Senator MARK BISHOP —Just a few preliminary comments: I asked some questions in both the May and February estimates and the relevant officers at the time were unable to give me the answers and undertook to take them on notice and respond. I refer to questions at pages 382, 383 and 385 of the May estimates and 151, 154 and 155 of the February estimates. I have not yet received written answers to those questions taken on notice. So could you draw that to the attention of the relevant officers so I could have answers to those matters that were raised?

Mr Balding —Senator, to our knowledge the questions from the ABC's perspective have been answered and they have been forwarded.

Senator MARK BISHOP —The secretary has just advised me that the May ones have been circulated. I went back through my files and I had not received them this afternoon. I will check again, if you could also check again.

Mr Balding —We will undertake to follow up too, Senator.

Senator MARK BISHOP —Tell me, FTE staff dedicated to ABC Online. Is that still around 30 to 35?

Ms Clayton —Around 35, yes.

Senator MARK BISHOP —What is the total annual expenditure by the ABC in this area?

Mr Balding —It is in the vicinity of $2.5 million to $2.6 million per annum.

Senator MARK BISHOP —Is that a relatively static figure or is it increasing?

Mr Balding —It is relatively static at the moment, but it built up from the very first year when we got $750,000. It has been sitting at $2 million to $2.5 million for the last two years.

Senator MARK BISHOP —So it has been sitting around about $2.4 million for the last two or three years?

Mr Balding —$2.4 million, $2.5 million.

Senator MARK BISHOP —Is there a specific budget allocation for ABC Online or is it part of general allocation?

Mr Balding —It is an allocation within our national networks portfolio. It has its own budget and it operates to that budget.

Ms Clayton —Senator, if I might add, ABC News Online is also separately funded through the news and current affairs budget.

Senator MARK BISHOP —And News Online, is that part of the $2.4 million Mr Balding was referring to?

Ms Clayton —I believe that News Online line is included—it's actually $2.7 million now that the budget is sitting in. But I will have to double-check that, Senator. It is something less than a million dollars that is spent on ABC News Online out of Brisbane.

Senator MARK BISHOP —Current usage statistics for ABC Online. What figure are we at now in terms of hits per day?

Ms Clayton —In May 1999, accesses per week were 2.6 million. That compared with March of this year of 2.4 million accesses per week and March 1998 of 0.8—800,000 accesses per week. So it is now 2.6 million page accesses per week.

Mr Balding —I can confirm that the actual news part of that is included within the $2.5 million.

Senator MARK BISHOP —Thank you, Mr Balding. That figure of 2.5 million hits; how is that audited? How do we know that is correct? Not that I am suggesting that it is not, but how do you verify it internally?

Mr Knowles —It is relatively easy to set up counters which access the number of counts of hits you have coming to your site, which is the way we count the number of hits coming into the site. When you go to some sites you find they run a counter up the front which says that you are `the 956th visitor' or whatever. We do not go to that length, but we do count them that way.

Senator MARK BISHOP —Does the measurement also attend to the duration of the hit, or is it just the fact that the site is hit?

Mr Knowles —It is quite complex if you want to track the duration and the total accesses, because when a person receives data, they receive that data in a burst, so therefore they are making another connection, although it is still the same connection. We do not count that as a second connection.

Senator MARK BISHOP —When we met in May, we had a discussion on the decision of the board to reject the part privatisation of ABC Online. From memory, I believe Mr Lloyd-James said a report had gone to the board. Are you able to provide a copy of that report to the committee?

Mr Balding —Senator, it is not normal practice that the ABC board reports are circulated outside the board. I would have to take that on notice.

Senator MARK BISHOP —Can you take that on notice and give me a response either way?

Mr Balding —I will do.

Senator MARK BISHOP —Are you able to tell me, Mr Balding, what reasons the board had for rejecting the part privatisation?

Mr Balding —At this stage, Senator, I am not across the detail of that report.

Ms Clayton —I might be able to fill you in. I think this was probably discussed at the last meeting. The primary reason is that the production of ABC Online is integrated into the production of ABC television and ABC radio product. So the product is not divisible. That means our television and our radio product, of course, by our charter must be advertising free and sponsorship free, so the sale of the site would be extremely difficult.

We also believe that given the way in which the online business was developing we had ample opportunities for revenue generation from that online site through onsale of programming developed within the online site to other service providers. We are actively pursuing that strategy rather than the asset sale of the site.

Senator MARK BISHOP —Is ABC Online evolving into a useful profit centre, for want of a better description?

Ms Clayton —It is very early days yet, Senator. As you know, the market is very speculative at the moment and believes that there are opportunities all over the place for online. We have had a number of requests and we are providing our news service to a number of Internet service provider sites and to private intranet sites. This seems to be a growing area of interest in ABC news services, as well as some other ABC programming services which are of interest.

So we have created a business unit within ABC Enterprises, which handles our merchandising and retailing activities and which has also assumed responsibility recently for program sales for ABC television as well. In this area we are negotiating the contracts for the sale of our news material into other sites and other programming material and we are also exploring other e-commerce opportunities. But it is very early days yet.

Senator MARK BISHOP —This business unit—does that have responsibility also for the marketing of online services?

Ms Clayton —For the marketing of online services, not in terms of publicity and promotion for our free-to-air online service, but it has responsibility for any e-commerce, any commercial usage of our online programming.

Senator MARK BISHOP —Has the management of ABC looked at the likely development of the online services business within the ABC?

Ms Clayton —Yes. The paper which was presented to the board, which you referred to earlier, had a comprehensive sweep of developments within the industry and the ABC's business and how our business can match the way the industry was developing. So it was a very comprehensive look at the industry and our own growth and how we could match those while retaining of course our independence and integrity for our basic free-to-air service.

Senator MARK BISHOP —So is it fair to assume that both the management and the board of ABC are confident of the growth and success financially in the medium term of ABC Online?

Ms Clayton —We regard it as an area of high potential for growth of revenue, yes.

Senator MARK BISHOP —This is probably a question for the minister. Board member retirements, June and July—-

Senator Alston —Are you available, are you?

Senator MARK BISHOP —No, I am not available—office of profit under the Crown, so I'm not available.

Senator Alston —You could forgo the salary.

