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Tuesday, 12 May 1987
Page: 3008

Mr LLOYD(5.53) —The honourable member for Isaacs (Mr Charles), for a considerable part of his speech, kept referring to the fact that in his view whoever controls programs and programming is more important than who owns the station. I say that is rubbish. The ownership of the station dictates the number, type and cost of programs and the fewer the owners the greater the dictation.

The National Party of Australia supports the abolition of the two-station rule, and that is the basis of this legislation. The restriction is outmoded and unfair to regional television. The honourable member for Isaacs highlighted the extremes involved, from under one per cent in the smallest market to 43 per cent ownership in the two major cities of Melbourne and Sydney. Not only regional television is unfairly restrained by the two- station rule; the two major cities of Melbourne and Sydney have 43 per cent and Adelaide and Brisbane have 16 per cent. It is time that the great inequity in that situation was addressed.

As I understand it, the trigger that has caused the Labor Government to address the two- station rule now is as a result of the twists and turns it has made on its regional television policy over the last few years, and the pressure by some networks to expand their dominance to all capital cities and the regional areas of Australia as well. Disagreement within the Government as to what the ownership percentage should be when the two-station rule is replaced has delayed the legislation for some time. Originally, two figures were considered. Firstly, there was the 31 per cent to 33 per cent suggestion, which would allow ownership affecting stations in Sydney, and Brisbane, or Melbourne and Adelaide, with a grandfather clause for existing media owners who were above that figure. Secondly, the figure of 43 per cent was suggested. That would allow everyone to come up to the largest ownership at that time. Later, the figure of 75 per cent was put forward; it was the innovation of the Treasurer (Mr Keating). I believe that that was against the wishes of many people in the Australian Labor Party who felt that 43 per cent should be as high as electronic or media television ownership should go in this country, and one can speculate why the Treasurer went for such a high figure.

Since the announcement on 27 November by the Minister for Communications (Mr Duffy) that 75 per cent would be the maximum percentage allowed, there has been a series of takeovers and prescribed interest purchases that have placed several companies above 43 per cent ownership. The highest figure is now 58 per cent. The figure of 75 per cent is too high. It would be dangerous to have such a percentage affecting the future concentration of our most powerful media form. That is not in the national interest. In theory, it allows four major groups, because we have three commercial stations in our major capital cities. Therefore, there is an effective theory of 300 per cent. If that is divided by 75, the result is four. However, that applies only in theory because the three organisations involved now have the pick of the market; they will pick the eyes out of the market. Thus, ordinary competition theory is not relevant in this limited entry market, and it will always be a market of limited entry because of the spectrum and because, while we maintain the Australian Broadcasting Tribunal with the regulations surrounding that and the issuing of licences, there will be viability arguments, High Court of Australia injunctions, and so on going on for years and years. This means that ordinary market theory does not apply in this type of situation.

Honourable members do not have to take my word for that. The United States of America is the home of competitive enterprise and of real enterprise rather than private enterprise and the corporate state. The United States has effective anti-monopoly legislation-and that is an essential part of competitive practice-and it has 12 stations and a 25 per cent of the market rule. Yet in this legislation the figure is 75 per cent.

Mr Duffy —There are only three networks, though.

Mr LLOYD —In the United States the figure is 25 per cent of the market, and that is the fundamental point I am trying to make.

In determining what should be the correct percentage, we should consider what criteria should be used to determine the best percentage of ownership to replace the two-station rule. I will make several points: We should have a percentage that allows large enough scale by a number of operators to be able to make Australian programs and maintain Australian content. They should also have the ability to make those programs of adequate quality or, to take up the point made by the honourable member of Isaacs, to contract with independent companies for programs of adequate quality so that they can be sold to other countries as well as to the smaller stations in Australia. There will have to be an adequate number of those programming forces though the ownership arrangements so that we have a diversity of programming. I believe that we must have diversity of ownership for that to occur. There must be reasonable financial strength to give such organisations the power necessary to purchase overseas programs, and they must have financial strength to be able continually to use the latest technology. Many people believe-including, I think, the supporters in probably just about every party-that about 31 per cent, 32 per cent or 33 per cent best fits those criteria. It would immediately allow for four separate significant groups. That is, there would have to be four separate licences in Melbourne and Sydney, which could then be matched with an Adelaide or a Brisbane licence and so on. That would give maximum program choice for the people of Australia.

However, there is a complication with that percentage, because 43 per cent is already in place for those companies that own Melbourne and Sydney licences. If they went for 43 per cent, no divestment was necessary and others could build up to the same figure. That provides the possibility of five or six major or reasonable players over a period of time, and would still guarantee a reasonable diversity in programming. But 43 per cent is important not only for the overall programming diversity competition in commercial television; it is also important for regional Australia and regional television ownership. That 43 per cent would prevent the physical takeover of the major regional stations by the major networks.

There could be some interesting series of ownership arrangements with 75 per cent-for example, one could have 43 per cent, which is Melbourne and Sydney, have three other capital cities and still own one of the aggregated regional television markets. Alternatively, it could be Melbourne and Sydney, two other capital cities and two of the aggregated regional markets; or it could be Melbourne and Sydney and every aggregated regional market in eastern Australia. The point that I wish to make is that regional Australia is greatly concerned at the prospect of actual ownership of commercial regional radio stations by metropolitan networks. It is just as concerned about the physical ownership as it is about the networking and programming control that comes from aggregation.

