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Environment and Communications Legislation Committee - 29/04/2016 - Broadcasting Legislation Amendment (Media Reform) Bill 2016

CAMPTON, Ms Ann Louise, Assistant Secretary, Media Branch, Department of Communications and the Arts

JANSEN, Mr David, Acting Assistant Secretary, Content and Copyright Branch, Department of Communications and the Arts

PELLING, Mr Simon, First Assistant Secretary, Content Division, Department of Communications and the Arts


CHAIR: I now welcome officers from the Department of Communications and the Arts. Welcome to you all, and thank you very much for coming down here to appear before us today. We appreciate it; thank you. I understand information on parliamentary privilege and the protection of witnesses and evidence has been provided to you—is that correct?

Mr Pelling : Yes.

CHAIR: I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. I now invite you to make a brief opening statement.

Mr Pelling : We do not have an opening statement, but thank you for the opportunity.

Senator URQUHART: Thank you very much for coming down today. Can you tell me about what industry and community consultation was undertaken in the development of this legislation?

Mr Pelling : We provided an answer to a question on notice in regard to consultation around the policy framework and the bill. I was away at the time, but I believe that one of my colleagues in the department went through some of it here. We did not really say an exposure draft of the bill, but certainly there have been extensive consultations with a range of media organisations, both with the department and by the minister himself, over an extensive period of time, around the big issues.

Senator URQUHART: I think we have heard, Mr Pelling, from many a media organisation, that there has been a very long process about media reforms.

Mr Pelling : Yes. I saw that testimony. Yes, there were many trips to the minister's office.

Senator URQUHART: So no surprises! In terms of the provision of the answer, I cannot recall whether you gave us a list of who was consulted.

Mr Pelling : Yes. It is one of the questions on notice—No. 6, I am told.

Senator URQUHART: A number of concerns have been raised in submissions about the impacts of this legislation on independent journalism. Has the department done any work on what these impacts might be?

Mr Pelling : Not specifically. Journalism as an issue is not really broadly within the policy remit of the department, but clearly, to the extent that the provisions in this bill will result in media organisations being better able to survive in the current market, you would think that that would have a positive result on their ability to employ and engage journalists. It is really for others I think. You have heard a lot of testimony about people's views about the role of professional journalism.

Senator URQUHART: Sure, but you have not done any real work on what that might be?

Mr Pelling : Not that I can recall recently, no.

Senator URQUHART: Clearly many media businesses are finding the conditions incredibly increasingly challenging. I think we have heard that and know that. They have got every right to argue for provisions that will make it easier for them to increase their profits, or reduce their losses in some instances. As legislators we also need to keep a keen eye on the impacts on the health of our democracy and the diversity of voices in the media landscape. How would these be protected under this legislation? How do we protect the health of democracy and the diversity of voices?

Mr Pelling : You are quite correct. I think the key policy issue here is about finding an appropriate balance between preserving diversity of voices, particularly around news and current affairs, and maximising the ability of local businesses in particular who employ local people and who support local content to continue to operate and survive in the market. So what the government is trying to do in this bill is address two of the most least effective media ownership rules of the five basic numerical media ownership rules, to effectively allow some consolidation of businesses and some capacity to move in the market to get better commercial outcomes. But at the same time the policy retains three key numerical arrangements: one is the four/five arrangement, and that does provide a limit to the number of media groups in any area and that particularly will be a protection in regional areas, and then there is the two-to-a-market radio limit and the one-to-a-market television limit. So there is a balance here which basically the government is trying to achieve—

Senator URQUHART: I do not want to put words in your mouth—I am trying to understand here—but are you saying that retaining those three other rules gives that protection?

Mr Pelling : Yes. A number of regional areas, for example, would already be at four, so that rule preserves those areas as having four different voices—of course bearing in mind that this is regulating only three platforms and of course those areas would still have all the other sources of content that are available.

Senator URQUHART: There was a report in The Australian online yesterday that the government is planning on slashing millions of dollars off broadcasting fees paid by television stations. I do not know the accuracy of that; whether that is correct or not. You might want to clear that up.