Senator MARK BISHOP —When I retire, yes. Discuss that with Mr Entsch! Has a recommendation gone to Cabinet as yet?

Senator Alston —No.

Senator MARK BISHOP —When will a recommendation for replacements go to cabinet?

Senator Alston —In the not too distant future, I suppose.

Senator MARK BISHOP —Are we going to play this back—when?

Senator Alston —I don't know. I haven't focused on that.

Senator MARK BISHOP —You haven't focused on that?

Senator Alston —I have focused on possible replacements, but I haven't focused on precisely when the names would go to Cabinet.

Senator MARK BISHOP —Right, in the not too distant future. Do you intend to keep the board at full capacity, seeing the vacancies arise in June and July?

Senator Alston —Oh, yes, yes—we'll certainly maintain the numbers.

Senator MARK BISHOP —Is that a yes or a probably?

Senator Alston —No, we will be making two appointments.

Senator MARK BISHOP —Are you considering appointments from outside Melbourne and Sydney?

Senator Alston —Yes. I thought you were going to remind me that one of the retiring board members was from Western Australia.

Senator MARK BISHOP —No, I think you know where they come from as well as I do. I just want you to know that we're still interested.

Senator Alston —We are seriously interested in places beyond Melbourne and Sydney.

Senator MARK BISHOP —Back to funding for digitisation. What funding has been allocated in the current ABC budget for digitisation of television production in the lead-up to 2001? Who has those figures?

Mr Balding —In the actual television production or for digital conversion?

Senator MARK BISHOP —Digital conversion.

Mr Balding —In respect of phase 1, we have an estimate of $110 million over the five-year period.

Senator MARK BISHOP —That hasn't been reviewed at all?

Mr Balding —It has been reviewed a number of times, in actual fact. It is still sitting around about the $110 million. What has changed is the actual cash flow from year to year, the timing of the expenditure, but the total for phase 1 is still in the vicinity of $110 million.

Senator MARK BISHOP —Has the ABC made submissions to the ABA with regard to the draft channel allocation?

Mr Knowles —Yes, we have, Senator. The ABC played an active part in the industry and ABA groups which in fact developed that channel plan and we have made submissions in relation to the final plan as was decided by the ABA.

Senator MARK BISHOP —You are after two additional channels, as I understand it, Mr Knowles?

Mr Knowles —No, the ABC, along with other broadcasters under the act, will receive one additional piece of spectrum to go with its analogue channel. In other words, there is an extra channel capacity of 7 megahertz to go with each analogue channel. So the ABC having one across Australia gets one digital channel.

Senator MARK BISHOP —Which particular new market are you going to try to be going into? You were discussing education at one stage, information technology at another. Have you resolved that issue?

Mr Knowles —You have two questions running there, Senator. In fact, what you are asking about is in fact the channel . While there are still some legislation reviews to be completed about the question of multichannel, multiprogram transmission on the digital channel, the ABC's strategy is that it will mix between high definition and multiprogram, presuming we were permitted to do that, and we are looking at several programming strategies ranging from an information channel through to learning channels and so forth. We are currently developing a content strategy for those.

Senator MARK BISHOP —The content strategy is not yet resolved?

Mr Knowles —It is an ongoing review, Senator, in terms of trying to find the right mix in amongst all of that and to find ways to reutilise the content that we have in an effective way.

Senator MARK BISHOP —Would you be looking to go further into news production or children's TV, those sorts of areas?

Ms Clayton —At the moment we are exploring a number of channels. I think in our digital content strategy document we produced at the end of last year, we indicated that information programming was one stream that we were looking at fairly closely. The other stream was education. We are now refining those ideas and looking practically at what programming we can produce within our existing resources and what would best meet the public interest in terms of a national broadcast multichannelling.

Information programming we are exploring. We are looking at a range of different styles of programming, innovative new programming that does not compete with or copy existing formats for news and information services, certainly services which reflect the interests of regional and state Australia.

So we are looking at a range of options for programming, but it will be confined by our ability to fund those, as well as, of course, whatever latitude we are given within the final decisions on multichannelling from government.

On the other channel, we have identified education early as an area of opportunity for us where we think we can develop further our programming potential with education partners across the country. We are looking at particularly preschool programming. As an adjunct to that, we are asking whether there are more opportunity for us to provide more preschool programming throughout the day.

There are other areas we are looking at. For instance, in terms of broadcasting of performance across all the states, how we can cover live performance of theatre and music and relay those on a multichannel as well. So there is a range of things that we are looking
at. It is going to come down to practicality—the practicality of putting it together—it is going to come down to budget and it is going to come down to an assessment of where we think audiences might find the best use from ABC multichannels. So it is an ongoing exercise for us and we are continually refining it.

Senator MARK BISHOP —The bottom line of that is budget allocation, is it not?

Ms Clayton —Budget allocation is one of the parameters within which we are working, yes. We are trying to find opportunities for utilising our existing resources, both in terms of material we have gathered already, but also in terms of the human resources and technical resources that we have available to us across the country in order to work with what we have. So that is a very large parameter in our decision-making.

Senator MARK BISHOP —I'll bet it is. Okay, that's fine on that. Let's turn to our friends down in the Victorian parliament. First question: Has the ABC executive examined the report prepared by the Victorian parliament on issues relating to the location of ABC production and administration?

Ms Howard —Yes, Senator, we have examined it in great detail and continue to do so.

Senator MARK BISHOP —How does the ABC answer the accusation made in the report that the ABC did not provide key information requested by the inquiry, that you were not helpful?

Ms Howard —I frankly find it astounding given that much of the time of a number of my colleagues and of myself was given up to helping the inquiry with information that they needed. We provided a great deal of information to the inquiry.

Senator MARK BISHOP —You provided a great deal of information to the inquiry?

Ms Howard —Information that they requested.

Senator MARK BISHOP —So you flatly reject that accusation, do you?

Ms Howard —Yes.

Senator MARK BISHOP —Why do you think they made such a serious allegation?

Ms Howard —Senator, there are a number of things in the final inquiry report that seemed completely to take no notice of any of the evidence that was given to the inquiry, a number of things where they completely ignored the things that we had said.

