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Monday, 1 December 2003
Page: 23368


Mr WILLIAMS (Minister for Communications, Information Technology and the Arts) (6:59 PM) —in reply—The government is committed to reforming Australia's media ownership laws. With the introduction of the Broadcasting Services Amendment (Media Ownership) Bill 2002 [No. 2], the government seeks to give effect to this commitment. Reform of media ownership restrictions will enhance diversity and competition by increasing the potential pool of media owners while allowing greater flexibility in business structures. This in turn will encourage the delivery of innovative services and a more internationally competitive media sector. This has been the rationale for similar reforms initiated in the United Kingdom and in the United States. In particular, the repeal of foreign ownership restrictions will allow new players to enter the media market.

The member for Melbourne has indicated that Labor supports the government's aim in removing foreign investment limits on media. Indeed, Labor has previously suggested it would support their removal without cross-media reform. The government is firmly of the view that the two must happen together; otherwise, our own firms would be put at a severe disadvantage, as foreign firms, unconstrained in relation to their overseas media holdings, could acquire Australian media groups while Australian firms would be unable to respond due to their existing Australian holdings.

The member for Melbourne also suggested that, in relation to foreign investment reform, further safeguards are required to protect local jobs and activity. Surprisingly, the Labor Party has not seen fit to bring forward amendments which reflect this concern. The member for Melbourne, nevertheless, praised CanWest—the Canadian owner of Network 10—suggesting that it demonstrated that foreign investment could be positive. I share the member for Melbourne's high regard for the manner in which CanWest has overseen the recovery of Network 10. Interestingly, CanWest is not subject to the safeguards that the member for Melbourne apparently thinks are necessary.

The bill provides for a transparent and effective test in relation to maintaining separate editorial decision-making responsibilities in cross-media controlled organisations. The objective of editorial separation requires that media outlets operating under an exemption certificate retain the ability to have separate voices. The member for Ballarat suggested that the editorial separation regime would have no effect. The member for Melbourne suggested that the editorial separation regime in the bill is a fig leaf because it is a once-off test and there is no provision to revisit the test once the certificate has been issued. This is not the case. It will be a licence condition on holders of an exemption certificate that editorial separation is ongoing. This requires the licensee to ensure that the objective of editorial separation is continuously met.

The holder of an exemption certificate will be subject to the Australian Broadcasting Authority's complaints and investigation process. If the ABA determines that a licensee has failed to comply with the editorial separation condition, it may issue a notice requiring the licensee to address the contravention within a specified time frame. Failure to comply with the ABA notice is a criminal offence which can result in a large fine being imposed. The ABA is also able to suspend or cancel a licence if a licence condition is breached.

When the government first introduced this legislation, it invited debate on its proposed reforms. As a result of negotiations with senators and other relevant stakeholders, a number of significant enhancements to the bill were developed. In combination, these enhancements further address public interest concerns and provide additional safeguards to protect diversity of news and opinion as well as to prevent market dominance by any media group. These safeguards include a requirement that a cross-media merger cannot be approved unless five independently owned commercial media outlets across radio, television and associated newspapers in metropolitan markets—and four in regional markets—remain in the market after the cross-media acquisition occurs.

A two-out-of-three rule restricts media ownership to only two of the three types of regulated media. A restriction on newspaper ownership also applies, with only one associated newspaper permitted per market, where the person also holds a cross-media exemption certificate for that market. The member for Melbourne has suggested that the current five or six media groups will rapidly fall to three under the government's proposals. His analysis does not take into account these new safeguards against media concentration or the role of potential new entrants with the removal of foreign investment restrictions. The member for Melbourne has also ignored the existing reach rules for television networks—a limit of 75 per cent of the national audience—and the control limits of one television and two radio licences in any licence area.

The member for Calare used the example of Bundaberg and suggested that the number of media groups would fall to three as a result of the passing of this bill. In fact, in all regional markets, no cross-media mergers would be permitted unless there were always four media groups remaining after any merger. Cross-media reform would also offer significant opportunities for growth to the second-tier media groups: in radio, Austereo, the Australian Radio Network, DMG, the Macquarie Radio Network and RG Capital; and, in regional television, WIN Corporation, Prime Television and Southern Cross Broadcasting, which is also in radio. Taken together, these rules will ensure a continuation of the substantial diversity that Australia currently has in its media ownership.

The Trade Practices Act 1974 will continue to apply to proposed media mergers and acquisitions. The TPA prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially reducing competition in a market. Competition effects of potential major media mergers or acquisitions of major operators, even those that relate to business which operate across media platforms, will generally attract the scrutiny of the Australian Competition and Consumer Commission.

A number of speakers asked why the government did not support the so-called Harradine amendment. Senator Harradine proposed an absolute restriction on mergers between television and newspapers in the same market. The intention appeared to be to prevent mergers between the largest media companies, but it also placed the same limitation on small to medium sized players and new entrants who want the freedom to expand and reposition themselves within the industry.

The member for Melbourne asked why we did not limit cross-media merger to radio. Commercial radio is certainly an important voice both in the capital cities and in regional Australia. It is also a sector with a significant foreign presence, including major media groups such as Clear Channel, DMG, and Independent News and Media. Earlier in this debate, the member for Melbourne suggested that radio was of minor significance to the major media groups. This may well be true. The commercial radio operators are small by comparison to the major newspaper or television groups. The radio sector is generally characterised by more, but smaller, players. It logically follows that a cross-media reform package that limits cross-media mergers to radio only would significantly limit potential scale and scope benefits from cross-media mergers. Denying Australian media proprietors the opportunity to achieve cross-media efficiencies in the larger media sectors means that the economic benefit from improved international competitiveness will be significantly reduced. A radio-only approach would also leave our largest media groups unable to respond to the overseas entrants that would accompany removal of the foreign investment limits.

The bill requires that regional commercial radio broadcasters, subject to a cross-media exemption certificate, comply with prescribed minimum levels of local news and information services or retain existing levels of local news and information, where these are higher. The ABA must also impose licence conditions requiring the broadcast of a minimum amount of material of local significance on all commercial television broadcasters in the mainland state capital cities as well as in Tasmania and the regional aggregated television markets.

The government recognises that this bill proposes significant reform to the existing regime. Given the rapid commercial and technological changes in the media and wider communications sector, a statutory review before 31 December 2006 will enable an assessment of the extent to which the proposed changes continue to safeguard the public interest and provide access to diverse and relevant sources of information.

In conclusion, the government is confident the Broadcasting Services Amendment (Media Ownership) Bill 2002 [No. 2] will reform the regulatory framework for ownership and control of media assets in Australia to the benefit of both the industry and consumers. Importantly, it will provide for a more vibrant, open and internationally competitive media sector—a sector focused on competing for audiences rather than on cost cutting. These reforms will also ensure that Australia retains a diversified and high-quality media sector. I commend the bill to the House.


The DEPUTY SPEAKER (Hon. L.R.S. Price)—Order! The question is that the bill be now read a second time. There being more than one voice calling for a division, in accordance with standing order 193 the division is deferred until after 8 p.m.

Debate adjourned.