Mr Pelling : That is a matter for—

CHAIR: Are you speculating on government policy?

Senator URQUHART: No, I said, 'You might want to clear that up,' if he is in a position to.

Mr Pelling : As the minister has said, they do not comment on budget matters.

Senator URQUHART: That is fine. In terms of the television broadcasting fees that are paid now, where does that money currently go?

Mr Pelling : It just goes back into consolidated revenue. Yes, it is received by Treasury.

Senator URQUHART: Has the department done any work on items that might be able to be removed from the anti-siphoning list?

Mr Pelling : We have provided advice on a number of occasions to successive ministers on the anti-siphoning scheme, and we have been given many submissions by the industry about things that they would like to come off the list, but I cannot speculate on what the government might choose to do with regard to those things.

Senator URQUHART: So you do not know what that is—

Mr Pelling : And others have said in the testimony to you—there was some discussion, I think, in the first hearing about a purported letter that—

Senator URQUHART: That is right. There were some tables that were attached and that sort of stuff. There have been some concerns in some submissions about the ACCC's ability to adequately protect diversity, plurality and local voices. The UK regulator looked at a number of factors outside of traditional competition frameworks: namely availability, consumption and impact, as well as governance models, funding models, power over editorial control, internal plurality, market trends and regulation and oversight. What formal requirements does the ACCC have to look at those factors?

Mr Pelling : Your questions would, with respect, be better directed to the ACCC, because I do not think it is my role to talk in detail about what the ACCC does.

Senator URQUHART: But you would have some idea as to—

Mr Pelling : I draw your attention, for example, to the testimony and submission of the chair of the ACCC to this committee. Also, the minister has asked the ACCC to have a look at its media guidelines that it published in 2006 or something like that. They have agreed to update these media guidelines, which will give some general guidance to the industry. It is worth pointing out that the media tests in the broadcasting legislation are different and have—in their history at least—a different focus from the competition test, which is much more about ensuring that competition exists in the market. But of course they will overlap to the extent that the ACCC, for example, looks at diversity, and the chairman said that one of the things it would look at in this is diversity. We are also very interested in the UK analysis and approaches, and we will be following that very carefully, but for the context of this bill, of course, we are just looking at specific numeric tests.

Senator URQUHART: Will we see more or fewer journalists as a result of this legislation?

Mr Pelling : In the sense that media organisations employ professional journalists and this legislation assists those media organisations in their bottom lines, they would agree. You would expect, at the very least, that they would be able to continue to support the kind of levels that they might support at the moment, but ultimately those are matters for those organisations.

Senator URQUHART: You have not done any modelling on what that might show?

Mr Pelling : No, as I said earlier, we have not done a lot of work on analysis of journalism, as such.

Senator URQUHART: Thank you.

Senator McKENZIE: The only question I have is one that has taken my fancy all day. Former Minister Alston's 2000 determination seems incredibly out of whack 16 years down the track, and nobody—other than, I think, Channel 9, but then, obviously, after the decision of the Supreme Court, they have reasons to agree with former Minister Alston—that we have heard from today thinks that that is a relevant definition of a broadcasting service.

Mr Pelling : There is a colloquial definition of small-b broadcasting and a legal definition of broadcasting. The Broadcasting Services Act has a specific definition of broadcasting—it is quite broad, but it is there—and that is the definition that applies for the purposes of regulating services. Essentially, the broadcasting services have to be licensed—particularly where they use broadcasting spectrum—and there is a scope of broadcasting which is in the act, because you could not license a broadcasting service without defining, at least in some general terms, 'broadcasting'.

Senator McKENZIE: But they are competing against entities that, for instance—

Mr Pelling : No, not necessarily. There are multiple classes of broadcasting. There are commercial broadcasters, there are community broadcasters, there are small players like—

Senator McKENZIE: Is Optus a broadcaster under the act?