Senator MARK BISHOP —Ms Howard, in the Australian Parliament, if a Senate inquiry should table a report and the witnesses or participants are aggrieved at the findings or conclusions of that report and believe the findings or conclusions are erroneous in fact, the Standing Orders of the Senate provide opportunity for the aggrieved witness or participant to table a document identifying the deficiencies in the original report. Has the ABC given any consideration to exercising that potential privilege in the Victorian parliament?

Ms Howard —At this stage we are preparing a response to the inquiry document. It has not been to the board yet. It is not at the stage where the board has seen or approved that document, but we are providing a response.

Senator MARK BISHOP —Would you be seeking to have that response tabled in the Victorian parliament?

Ms Clayton —Senator, we have not considered what the options are in that response. We certainly intend to provide it to the economic development committee of Victoria, so we have not considered what the formal processes might be for that report.

Senator MARK BISHOP —You might consider that option and have it on the public record. How does the ABC answer the accusation made in the report that the ABC does not know the geographical breakdown of its staff and resources—a fairly offensive sort of comment, I would have thought.

Ms Howard —I find that surprising and odd.

Senator MARK BISHOP —Surprising and odd?

Ms Howard —Given that I myself was at great pains to explain where our staff were located and the facilities available at each of those places, as were a number of my colleagues.

Senator MARK BISHOP —So not only your personnel know the location of your staff and resources and equipment, but presumably your computer systems would be able to identify staffing locations and numbers and those sorts of things?

Ms Clayton —Senator, we did provide as part of our final submission—we gave three submissions to the inquiry—a breakdown of staff by place of payment, so that was the closest we could get to where people actually lived. These sorts of staffing breakdowns sometimes are by production unit—sometimes people are allocated to production units whose offices may be somewhere, while they may physically be located somewhere else. So there are various ways in which we can cut it. In the final cut, we actually gave them a figure—we said where people are paid.

Senator MARK BISHOP —If I asked you, Ms Clayton, to tell me how many staff are employed in an executive capacity, management capacity, administration capacity and production capacity broken up on a state and territory basis, how long would it take you to obtain that information?

Ms Clayton —I couldn't tell you. Can I say to you we are in the process at the ABC—and this is one of the problems for us—of actually changing over our human resource system. We have an existing system which has been in place for a number of years which was actually mapped against our previous structures. We are moving to a new human resource system. One of the things is whether we should be working with the old system or the new system.

We have, as I say, got broad breakdowns—in our monthly human resources reports we have breakdowns by state, by category of staff. However, those breakdowns may not again reflect the actual location of the staff. They may be by the state against which that program is allocated. So I cannot tell you precisely whether we could tell you how many people live in one state in whatever category, whether or not the system would cough that up at the moment. We can tell you how many people are paid in each state; we can tell you what categories of people live in each state; and how many of them. But whether that categorisation is against state of residence or the state against which the program is allocated I just cannot tell you at this stage. So that just gives you an indication of the complexity of the task.

When we actually enter the data, how do we enter it—by where they live or where the program is allocated? Those are the sorts of refinements we are going through at the moment in setting up new information systems for our staff members.

Senator MARK BISHOP —How does the ABC answer the accusation made in the report that the ABC intimidates or otherwise limits the freedom of staff in expressing views? That is a pretty serious accusation for a broadcaster, isn't it?

Ms Howard —In fact, I took this up with the committee chairman on two occasions when a number of my staff had come to me and said that they were going to talk to the inquiry and they did so and nothing has happened to them and they were not intimidated. A lot of staff
also said they were not prepared to give evidence to the inquiry. I think the inquiry was disappointed at the number of staff who volunteered. But there was no intimidation.

Senator MARK BISHOP —Why did staff, Ms Howard, not wish to give evidence to the inquiry? Did they give you a reason?

Ms Howard —Some of them believed that the inquiry was not in their interests. Some people gave no reasons in particular.

Senator MARK BISHOP —They just didn't wish to exercise their right?

Ms Howard —No, they didn't wish to be a part of giving evidence to the inquiry.

Senator MARK BISHOP —How does the ABC answer the proposition made in the report—the minister will be interested in this—that the ABC could save between $25 million and $74 million per annum by operating at best practice levels?

Ms Howard —We were interested in that too. We were trying to work out how, for example, the number of managers within the organisation was calculated and I think part of it was a terminology problem. For example, I have in local and regional services a number of people who are called regional program managers. In fact, they are not. Their management extends to things like looking after the petty cash, making sure that the cleaning is done. They are the senior broadcaster in the station. They are not, strictly speaking, managers. They all have jobs on air—you know, as breakfast announcers and things like that.

Senator MARK BISHOP —So they are already multiskilled!

Ms Howard —Oh, yes. So if I took away those 48-odd managers, we would have 48 fewer breakfast programs around the country, for example. So I think there was a misunderstanding of some of the terminology of what we describe as an RPM, as a regional program manager, and what is in fact a working broadcaster.

Senator MARK BISHOP —So you are very charitable, Ms Howard. You think it was a misunderstanding. You don't think it was malicious or deliberate or vicious?

Ms Howard —I'd like to believe it was a misunderstanding, Senator.

Senator MARK BISHOP —The ABC has been engaged in a fairly significant review of internal costs for certainly the last three years and possibly the last five or six years, hasn't it, Mr Balding?

Mr Balding —It certainly has, yes.

Senator MARK BISHOP —And it has suffered significant budget cuts in recent years.

Mr Balding —It has.

Senator MARK BISHOP —So I presume there would have been a series of internal reviews aimed at improving output and productivity over the last few years; is that correct?

Mr Balding —Senator, that is correct. The ABC in coming together under a new structure looked at a whole range of issues from its support services to the way it was structured. I think you have to recall that in 1997-1998 the ABC saved some $29 million as part against those budget cuts. That $29 million came as a direct result of restructuring, introducing new efficiency measures, reengineering our support services, our support functions.

Just in the support area, the ABC has saved some $8 million per annum. In my own portfolio, the finance and business services, we have had a 17 per cent reduction in the budget funds for that portfolio, a 17 per cent, 18 per cent reduction in staff numbers. Again as a result
of reengineering our processes, introducing new technology. And all this was advised to the Victorian Government inquiry.

Senator MARK BISHOP —So the information you have just given us tonight was provided to the inquiry in Victoria?