As an Australian, I am also concerned by the tighter, more complete monopoly on program purchase that would be created in relation to the price that would have to be paid by regionals and those not in the major networks. The more concentrated the monopoly, the higher the price paid by everyone who is not in the monopoly. That would further reduce the viability of many regional television stations.

The National Party is opposed to the restrictions in the legislation on cross-media ownership. It confirms--

Mr Saunderson —Ha!

Mr LLOYD —That laughter from the honourable member for Aston confirms the ideological hatred of the Australian Labor Party for the regional newspapers. Labor members do not even try to deny their hatred. The relevant clause prohibits anyone with a prescribed interest in a commercial television licence from also:

Holding a prescribed interest in a relevant newspaper, 50 per cent of whose circulation is in the service area of the associated commercial television licence.

I do not believe that the basis of that restriction is valid because it exaggerates the significance of local newspapers. Anyone who talks to people living in regional towns and asks them what newspapers they read, will not be told, in general, that the most important paper is the Bendigo Advertiser or the Shepparton News. They will say that it is the Melbourne Sun, the Melbourne Age or the Sydney Morning Herald, or whatever the paper is in each of the States. The metropolitan daily newspapers are the major newspapers read by, and have the greatest significance on, people in regional areas.

The legislation grandfathers the existing arrangement, and that acknowledges what I believe we should always acknowledge-the positive role that regional newspapers have played in the development of commercial regional television. However, this Broadcasting (Ownership and Control) Bill overacknowledges the need or opportunity for a single operator to expand in a limited entry market in television. However, for the print media-which is completely open to entry-it is very restrictive, and for any minor expansion the grandfather aspect is lost.

The National Party is also unhappy about the back door method of controlling the print media when, constitutionally, we have no power to do so. For the benefit of a couple of my colleagues opposite, I repeat that the only reason the restrictions on cross-media ownership exist is because of the vindictive attitude of members of the Labor Party towards the regional newspapers. They have also been vindictive in their arrangements for the termination of the two-station rule. That termination will not be allowed for those companies that choose the multi-channel service path rather than aggregation for equalisation. As a further blackmail to aggregate quickly, there is a sales tax exemption on UHF equipment that will be lost after 1991.

This legislation is based on a false premise-that there must be equal programming choice between city and country for commercial television. Let us compare ourselves with other countries. With the exception of our remote areas, which are difficult to service, there is a greater commercial choice in the regional areas of Australia than there is in many, if not most, other Western countries. If the Government had gone ahead with a supplementary licence system, which we started, there would have been greater program choice in the regional areas already. The two major markets of Sydney and Melbourne, compared with many other countries, should obviously provide more choice.

In fact, in the communication policy that I prepared for the coalition parties for the 1984 election, there was the ability for more program choice. The question is: Which way is best? Should it be by a fourth channel-and that is the purpose of the Liberal Party amendment-or should it be by pay television? The four-year ban that the accompanying legislation requires becomes a matter of debate.

The point that I wish to make about pay television, and the completely unnecessary four-year restriction, is that pay television can also be important in our remote areas. Honourable members may recall that when we were considering the provision of a commercial television signal to people in the remote areas, the John Hartley group said that there would never be a free service to remote areas, so there would have to be some sort of pay system. The proposal then was to use the 30-watt spot beams to provide the remote areas with service. I supported those who went that way. Obviously, people in the remote areas deserve free service, the same as everyone else in this country-that is, in addition to the Australian Broadcasting Corporation there should be one commercial channel.

That would have been a reality if the supplementary system or the MCS system had been the only way to equalisation of programs between the city and country. With aggregation, nobody will pick up that spot beam option because it is not viable and there is no future in it for the company. The people in the remote areas of Australia are now further away from a commercial television program than they were five years ago. In retrospect, John Hartley and his group had a fairly powerful argument.

In relation to remote areas, I ask the Minister for Communications-and other members of the National Party will make this point in stronger terms-why there should be coding or encryption restrictions on the Special Broadcasting Service, the ethnic system? Removing encryption would be a way of allowing people in remote areas some choice. The Minister may wish to respond to that question and expand on the complications or possibilities of such a system. I know that a range of speakers will ask that question during the debate, because it is a genuine point.

This is a cognate debate and it is part of a wider debate that includes the equalisation legislation. The honourable member for Gilmore (Mr Sharp), our specialist on communications, will give in greater detail the attitude of the National Party and the amendments that will be moved in Committee. But in general terms the National Party believes that 43 per cent is the maximum that should be allowed for television ownership. There should be no cross-media restrictions. There should be no two-station rule, irrespective of whether a station opts for MCS or aggregation. The two-in all-in option should replace the present one-in all-in requirement in deciding whether regional television stations in the aggregated market areas opt for the aggregation option or the MCS option. So, in total the National Party will oppose the motion for the second reading of the legislation because this is not the most appropriate way to abolish the two-station rule.