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Monday, 23 March 1987
Page: 1159

Senator LEWIS(8.15) —I rise to speak to the motion that the Senate take note of the report of the Senate Select Committee on Television Equalisation. I follow the Chairman, Senator Richardson, and start by congratulating him on his chairmanship of the Committee. He did an excellent job. As he has just said, the relationship among the eight members of the Committee was really first class. I do not recall any major disagreements of any kind, including of a personal nature, arising among us. It is always very interesting that members of Senate committees have such an excellent relationship whereas in this chamber the swords are out-both the broadswords and the short, sharp knife, if possible. Nevertheless, on a Senate committee the attitude is always much better and it is a pleasure to serve on them. As I have said, I thought the Chairman performed very well. At one stage he made some critical comment to me about chopping him off in mid-stream. That is one of my characteristics, I suppose. I enjoyed the company of my colleagues.

The Chairman even took me out for a meal to one of his select restaurants in Sydney. It was one of those restaurants where, I gather, if one is an Australian Labor Party politician one is welcome. I had to be snuck in. Nevertheless, the Chairman took my money when I offered it to pay for the meal; he did not say that he would shout me.

As all honourable senators would be aware, we had first class staff, and they performed magnificently. As Senator Richardson said, we sat until the early hours of the morning hearing evidence and the ability of our staff to perform in producing material that we requested was, in many cases, quite miraculous. I thank all of the staff-the typists as well as the executive staff, if I can call them that. I also thank most sincerely my staff for their contribution, and I include a couple of people who were co-opted for various little jobs I asked them to do. I also thank the witnesses. It was a most incredible committee investigation because we had over 70 submissions, one of which was accompanied by a metre of additional material, and they were most significant. The witnesses were really first class. The evidence of Huw Evans was first class. I have not referred to him in my report; I think my colleague Senator Puplick has done so. We also had evidence from the chief executive officers of companies who are obviously top notch entrepreneurs and managers and Australia can be proud of these business people. The technical experts, notwithstanding the areas of disagreement, were first class. I thank all of those people.

I also congratulate the Government's staff from the Department of Communications, and in particular Mr Sebire from Telecom Australia, who gave some very genuine and sincere evidence about how he and Telecom would overcome the problems which they would face as a result of the Government's requirements. It was clear that he was honest and genuine. It was also clear that he worried departmental officers, but he did not worry members of the Committee. He just laid it on the line that if the Government provided the instructions in time, if the Government provided the money in time, if the sites were able to be acquired in time, Telecom would do its job in putting up the transmission equipment. That is not a bad sort of an effort, because we are talking about putting up something like 300 pieces of transmission equipment, whether they be transmitters or translators. That really is an enormous task and, under the Government's aggregation scheme, that will be required to be completed by 1992. Quite frankly, I and other members of the Committee had our doubts about whether that could be achieved. Nevertheless, Mr Sebire pointed out that Telecom would be able to achieve this, subject to those things I mentioned earlier.

The Department of Communications, of course, had the unenviable task of defending the Government's proposals. That was difficult for it. There is much emotion in this industry. Sometimes the departmental officers were under heavy pressure and sometimes they were under much industry criticism. A number of frank admissions were made by departmental officers for which we were very grateful, and I must say that overall in the end I thought that the departmental officers were very fair. I certainly do not make any major criticisms of them. They have their difficulties and I thought that overall they came out of it quite well.

The Broadcasting Amendment Bill (No. 2), in my view, turned out to be a real bucket of worms. It heaps more regulation on top of the bureaucratic control which already surrounds this industry. It gives the Minister powers of patronage of a kind usually associated with eighteenth century English Prime Ministers. In fact, it could prove to be a most expensive folly which locks licensees into huge capital outlays at this stage-I am talking about hundreds of millions of dollars-for a plan that may be rendered obsolete by rapid technological change. It effectively locks out regional viewers from the benefits of immediate future technology for at least the next decade, because under this scheme regional television viewers in Australia will be locked into a series of UHF stations on the terrestrial network-in other words, along the ground-and satellite services or fibre optic services are gone. Those services and that equipment are advancing so rapidly that to be talking about locking these people out of these systems for the next 10 years is, as I have been saying, in my view, an expensive folly.