Mr Balding —I gave it personally and it was also provided in a supplementary submission to the inquiry.

Senator MARK BISHOP —So what do you say to this proposition that you could save another $25 million to $74 million per annum?

Mr Balding —I'd like to talk to the consultant.

Senator MARK BISHOP —How does the ABC answer the proposition made in the report that the ABC should be the subject of an audit conducted by the ANAO?

Mr Balding —The ABC is already subject to audit by the ANAO.

Senator MARK BISHOP —It is already subject to audit?

Mr Balding —As with all Commonwealth departments and authorities, the ABC is a public body which is accountable to the parliament and we are already subject to audit. We are subject to a number of audits from the ANAO. We are subject to a financial compliance audit, which is the statutory audit—the Auditor[hyphen]General signs off on our accounts every year. We are subject to a number of performance improvements audits, management audits, by the ANAO, which the ABC willingly participates in. We are currently subject to another audit with the ANAO in respect of our phase 1 digital costings. So the ANAO has continual residence at the ABC.

Senator MARK BISHOP —The Victorian economic development committee report, pages xvii and page 71 refers to `the lack of high definition television production facilities planned for Ripponlea, the home of ABC television production in Melbourne.' Does the ABC have any plans to equip the Melbourne television production centre for HDTV?

Mr Knowles —Senator, I personally told the committee that we were planning to put HDTV into Melbourne. Our submission also in fact highlights that particular factor. We expect that high definition television is more than likely to go into Melbourne before Sydney for various practical reasons such as building construction and the like.

The real question about high definition is just precisely which point in time will it go, because at the moment if I went out to buy the equipment, I couldn't, although I will be able to from January next year. From the ABC's point of view, we will be taking a strategic decision at the time the pricing and availability of equipment is such that we get best value for money.

Mr Balding —Senator, when I appeared before the committee, I also assured the committee that we would be rolling out digital technology at our Ripponlea studios.

Senator MARK BISHOP —Thank you for those responses, ladies and gentlemen. I come to NTN transition arrangements: the same questions we did with SBS. Have there been any interruptions to ABC transmitted analogue broadcasting since the changeover?

Mr Knowles —No, Senator. In fact, it has continued fairly smoothly. It has been a smooth transition. Some factors we have settled, but some factors would not move across to the new arrangement until 1 July to allow for an effective transition, allowing the ABC to pick up things previously done by NTA. We are having regular dialogue with the new provider.

Senator MARK BISHOP —So you have no cause to complain at this stage?

Mr Knowles —No.

Senator MARK BISHOP —And is your budget for the next five years for purchasing the transmission services in a post NTN sale environment satisfactory?

Mr Knowles —There are two elements . We have the cash amount, which in fact covers the acquisition of the transmission services plus a small amount to cover extension and infills for minor ongoing works that are needed to fix up pockets of poor reception and the like. That is part of the budget and compact with government.

Senator MARK BISHOP —Fine. I understand that. Has the process of privatising the NTN caused any disruption or additional expense to the ABC in respect of broadcasting of services?

Mr Knowles —No, Senator.

Senator MARK BISHOP —Can you just outline the nature of the agreement entered into by the ABC and NTL Australia Limited in respect of the domestic analogue transmission services contract?

Mr Knowles —The contract is for the supply of transmission services according to certain performance parameters which are identical to the performance parameters we expected to receive from the NTA. So there is no change to what we get delivered, simply a change of agent.

Senator MARK BISHOP —Sale of the Adelaide Terrace property in Western Australia. What is the nature of the arrangement between the Fini construction group and the ABC in relation to the Perth Adelaide Terrace property? Can you take me through that?

Mr Balding —Yes, I can. At the moment the board has approved our negotiating with Fini to come up with a final heads of agreement, but generally the agreement would encompass Fini buying the Adelaide Terrace site from us and providing us with a new building on the new East Perth site. So it would be a turnkey operation.

Senator MARK BISHOP —And you have had the Adelaide Terrace property valued?

Mr Balding —We have had it valued, yes.

Senator MARK BISHOP —How many valuations did you organise?

Mr Balding —Offhand I'm not sure, but it would be two to three valuations.

Senator MARK BISHOP —Is there a standard practice for that with dispersal of property?

Mr Balding —Yes, there is. We have our own valuers whom we engage and we make sure that we seek our own valuation prior to and independent of what offer is being made.

Senator MARK BISHOP —So that has been done. Can you provide to the committee the names and positions of the directors of the Fini construction group?

Mr Balding —I will take that on notice. I haven't got it with me.

Senator MARK BISHOP —That is fine. Has the Fini construction group done any previous work for the ABC?

Mr Balding —I am not aware. I will take that on notice too, if I could.

Senator MARK BISHOP —Where will the additional $3 million required for the relocation be sourced from?

Mr Balding —It may not be a specific $3 million coming from one source. We are applying a number of sources to our property redevelopments throughout Australia. There are two major property redevelopments other than Sydney at the moment. There is East Perth, which we are
talking about now, and also Brisbane. We are looking to apply some future property funds, capital funds, as well as some borrowings.

Senator MARK BISHOP —As well as borrowings?

Mr Balding —Yes.

Senator MARK BISHOP —What sort of figures are we talking about in terms of borrowings?

Mr Balding —I haven't done the full mix on that as yet.

Senator MARK BISHOP —That Adelaide Terrace property would be a fairly prime site, wouldn't it, in terms of value?

Mr Balding —Oh, I presume so—fairly prime.

Senator MARK BISHOP —Fairly prime, yes. It intrigues me that there is this sort of negative cost in shifting out of Adelaide Terrace to a smaller facility in East Perth.

Mr Balding —How do you mean, Senator?

Senator MARK BISHOP —My understanding is that there will be a net cost involved in the relocation. Is that not right?

Mr Balding —Yes. But for that we are getting a brand-new building on a new site.

Senator MARK BISHOP —Yes. You are essentially shifting from the heart of the city to an inner city suburb, I concede that, in a newly developed area, but I would have thought the value of that property was fairly high.

CHAIR —Do you have an estimate of the value of the Adelaide Terrace property?

Mr Balding —Our estimate of market value is in the order of $11 million to $12 million.

CHAIR —And the purchase price of the East Perth site?