Mr Pelling : Optus may still be a subscription broadcaster—I am not sure. It would depend on whether it has subscription broadcasting licences from the Australia Communications and Media Authority.

Senator McKENZIE: So you are standing by former minister Alston's determination that a broadcasting service is only something that is a television program or a radio program—using the internet is not?

Mr Pelling : That definition has a specific history behind it which really relates to—and this goes back a couple of decades—the world as it was then and concerns that were raised in the early days of the internet that they not be regulated as broadcasters. Once you have a commercial broadcasting licence, for example, a whole range of very onerous, or potentially very onerous, public interest-type provisions apply. You have to provide local content, you have to operate within licensed areas, and things like that. So Australian content, children's content—all of those sorts of things. And you have to comply with the code of practice.

Senator McKENZIE: I appreciate that.

Mr Pelling : If you were to remove that determination, then you would fall back on the definition in the act to the extent that it is about things that are regulated in that act, of course.

Senator McKENZIE: You mentioned a specific broadcast licensed area. But what about the case when people are broadcasting, in the colloquial sense, into that area the service that somebody has actually paid a lot of money for to broadcast, with a big 'B', into that area?

Mr Pelling : A general view of that would be: to the extent that, if you like, the streamed service falls within the exception, then it would not be regulated, whereas the free-to-air service in the area would be regulated under the act. This is precisely the issue that a number of the regional broadcasters have raised.

Senator McKENZIE: Which, to me, suggests that it is meaningless, because people are just getting—for the same reason the reach rule now is sort of redundant in many cases.

Mr Pelling : A number of players have made that view. I will not offer a specific comment on whether or not it works in the current environment. There is probably a good case for having a think about those sorts of things, but it is what it is at the moment. For the purposes of regulation under the Broadcasting Services Act, the broad definition in the act applies. There is a specific exclusion for services dealt with over the internet. I am simply saying, also, that if you were to just strip that out, then there is, potentially, an increased risk that organisations that deliver things that might be considered to be broadcasting services under the Broadcasting Services Act would then be regulated by that action and would fall under a regulatory arrangement. That may not be the most desirable thing in those circumstances.

Senator McKENZIE: Thank you. I have no further questions.

CHAIR: I have a few, if I could, Mr Pelling. The first couple relate to evidence we heard from Prime at our first hearing, and it was also in their submission. The first issue relates to the application of the 15 per cent threshold for deemed control. Is it correct that a trigger event could occur if a change in ownership led to a person owning just have 15 per cent of a regional television network?

Mr Pelling : Yes. Broadly speaking, that is correct.

CHAIR: You may have seen, or heard, that Prime had argued such an outcome would not be appropriate as a person owning 15.1 per cent of a network would not necessarily yield synergies or efficiencies. Are you able to respond to their concerns?

Mr Pelling : I think that is an issue we need to consider further. Obviously, that will be a matter for the minister, and we will advise the minister appropriately. Both Prime and, I think, Southern Cross raised specific issues around that definition. One of them proposed that we raise the threshold 50 per cent. The other proposed that we just take out the deemed 15 per cent provision and leave the more generic provisions about the more anecdotal—not anecdotal; what is the word I am looking for?

Witness interjecting

Mr Pelling : Yes: this question of actual control, which is more about who controls the programs and those sorts of things.

I think the other side to the coin, though, is that if you start to play around with the definition of control in the Broadcasting Services Act, which has been well established over many years and around which all sorts of structures have been set up, there is some associated risk that would need to be thought through. For example, if you went from 15 to 50 per cent then the threshold would be suddenly much different. At the moment there are a number of media players who operate at round about the 15 per cent level, so they have a reasonable shareholding but they are not actually in control of the company. They could suddenly increase their threshold if you took it up to 50 per cent unless you did some strange thing which said 'only applies in this circumstance but not in that circumstance'. It would be, to my mind, quite complex as to how you would actually apply that. So, it is not a simple thing but, having said that, we have heard their testimony and it is something that we will provide advice on.