Further, it is not only the regional television stations that have to spend hundreds of millions of dollars. In fact, with the works required of Telecom, the taxpayers of Australia will be spending hundreds of millions of dollars on this equipment. One cannot help asking whether that expenditure is justified at this time when the country is in dire economic straits. I see that Senator Walsh is in the chamber. I do not know whether or not he is aware of this, but his Minister for Communications is about to require the taxpayers of this country to spend some hundreds of millions of dollars on putting into place UHF equipment around the country-some 300 transmitters and translators. All this money is about to be spent, and has to be spent, overseas, because all this equipment has to be imported from Japan. The situation is that the Japanese are so far ahead in this technology that no other country is actually even producing it. All of the other countries have gone right out of the system and the Japanese have remained in what is called the terrestrial system-in other words, the land based system-because they believe that they can provide this service to Third World countries. We, of course, under this Government's proposal will be the first Third World country to receive the equipment. The other nations that used to be in this industry have opted out pending future developments of satellites.

Even more important than satellites are the new fibre optics, which in fact, as far as I have been able to ascertain, may very well prove satellites to be another expensive folly. When this evidence was given, I immediately said: `Why can some Australian manufacturers not move into this area and start to produce this equipment?'. But, if one thinks about it, it becomes clear that, with about $300m worth of transmission equipment to be sold or installed in Australia over a period of about five or six years, that is not a contract which is sufficiently large for any Australian manufacturer to tool up for or even to produce the equipment under licence. Even if one could persuade one of the Japanese expert companies to license an Australian manufacturer, the whole contract is not sufficiently large and there is not sufficient possibility of future additional contracts to make it worth while for an Australian manufacturer to enter the industry.

Senator Haines —Even with all the associated depreciation allowances?

Senator LEWIS —Even with all the advantages of depreciation allowances and all the rest of it. That was the evidence. The contract would end because, as I said, probably only the Third World countries will move in the terrestrially based equipment, and of course, the Japanese will be able to supply them without any difficulty. So the Australian contract would be sort of a one-off project and to tool up for a $300m contract would really not be worth while. That was the evidence and it seemed to me to make sense, disappointing as it was.

This Government is in effect requiring the expenditure of some $300m worth of equipment not because of some market based, market driven requirement, but simply because the Government has decided that this is the way it will go at this stage. Of course, one wonders why it is requiring the industry to go along this path. I say this because one has to look back at the provision of the satellite. The satellite has to be paid for, and the satellite at the moment is sending down signals which are being picked up by the major networks in Australia. The major networks are then sending those signals out to the metropolitan stations and on relay to the regional stations. Clearly there is a need to sell the whole signal. I would suggest that the networks have probably said to the Government: `If you want us to take all of that signal from the satellite, you have to make sure that we have the opportunity to market it'. At the moment the regional stations are cherry picking; they are taking only one of our programs because there is only one station in each regional area, whereas if the Government makes it three stations in each regional area they will have to take all of the signals which are coming down from the satellite, and we will have a chance of recovering some of the money that we are paying for the services supplied by the satellite.

There was agreement in the Committee that immediate steps should be taken to ensure increased and improved television services to regional viewers. The disagreements arose on what the best means of doing so were. Under the Government's plan licensees were given no genuine alternative to direct aggregation, which was the Government's preferred option. What is meant by aggregation? The Victorians would understand if I were to explain it in these terms: The television stations of Albury-Wodonga in the north-it is really in Albury, but it considers itself now to be a Victorian station-and Bendigo and Ballarat would be aggregated into one market of about a million people, and in each of those three areas the other two stations would be able to establish a UHF, or ultra high frequency, service. So in each of those three areas there would be three regional commercial television stations supplying a signal, so the people would apparently have a choice of viewing. I am sure that in due course on Wednesday, when my colleague Senator Puplick speaks, he will talk about what that choice is. In effect, if I can continue to talk about Victoria, the area of Mildura was excluded and the area of Geelong was excluded. The Committee agreed unanimously that Geelong should be given a UHF station. I hope that the Minister will take up the recommendation of the Committee. But Mildura was excluded, and the Committee has recommended that perhaps it could be included with South Australia.