Mr Balding —From memory about $2.17 million, I think it is.

Senator MARK BISHOP —What are the extra costs involved?

Mr Balding —The total project cost for the East Perth site is in the order of about $23.5 million?

Senator MARK BISHOP —What is the timetable for studio relocation.

Mr Balding —They are still doing the finetuning on that now. You are talking about two to two and a half years.

Senator MARK BISHOP —Will the relocation have any impact on the digital broadcasting timetable for the Perth operations of the ABC?

Mr Balding —No.

Mr Knowles —Senator, in order to make sure that we do not spend money and then unspend it again, we are targeting our timetable for the full digitisation of Perth in conjunction with that new property development, but that will not stop digital television appearing in Perth. We will put the necessary transmission equipment in to deliver digital television in Perth and provide the local material from the existing facilities in the transition. That way we can actually maximise the simplicity of the transition by building the new facility and letting people start there.

Senator MARK BISHOP —Thank you, Mr Knowles. I just refer you to the PBS at page 112 under the heading of `Competitive tendering and contracting'. The second sentence there says:

The ABC Board has agreed that between 10% and 15% of the annual program budget (excluding News and current affairs) is contestable.

Can you just explain to the committee what is the methodology used by the ABC to determine successful bids in relation to the 10 per cent to 15 per cent of the ABC's non-news production budget that is classified as contestable?

Ms Clayton —Senator, we can provide you with the guidelines for contestability which are published and provided to the independent production industry, which give out the assessment criteria, and we can take that on notice.

Senator MARK BISHOP —That will be fine. What is the current figure for 1999-2000 ABC production budget allocated to the contestable classifications?

Ms Clayton —At the moment I do not think we have an allocation, but I think in this current financial year it is 11 per cent.

Senator MARK BISHOP —What is the annual program budget?

Ms Clayton —The annual program budget—if you can just bear with me a little bit—for non-news and current affairs production is in the order of $81 million.

Senator MARK BISHOP —That $81 million is for non-news and current affairs?

Ms Clayton —Yes.

Senator MARK BISHOP —And including news and current affairs?

Ms Clayton —Including news and current affairs I would probably have to take that on notice. The news and current affairs budget figure I know, but it includes radio production.

Senator MARK BISHOP —Can you do that for me, please.

Ms Clayton —Yes.

Senator MARK BISHOP —Radio Australia: what countries in the Pacific and South-East Asia are serviced by Radio Australia through the two satellite subcarriers leased by Radio Australia from the ATVI Channel Seven group.

Mr Knowles —Basically countries in South-East Asia and some of the Pacific are the major coverage areas by those beams.

Senator MARK BISHOP —Which countries are they?

Mr Knowles —It extends from around Burma across into China on one beam and then out into the Pacific on the other beam, if I remember rightly.

Senator MARK BISHOP —So Indonesia, Malaysia, Brunei, Vietnam, Laos—-

Mr Knowles —Thailand.

Senator MARK BISHOP —Into Burma—-

Mr Knowles —Vietnam.

Senator MARK BISHOP —How far north?

Mr Knowles —About halfway into China, from memory.

Senator MARK BISHOP —Then heading east?

Mr Knowles —Heading east I think the beam cuts out around the edge of India. The final number, of course, depends on how big a dish somebody wants to put up.

Senator MARK BISHOP —In the Pacific does it go across to South Korea, North Korea?

Mr Knowles —No, Senator. I am fairly certain it does not. That beam is basically southern Pacific—the Philippines through around into Fiji.

Senator MARK BISHOP —The Pacific islands?

Mr Knowles —And the Pacific islands, yes.

Senator MARK BISHOP —What are the budgetary implications for Radio Australia in respect of their lease of satellite bandwidth from the Australian Television Channel Seven group if the consortium is dissolved or otherwise alters their satellite leasing arrangement with the Indonesian carrier? What are the budgetary implications of that?

Ms Clayton —We would have to take that on notice. At the moment I believe it is in the order of $100,000 per annum, the cost of leasing that. I believe it is in that order, but I would take it on notice for confirmation.

Mr Knowles —I suspect, Senator, that you are talking about the budget implications if that service were not available through the ATVI transponder. There are a large number of potential transponder providers covering that same region from whom we would probably acquire transmission capacity at a very similar rate. We would test the market and see what was there. So it is not a case of it disappearing. There are an enormous number of potential providers—PAS is one of them. We've got a number of other things—Palapas satellite would still be available to us, for example. The satellite does not disappear with the service.

Senator MARK BISHOP —Do you have a contract with NTL Australia in respect of that Radio Australia transmission services contract? Are they involved in that at all?

Mr Knowles —There is an arrangement between the department and NTL for continuation of the Radio Australia service—this is a general Radio Australia service—while that agreement is being finally put together. That agreement was not in place on 10 May when the new contract came into being.

Senator MARK BISHOP —So when will it come into effect?

Mr Knowles —I'm expecting that it will be in by the middle of the year.

Senator MARK BISHOP —And the duration?

Mr Knowles —I think it is a 10-year contract. If you give me a minute, I will probably find the answer.

Senator MARK BISHOP —What representations has the ABC made to the Federal Government, if any, with regard to extensions to the two-year funding made available for news production to be broadcast by Australian Television International Pty Ltd? Have there been any representations to the government?

Ms Clayton —Yes, the ABC has made representations to the minister.

Senator MARK BISHOP —What is the nature of those representations?

Ms Clayton —I think we have written to the minister to seek negotiations for future funding of the provision of ABC news and current affairs services to—sorry, what am I thinking of? I'm in the wrong—this is for ATVI?

Senator MARK BISHOP —Yes, ATVI.

Ms Clayton —Sorry, I lost my train of thought. To seek continued funding for the provision of ABC news and current affairs services, we have written to the minister.

Senator MARK BISHOP —When did you write to the minister?

Ms Clayton —It would have been prior to the budget—I think towards the end of April.

Senator MARK BISHOP —When do you anticipate having those negotiations with the government?

Ms Clayton —I think those negotiations have been completed with the government. There is no additional funding provided within the current budget.

Senator MARK BISHOP —No additional funding provided for it within the current budget?

Ms Clayton —That is right.

Senator MARK BISHOP —So will you be able to meet your obligations?