CHAIR: You will provide advice to the minister on those issues?

Mr Pelling : Yes.

CHAIR: The second one is that the concept of control is not two-way. This also relates to some evidence that we heard from Prime. They had submitted that the definition of a trigger event in the bill does not address the scenario where a person who controls a regional licence starts to control a metropolitan licence and, as a result, they start to reach an audience of over 75 per cent of the population. First of all, are you aware of that evidence from Prime?

Mr Pelling : Yes.

CHAIR: Was it actually correct for them to say that a trigger event would not occur if a person who controls a regional licence starts to control a metropolitan licence?

Mr Pelling : That is how the provision currently operates. Our view, I think, is that that is not what was intended but, again, that would be decision for the minister.

CHAIR: When you say it is not what was intended, could you just clarify that further.

Mr Pelling : The broad intention here is that where groups form which go over the 75 per cent control rule, no matter who initiates it, the key issue is that the group is formed and then that constitutes the trigger event. In that sense, whether a regional broadcaster controls the rights of a metropolitan broadcaster or a metro broadcaster has the rights of a regional broadcaster should not necessarily be the key issue. The key issue would be that a transaction occurs that constitutes—

CHAIR: Could I just clarify your response to that, because I think this is quite important. You are saying that it was not the intent to have it read or interpreted just one way—a metropolitan owner owning a regional service—but that is actually the practical outcome of the wording of the—

Mr Pelling : That is the way the wording reads at the moment. I have a copy of the bill somewhere.

CHAIR: But you are saying that that is the way it reads but it is not the intent?

Mr Pelling : This ultimately, again, will be a decision for the minister, but my understanding is that the focus really, in terms of the policy, is a focus on the formation of a group, not on whether it is one or the other which drives the process.

CHAIR: Okay. Just so that I am very clear: when this legislation was drafted it was not the intent to have it one way or the other; it was that it should encompass both scenarios, but the current wording reads just for one scenario?

Mr Pelling : That is the department's view on the matter, and we would need to make sure that the minister is happy with or agrees with that view.

CHAIR: Okay, thank you. If a merger between a metropolitan network and a regional network is proposed, could the local programming requirements be circumvented by the transaction being structured so that the regional licensee gains control of the metropolitan licence rather than vice versa? It is an extension of the last question.

Mr Pelling : To tell the truth, I have not done work on the detail. We would need to think about that scenario. If the minister agrees to change that, it becomes a moot point anyway.

CHAIR: I accept that and I understand your answer. Can I get you to take that on notice and possibly get some further advice about that from someone who is familiar with it?

Mr Pelling : We can take that on notice, yes, unless my colleagues have anything to add to that.

CHAIR: Because we have a provision in there that is clearly now something other than what you have said was the intent. I think there are some logical flow-ons from that, including the scenario I have just presented. So if you could take that on notice and get back to us it would be appreciated.

Mr Pelling : Yes, Chair.

CHAIR: Thank you. We have had a lot of testimony here, as you know. It has been very clear that there is a widespread belief that the current legislation is anachronistic and a whole range of other words that really do not apply to the current communications, broadcasting and digital world we now live and work in. We have had various submitters. I think the consensus is that these are a start, but clearly there is a lot more to be done. Is it your considered opinion, as an expert working in this area, that we need to look at evolving the legislation away from platform-specific requirements and more towards content so that the legislation is platform agnostic, so that as technology changes and as the means of communication change we do not need to keep changing the legislation to capture every single type of communications platform? Is that something that the department has turned its mind to in relation to this issue?

Mr Pelling : Yes, we have. Speaking now as a departmental officer, as opposed to any particular government policy, I certainly think that when you look at the industry we have regulatory frameworks which are particularly focused on old-style industries. For example, the broadcasting legislation saw broadcasting as a sort of vertical silo. Increasingly, from a policy perspective, we think that you need to start thinking of the communications industry from a different perspective—that is, a more horizontal perspective where you look at how on one level people are providing the infrastructure and services at the network level, and at another level people are delivering more on the content side of things, for example. I am presenting very simplistic kinds of pictures on this. If you go down that route then there is the opportunity to kind of rethink. Are the regulatory frameworks that we have at the moment fit for purpose? Do they best support industries which are really operating in that space, rather than just the old, commercial, subscription broadcasting kind of framework, the old telecommunications framework, et cetera.