Let me point out that there is no suggestion of any free market forces operating here. The Government is requiring this aggregation service to commence. There is no suggestion of new players coming into the field. With due respect to my colleague Senator Richardson, it is nonsense for him to talk about market forces. There are no market forces here. All that is happening is that a monopoly which exists in each of the three regions is being converted to an oligopoly, as the three existing stations in those areas will be supplying three signals to the aggregated market instead of one signal being provided to each of the smaller markets. Of course, it is totally deceptive for the Government to talk about market forces.

The Government claimed that it was offering the regional television stations an option. It said: `If you don't want to go directly into aggregation, we will allow you to take the MCS path'. That refers to the multi-channel service. Under the multi-channel service each of those three stations would be allowed initially to operate an additional service to its own monopoly region. In my Victorian example, the station at Ballarat would be able to provide not only a service on BTV6, but also an additional service on, say, BTV9 or whatever the figure might be. It would really be able to broadcast two services in the one area. Most of the regional television stations pointed out that in that way they would be able to provide a greater choice and they would be able to provide it much more quickly than an aggregated market. I certainly acknowledge that there was a lot of merit in those arguments. I am not disagreeing with those arguments. But the point is that the Government has made sure that that so-called alternative cannot happen. Mr Westerway, the Acting Deputy Secretary of the Department, acknowledged to us when we asked him about it that in each of the aggregated markets there was one trigger station which would require immediate aggregation, and the Government had insisted upon the `one in, all in' rule. In other words, if one of the three companies wanted to aggregate, the other two must.

Senator Puplick —Trojan horses everywhere.

Senator LEWIS —Trojan horses, as my colleague says. The result is that there undoubtedly would be aggregation. The Government and the Department were not satisfied that maybe there would be trigger companies in each of these areas, so they added other advantages to direct aggregation and disadvantages to the MCS path. So, although the Government is talking about choice, there is no real choice.

Senator Sheil —Poison pills.

Senator LEWIS —Poison pills, my colleague from the National Party of Australia said, and he is quite right. In fact, there could be no doubt that a genuine option to follow the MCS path without a penalty would have provided additional services to regional viewers in a much shorter time.

My colleague Senator Puplick had a slight difference of opinion with my colleague Senator Sheil and me about that, as the recommendations will show, in that Senator Sheil and I thought that a genuinely market-driven scheme could be devised whereby market forces would operate in a much better way than had been mooted previously. We have tossed in a few ideas that I hope will result in some original thinking in this area. I see that Senator Walsh is in the chamber. I ask him to look at our dissenting report and the alternative scheme referred to in the dissenting report to see whether he finds some merit in that dissenting report to mention to his colleague Mr Duffy, because that would be a much more genuinely market-driven scheme than the nonsense which Mr Duffy has been talking about until now. If the Government were honest and acknowledged the major flaws revealed by this inquiry, it would withdraw this legislation which, quite frankly, I think is a shonky piece of legislation, and it is manipulative. The Government should allow some genuine market-driven forces to decide on the best means of providing improved services to regional viewers.

Finally, let me explain that when honourable senators read this report they will find that it is a bit difficult to follow all the recommendations, because there is a great variety of recommendations. There are the recommendations of the majority of the Committee and then there are three--

Senator Puplick —And the Chairman has the casting vote.

Senator LEWIS —Then there are three dissenting reports of the other four members of the Committee. As my colleague Senator Puplick said, the only reason that there is a majority report is, of course, that the Chairman of the Committee had a casting vote.

Senator Richardson —He exercised it wisely.

Senator LEWIS —Wisely, the Senate set up the Committee so that the Government senators would have a majority and the Chairman would have the casting vote. Actually, I drew up the motion so that it would be that way. I acknowledge that the Government should have the majority on a Senate select committee, and it has exercised its majority in this case. Of course, the truth is that the numbers in the Senate are against the Government. If the parties on this side of the chamber adopt the dissenting reports, the legislation will not be passed and, in my view, in those circumstances, rather than go through that course, it would be far quicker if the Government withdrew the legislation and had another look at it.