Ms Clayton —For Australia Television news?

Senator MARK BISHOP —Yes.

Ms Clayton —No, I think there was an announcement on 4 June that we will be ceasing to provide news to Australia Television.

Senator MARK BISHOP —You will be ceasing to provide—-

Ms Clayton —The news service to Australia Television. However, we are still in negotiation with Channel 7 over the provision of other news and current affairs programming on a commercial basis.

Senator MARK BISHOP —So where will Channel 7 get that—-

Ms Clayton —You would have to talk to Channel 7.

Senator MARK BISHOP —And you will be unable to provide that because the government has refused additional funding in the current budget?

Ms Clayton —The original government agreement was only for two years. There was no guarantee of further funding. The government is no longer able to provide that. Channel 7 has indicated that they cannot purchase from the ABC a service at a cost which covers our cost. Under those circumstances, we cannot provide the service and subsidise Channel 7.

Senator MARK BISHOP —You made a commercial decision that you cannot provide a subsidy to an industry competitor?

Ms Clayton —If it is a commercial service, we should not be subsidising that service.

Senator MARK BISHOP —I take your point.

Mr Knowles —Senator, I can pick up your answer on Radio Australia. The current NTL contract was in fact settled on 1 May. At this stage we have no draft contract for the RA contract—that is still being developed. We expect that should be finalised before the end of the year. There are arrangements in place that cover that interim period. The final period will be subject to the discussion on the contract. We would normally expect it to be 10 years.

Senator MARK BISHOP —All right. Ms Clayton, coming back to you, what is the estimated cost of continuing to provide a similar level of production per annum for that service?

Ms Clayton —I think I would have to take that on notice. I am not close enough to the actual details of the costs, Senator Bishop.

Senator MARK BISHOP —I have a figure in my mind of less than $120,000. Is that—-

Ms Clayton —That is nowhere near the mark, no.

Senator MARK BISHOP —You will take that on notice?

Ms Clayton —Yes, we will take that on notice.

Senator MARK BISHOP —Do you have any ongoing discussions with ATVI regarding an ongoing relationship with respect to news production or is that—-

Ms Clayton —The funding from government covers the provision of news and current affairs services. I believe that Channel 7 is still interested in purchasing some of our existing services—not the dedicated Asian news service—so I think we are still talking to them about the terms on which we might provide some of our other programming to them.

Senator MARK BISHOP —But you are not talking about the—-

Ms Clayton —Not the dedicated, tailored Asian news service, which we made specially for Australia Television International.

Senator MARK BISHOP —Thank you, Ms Clayton, ladies and gentlemen. That completes my questions on the ABC.

Senator COONAN —I wanted to clarify a matter raised in previous estimates of scrutiny of ABC editorial policy and monitoring for bias, especially by reference to the ABC's coverage of the waterfront dispute. For the sake of continuity—I know some of the officers were not here on the last occasion—I should place on record that since the matter was last raised, there have been two additional reports: firstly, a critique by Professor Bell of the IPA report. I assume that that critique has been sent to the committee. Does anyone know about that?

Ms Clayton —Senator Coonan, I do not believe we have actually sent a copy of Professor Bell's critique to the committee. I think we sent it to individuals. I have a copy of it here if you would like it.

Senator COONAN —It should be tabled. And a response to Professor Bell's critique by the IPA which I will table. Additionally the ABC has provided some answers to questions on notice, which I assume you all have copies of.

Ms Clayton —We have, indeed.

Senator COONAN —Beginning firstly with the written responses to why the original Professor Bell report was commissioned by the ABC, you advised us that between 8 April and 6 May last year a number of complaints were made from various quarters. What was the nature of the complaints and from where did they emanate?

Ms Clayton —Senator Coonan, I will have to take it on notice for the details of it. There were a range of complaints about, for instance, the handling of the National Farmers Federation rally. There were complaints relating to particular news stories on the 7 o'clock news. There were a range of complaints. Eventually the minister wrote to us about, I think, 13 complaints seeking our response, and we responded to those complaints in detail.

Senator COONAN —I suppose the point is then that they were serious complaints—at least the ABC regarded them as serious complaints?

Ms Clayton —If they are passed on to us at that level, we do take the complaints very seriously, as we take all complaints very seriously.

Senator COONAN —How were they investigated?

Ms Clayton —Within the organisation. The investigation was carried out through our office, which is the corporate affairs office of the ABC. We interviewed various people across the corporation. We compiled the evidence.

Senator COONAN —So this was all done internally, was it?

Ms Clayton —Yes. The investigation of each of those complaints was carried out internally. They were scrutinised, as I understand it, by the chairman. The report also went to the board.

Senator COONAN —What I am interested in trying to establish is why it was thought necessary to go outside to commission Professor Bell to do a report. I mean, was it thought the existing internal mechanisms were not sufficient by themselves? What was the process that led to that?

Ms Clayton —It is a matter of perception, Senator Coonan. There was considerable criticism in the media as well as the direct criticism that we received by letter. Because of the high profile of these complaints in the media, we felt that to have a third party look at it would be wise and prudent on our part under those circumstances.

Senator COONAN —That is precisely the point, isn't it? There are clearly occasions when the ABC—as both, I suppose, producer and regulator of its own content—needs to be fortified by some third party evidence to be able to assure the board that it is abiding by its guidelines?

Ms Clayton —We regularly provide and have provided budgets regularly now for external monitoring of our election coverage. There may be other circumstances in the future where there is highly controversial public debate going on where we would feel that to have an ad hoc review of our coverage would be appropriate in terms of public perception, yes.

Senator COONAN —There is currently no source of independent advice, is there, available to the board. It is very much an internal process, an upwardly mobile process, perhaps, was the way it was described to me on the last occasion.

Ms Clayton —The independent advice that is available to us is that there is an independent complaints review panel appointed by the board which has independent—-

Senator COONAN —But that's after the event, isn't it?

Ms Clayton —That is to respond to particular complaints.

Senator COONAN —What I'm getting at is that, as I understand it—and I have gone through it I think fairly carefully—there is no systematic independent process to provide advice on editorial policy.

Ms Clayton —No, and it is probably not the role of the ABC to provide that. It is certainly the role of the ABC to monitor its own performance and from time to time where we see that there is a public perception we do commission an independent process, but by virtue of the nature of our commissioning it, its independence is always questioned, as the IPA has done.

