC seems to be relentlessly targeting more expensive, higher paid, more experienced staff. On the capacity of the ABC to absorb further cuts—$30 million in that year, and $28 million will be the size of the gap the year after and $38 million is the size of the gap in 2018-19—I just do not believe that it is possible for us to have the ABC that we recognise now.

Senator RUSTON: To get a bit of clarity around your last comment, from the evidence that we received this morning from Mr Scott, it was quite clear that there were some additional forms of savings able to be found through asset sales and through the savings from the transmission review, which, hopefully, will go some way to deal with those issues in that certainly neither of those two opportunities have been accommodated in what is going on at the moment.

The other thing that Mr Scott said this morning was that the majority of the savings that have been requested by government—the $254 million or, I might say, 4.6 per cent; I do not believe Mr Scott's eight per cent; he admitted to me the other day that it actually was incorrect—are not coming from programming and content. He said this morning that the majority of the savings from programming and content, which is the Adelaide production, state based 7.30 programs and a lot of the programming stuff, are actually going to fund his digital and online changes. From the negotiations and talks that you have been having with the ABC, do you have any line of sight on the differential between what is going to be used to go into that pot, which is a completely separate issue, and the activities to fund the savings? I think we need to be very clear that there is an ABC ongoing agenda here in relation to the digital-online program that requires fundamental changes within the ABC that were going to occur regardless, and it seems to have been somewhat clouded by this additional requirement for savings. Do you have any idea of the quantums on those?

Mr Tull : The first thing I would say is that the ABC are like every other media organisation in the developed world and are struggling to cope with what media convergence means for them. Like every other media organisation in the developed world, they realise that digital and online is where the audience want to be—and it is expensive. So there is a real imperative here, and the ABC's choice at the moment is to provide audiences what they want now and maintain their current suite and content over their current platform, and make no other changes or savings. But, if they did that, they recognise that in a few years time they are going to be not able to meet audience demand. So they are caught in this need to find the investment et cetera. To specifically answer your question, we think in the order of $20 million is the funds that they are trying to—

Senator RUSTON: Yes, he confirmed that.

Mr Tull : That would account for a number of jobs, particularly out of the news area. It is in that order. The exact timetable is not clear to us and I am not sure if it is clear to the ABC.

I will make one other quick point. I referred earlier to the gap between the savings that the ABC is trying to identify now—around $30 million—and, in particular, the three large out years of covering the cuts. There is a $30 million gap in 2016-17, a $28 million gap in 2017-18 and $38 million gap in 2018-19—a substantial amount of money. The sale of Lanceley Place may well be part of the plan to cover the gap in 2016-17. Whether that is successful or not will depend on the valuation of that property. I have some concerns about that.

The prospect that the ABC will be able to plug a further $60 million, $70 million or $80 million gap through savings in its transmission contract is a risky prospect. Yes, there is a new contract being negotiated, but, as yet, I can see no signs that the essential problem with the transmission contract is going to be solved. The essential problem with the transmission contract is the shape of the market. There is not one. That is essentially the problem. At the point that contract was made—a 15-year contract—there was one provider. We have not advanced beyond that. There are a few new, small entrants in the market. They may be able to make some impact on it, but the idea that those transmission savings will cover that gap remains to be seen, and, unless something changes in the shape of that market—

Senator RUSTON: But isn't that the point—that it does remain to be seen? You, or Mr Warren, made the comment a little while ago that Adelaide did not need to be shut down now. So we have got a number of unknowns that are still out there—transmission being one of them, asset sales being another—about the realisation of the savings through this suite of things that have come out of the Lewis review. They still remain unknown but we seem to have gone whack-bang out there and gone for everything all at once. We have tried to get our $20 million slush fund together for online digital—and I am not passing any comment as to whether that is the right way to go; that is a decision for the ABC, but nonetheless there is $20 million that needs to be found. I am concerned that we have made these cuts to production in Adelaide, we have made these cuts to some rural and regional services and some programming, when we really still remain in a situation where we are uncertain. I am not sure that you have not just supported my argument that maybe we should slow down here a little bit and maybe take this one step at a time instead of just going hell for leather and cutting all these things, when there are so many things still left unknown.

Mr Tull : The issue the ABC faces there, though, is that, while there are a number of unknowns—and I think I have described quite well the risks around the transmission contract—there is one certainty, which is that, in the next 18 months, they will need to find a $20 million saving and fund a large number of redundancies. If they do not, then there is no prospect at all of the ABC meeting the cuts schedule.

Senator RUSTON: They have got a $20 million saving in 2015-16, not in 2014-15.

Mr Tull : In 2015-16, yes.

Senator RUSTON: So in 18 months.

Mr Warren : Senator, I understand your question. The question is a bit, I think—and this has been a bit of the debate generally: has the government cut too much or are the ABC using the opportunity of the cuts to make changes that they wanted to make anyway? Frankly, I think the answer to that question is yes! Both of those things are true. We would obviously have arguments about the way the ABC have done this, about some of the judgements that they have made, and I think it is legitimate for them to be criticised for that, but, at the same time, I am not sure and I am not convinced by the arguments in the Lewis report or elsewhere that there are these substantial efficiencies to be gained out of the ABC without there inevitably being an effect on programming. This is one of those cases where, with respect, I think both sides are a bit in the wrong on this.

ACTING CHAIR: I have one last question. The cuts, it appears, will not be required to be put through the Senate. This is something the government can proceed with if it actually thinks that it is a good idea, and it has a mandate for it. I would disagree with both of those contentions. But, if we are stuck with it—and you will have to keep your responses brief; my apologies—what do you think management should do differently? If they are going to be forced to find the money somewhere, what would you have them do?

Mr Tull : We recognise that the ABC cannot control its budget, but it can very much control how it develops options and how it goes about implementing them. One of the things that has been most unsatisfactory over the course of this year is the unwillingness of the ABC to engage its very talented and very loyal staff in having a proper discussion about what might be possible: how could we maintain all of our regional services, meet all of our competing demands? There are ideas in the organisation. There are very many talented people. They are very loyal to their audiences and to their regions. They have good ideas, and they have not had the opportunity to put them forward. That would be one idea. And the ABC must do a better job of consultation with the community. The community's say in what has happened here has been negligible.

ACTING CHAIR: But I guess you would acknowledge that there is no way of whacking an organisation of the scale of the ABC with cuts this significant without real pain somewhere. There is no nice way for this to happen, is there?

Ms Hunt : And there is certainly no way of doing it without affecting programming.

ACTING CHAIR: Programming and staff, otherwise—

Mr Warren : The only thing I would add to that is that it is important to remember that, with the possible exception of Adelaide, there are not any real big-ticket items in this. This is a long laundry list of quite small savings. So, it would be possible to have a lot of moving parts in here and say, 'Well, no, actually we are going to keep doing that', or not do something else. So, yes, they had to make some changes. They have chosen a particular package, but it would have been possible to pull some of those out and put other things in if they had a mind to.

ACTING CHAIR: I am sorry, but we have such restricted time, so we will need to let you go. Thanks very much for coming in this afternoon. And best of luck.