CHAIR: In relation to a question which you answered from Senator McKenzie when she was talking about the definition of broadcasting, you quite rightly pointed out that there is a legal definition that the act operates under, but you also said that there is a colloquial definition. How would you describe the colloquial definition of broadcasting now?

Mr Pelling : I would not try to put a definition as such around it, but if you are a consumer I would say that you are probably starting to see content, however delivered and on whatever platform, as being a continuum of material. So from the consumer's perspective, you may watch the same content on different screens, you will at different times in your day or in your life be watching material on small screens and big screens and so on. To that extent, from a consumer's perspective, how the content gets to devices is not really the issue anymore. It is: 'I want content in forms that I want at a particular time. I want high-definition content on a big screen, or I want convenient content on a mobile screen' or something like that. You would probably increasingly see those services as being interchangeable.

CHAIR: Just to put this perhaps a little oversimplistically, is what we are talking about now all about a change in focus from broadcasting as a method of transmission—the way of transmitting—to a focus on people receiving information or data in whatever way, so it is now more about what content they receive rather than the way that it is transmitted?

Mr Pelling : Yes, that is consistent with the kind of layer approach. It is obviously not a simple equation here, because people who provide infrastructure will provide content and they will provide apps and services and things like that, so it is a multifaceted and complex equation. But essentially, purely from a consumer's perspective, you are much more focused in general at a content level, in terms of the content you get and it being appropriate for where you are, how you want it, how timely it is and all those sorts of things, rather than it necessarily coming from this supplier or on this particular screen per se. So it is a focus much more on what you are seeing, what you are hearing and how relevant and convenient that is to your life than on it coming from this person or that person.

CHAIR: Thank you. Also, in the evidence that we have heard so far, at the previous hearing and again today, about the requirement to have both of these measures—the two-out-of-three and also the 75 per cent reach rule—changed simultaneously, there have been varying degrees of support for both, but there has been a very strong argument throughout the testimony that they need to be done together. I am just wondering whether you have any comment or additional information on that.

Mr Pelling : We certainly support them, and the government obviously is supporting them, being done together, and I am not aware of any decisions by the government to try to separate them out into separate things. Our view is really that we are tackling two of the least effective media ownership rules, particularly the 75 per cent rule, which probably provides very little meaningful protection anymore. The two-out-of-three rule is again a rule which has served its time. In regard to that rule, you would be drifting more towards allowing organisations to build scale and scope rather than trying to protect old industries as separate industries. So we think they are part and parcel of a package to try to make some meaningful change to the framework of media ownership rules.

CHAIR: My final question relates to consultation. We have had a number of questions, and we have also had a range of evidence, in response to the level of consultation and engagement the industry has had in relation to these changes. Would it be fair for me to characterise it by saying that the department, the ministers and others have been engaging for quite some time on the provisions that are now in this bill?

Mr Pelling : That is correct. There has been a lot of engagement by us and, on my understanding, by the minister's office—obviously, precisely what they do is up to them—with key industry stakeholders on this. While we did not specifically release an exposure draft of the bill, the concepts around the media ownership rule and related matters, like anti-siphoning and so on, have been talked about with industry, at their behest and at the minister's behest, extensively.

CHAIR: So really there were few if any surprises there for them.

Mr Pelling : Nothing in this, in my view, should surprise any of the key players who would be affected by it.

CHAIR: Thank you very much. We appreciate your time coming down here to provide testimony on this very important issue.

Mr Pelling : We are happy to serve the committee.

CHAIR: That concludes today's hearing, and I thank all witnesses for their very informative and well-considered presentations.

Committee adjourned at 16:29