Senator COONAN —Yes, I understand the process. A little over a year ago in May last year the minister, on behalf of the government, put forward five specific suggestions for the board's consideration to assist the transparency process, if you like, of the ABC's internal review processes, including its editorial policies unit for the very reasons we have been discussing. What has happened to that suggestion?

Ms Clayton —We explained at the time, Senator Coonan, that we had—again within the corporate affairs area—an editorial policies unit which governs the development of our editorial policies and education about those editorial policies. That happens on a biannual basis. It is a corporate responsibility, as indeed it is in the BBC.

Senator COONAN —Is that a separate unit you are describing?

Ms Clayton —It is part of our corporate policy unit, but it is a discrete function of that corporate policy unit with discrete objectives.

Senator COONAN —When was that introduced?

Ms Clayton —That has been in place for many years.

Senator COONAN —If that's its role, it didn't help in relation to the waterfront dispute.

Ms Clayton —As I say, its role is the development of and the education on our editorial policies.

Senator COONAN —It doesn't provide independent advice?

Ms Clayton —It doesn't provide day-to-day independent advice on monitoring within the corporation of editorial activities.

Senator COONAN —I understood that that was what the minister had been suggesting—that it was worth considering some sort of separate unit to provide that kind of independent advice.

Ms Clayton —Our view very much is that, given our own internal mechanisms, given that these activities are happening on a daily basis, program decisions are being made on a daily basis, that we are responding to any complaints that come in from the general community promptly, and we do apologise where it is necessary, such an overriding body across the corporation which is separated out from the program department is not necessary and that our procedures are adequate. I might also add that it is the express and explicit role of the board to monitor the independence and impartiality of ABC news and current affairs and other journalistic output and they do that regularly through a quarterly report. That is a role that the board has actively taken on over this period.

Senator COONAN —Was Professor Bell's report the subject of one of these quarterly reports?

Ms Clayton —Professor Bell's report was the subject of two specific presentations to the board. I think one of them was within a quarterly report and one of them was without, because we weren't in sync with the quarter. Professor Bell came himself twice to the board, gave a presentation on his report, the board discussed in detail that report with him, questions about methodology, questions about the result, and at the end they were satisfied with that process.

Senator COONAN —I understand that. Did they also have a report on the IPA criticism of Professor Bell's report?

Ms Clayton —Yes, they have had a report at the last board meeting as part of the impartiality and objectivity report. The IPA report was provided to them. Commentary was provided. We advised them that Professor Bell's report was freely available—and I think it was available at that time, so, yes, they were fully informed.

Senator COONAN —To the extent that any of these reports are in writing, could you take on notice to provide copies of them? Thank you.

There is just one thing I want to clear up before I ask a couple of questions about the reports. In a previous estimates, in answer to a question by Senator Tierney, I think it was you, Ms Clayton, said that there was a threshold test before anyone could take a complaint to the independent complaints review panel, and Mr Lloyd-James said on the last occasion—in response to a question from me—that there is no threshold. Which is right?

Ms Clayton —The threshold test that exists is that it has to be judged as a serious complaint.

Senator COONAN —How do you do that?

Ms Clayton —That is a very good question, Senator. I think as long as the complaint itself relates to the terms, the independent complaints review panel has never rejected a complaint on the basis that it was not serious. But that was written into the guidelines.

Senator COONAN —I won't say it's a Clayton's threshold then! That would be unfair. In a written reply to my question on notice concerning the IPA finding that ABC reporting favoured MUA interests over Patrick interests by 36 per cent more air time, the ABC replied
that the methodology used by Professor Bell is properly a matter for him to comment on, which of course I think is absolutely the right answer. But I take it from that comment that the ABC simply does not know definitively whether Professor Bell's methodology is flawed or whether it isn't.

Ms Clayton —What we have done, of course, is commission an independent reviewer.

Senator COONAN —I understand that.

Ms Clayton —We have not commissioned an independent reviewer to review the independent reviewer.

Senator COONAN —But they seem to be arguing with each other.

Ms Clayton —The ABC board itself has a range of excellent expertise, but its members probably are not qualified to do that kind of study.

Senator COONAN —So you don't feel qualified to comment on it, which is interesting, because a specific conclusion on which the ABC appears to rely is Professor Bell's finding that almost equal exposure as measured by sound bytes was given to both sides of the dispute. I'm just wondering where we go with that.

Ms Clayton —I think Professor Bell in his report has indicated there are differences in methodology in the measuring of sound bytes.

Senator COONAN —The IPA report criticised Professor Bell's finding that there was almost equal coverage by finding that Professor Bell had used highly selective criteria and left a lot out.

Ms Clayton —Professor Bell has addressed that, I think, in his critique.

Senator COONAN —Yes, but I am curious to know by what process you adopted the Bell report as correct and the IPA report as adding nothing of value.

Ms Clayton —Professor Bell's report came as part of a general overview of our performance. We monitored audience complaints. We looked at specific complaints. There was nothing in any of that reporting which indicated to the board—and the board I think has made statements in this regard—that there was any evidence of systemic bias in any of the ABC's coverage of the waterfront dispute.

Senator COONAN —But what you said—at least what the press statement said, speaking of you generically—was that you made quite a feature of accepting Professor Bell's conclusion that there was almost equal coverage.

Ms Clayton —That's right.

Senator COONAN —Then you get a report that challenges the central tenet of that report. I am just wondering how you distinguish which is right.

Ms Clayton —You get another report from Professor Bell which challenges the central tenet of the IPA report.

Senator COONAN —And you get another report from the IPA which[hyphen].

Ms Clayton —We commissioned an independent report. That was the finding of the independent report at the time, and that supported findings of other measures of our performance under the waterfront dispute. If that report of Professor Bell's had been out of line with our own monitoring and out of line with our performance in other controversial disputes since, you may have questioned it, but it has not been out of line with our performance in any controversial dispute since in terms of our monitoring of the federal
election, our monitoring of the New South Wales state election and our ongoing monitoring of audience complaints.

Senator COONAN —So you're not really interested in the methodology. You are just interested in the conclusion that so far as Professor Bell is concerned, he supports the ABC's view that it is not biased in the way that it conducted its coverage?

Ms Clayton —We selected Professor Bell on the basis of his reputation.

Senator COONAN —Just wait a minute. Just answer my question, if you would. You are interested only in the conclusion, not how Professor Bell got there?

Ms Clayton —We are interested in the integrity of the conclusion and the integrity of the conclusion is evidenced by Professor Bell's own qualifications and by, I might say, scrutiny of that report by the board at the time of its delivery.

Senator COONAN —We will see how they scrutinise the IPA report in due course, no doubt, but I am just interested, because the first IPA report came out on 3 April and the following day Mr Johns said he was satisfied with the coverage and findings of the Bell report. I was just wondering whether some further reviews were undertaken between 3 and 4 April to enable that statement to be made?

Ms Clayton —Mr Johns made the statement on the basis of the report as received. You must understand the environment in which this is happening.

Senator COONAN —I do, I do. I am just wanting to understand the process here.

Ms Clayton —We are dealing with an ongoing public issue and it is necessary for the managing director to make those statements at the time.

Senator COONAN —What I am interested in is whether anybody between 3 and 4 April turned their mind at all to whether or not the Bell report was highly selective?

Ms Clayton —The Bell report had been commissioned by us on the basis—-

Senator COONAN —Had they thought about whether it was highly selective?

Ms Clayton —The Bell report had its own internal integrity on our reading and I think that internal integrity has been supported by findings from other measures of our performance since and I do not think that there is a serious challenge to it as a result of the IPA report.

Senator COONAN —What I put to you in a question that you have taken on notice was that you appear to have just rejected the IPA report out of hand and it seems to be supported by the fact that nothing much seems to have happened between receiving the IPA report and just saying, `It doesn't add any value, goodbye.'

Ms Clayton —I think the actual quote that we provided to you in our response was that it comes from its own opinion base.

Senator COONAN —Would you discount it for that reason, assuming that was true?

Ms Clayton —We said of independent value, in that sense.

Senator COONAN —So you think it was biased itself, that report?

Ms Clayton —I think that the report itself came from a position—I think Professor Bell has explained this within his report, which we will table at the committee, that the benchmark of bias which the IPA used was a version of the history of the events and I think Professor Bell—

Senator COONAN —But just dealing with sound bytes for the minute, which seems to be the critical central issue, it seems to be the case that Professor Bell did not count some and the IPA report counted all of them. Is there any logic why he would leave out some?

Ms Clayton —I think Professor Bell has dealt with that.

Senator COONAN —The IPA dealt with it. Have you read—-

Ms Clayton —I certainly have read the IPA report.

Senator COONAN —The recent one, a couple of days ago?

Ms Clayton —No, we have not yet received that.

Senator COONAN —Maybe I will leave it until you have had a chance to read that. I will pursue it on another occasion, because I have obviously run out of time. But Professor Bell had used a much narrower criterion than the IPA did in measuring all the sound bytes and I am just interested to know whether or not you reviewed what had been left out again or did you just leave it up to Professor Bell?

Ms Clayton —This was an independent commissioned survey. We did not interfere in the methodology because it was an independent survey. The methodology was agreed with—-

Senator COONAN —Wouldn't this be something discussed by the board?

Ms Clayton —Certainly the outcome of the report was discussed in detail by the board and the board was very satisfied with the outcome of the report.

Senator COONAN —But if you leave out a whole lot of potentially relevant material, you'd have to justify yourself, would you not, as to why non-MUA people weren't relevant, non-office-holders of the MUA weren't relevant to be counted?

Ms Clayton —I think Professor Bell has explained himself within his own report.

Senator COONAN —This is turning into a bit of a mantra. We will obviously have to pursue it a little further. But I think what it does prove is that what is considered relevant and what is not is very much a matter of judgment and no doubt opinions can legitimately differ. But I certainly intend my questions to be a constructive focus about how the ABC adheres to its guidelines. That's really what this is all about. We can argue about different reports. I am interested to know what assurance you can give the committee that serious criticism will be properly considered and not rejected out of hand as being biased itself?

Ms Clayton —I think we can give you that assurance.

Senator COONAN —I certainly hope so. Also with the Victorian parliamentary inquiry Mr Johns was again quoted as having dismissed the report as an exercise in political lobbying. Is that also another instance where that is considered to be simply a biased attack?

Ms Clayton —On the basis of the efforts that we had put in, on the basis of the conclusions reached by the committee in their report, on the basis of the misleading information provided within that about our evidence, and on the basis of conversations that we had had with the committee all the way through, we felt that at the beginning of the process there had been an agenda and at the end of the process there continued to be an agenda on that and I think that was reflected in it.

Senator COONAN —I understand and accept without question that the aspirations of the ABC to be unbiased are genuine. I accept that. But there is a difficulty, I think—I just ask you to think about this, because I want to pursue it at some further stage—when you have a complaints system and a monitoring system that is dependent on subjective internal assessment and where there is no systematic independent advice for program makers, there is an
appreciable risk that guidelines will be breached. I think it is a serious matter that this committee has to pursue from time to time.

Ms Clayton —I think you ignore the role of the ABA in that assessment. The ABC provides a code of conduct to the ABA. The ABA receives complaints under certain circumstances that have been through the ABC and makes its own judgments on that. So I think that there is an independent regulatory body established under the ABA which serves the purpose.

Senator COONAN —So you do not think that there is any appreciable risk with the conditions that apply that there will be any breach of guidelines?

Ms Clayton —The ABC is one of the most scrutinised organisations in this country.

Senator COONAN —Absolutely, but I am afraid it has to be.

Ms Clayton —Apart from the formal regulation and committee hearings such as this, we regularly receive letters from our audience, the media—all of those we take into account, all of them we log, all of them we lobby. I think that our efforts to achieve fairness, accuracy and impartiality probably exceed any other organisation in the country. They should do, but they do and we take it very seriously.

Senator COONAN —I don't doubt the aspirations are genuine and the motives are genuine, but sometimes we fall between the cracks. Should we leave the war of methodologies to the next occasion when you have had a chance, perhaps, to look at the response?

CHAIR —Senator Payne has some questions on notice for the ABC. That concludes ABC. I call the ABA.

[9.35 p.m.]