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Thursday, 9 June 1994
Page: 1609

Senator SANDY MACDONALD (1.40 p.m.) —This inquiry was triggered by the release in late 1993 of Conrad Black's autobiography called A Life in Progress. It is all about accountability. It is a shame that such a complex and important area of inquiry by a Senate committee has been truncated to such a short time for debate. One of the most important documents prepared by a Senate committee is being presented today to the Senate and it is sad that we do not have longer to debate it. In the brief time that I have available, however, I wish to make some comments about what is the acceptable level of foreign ownership in the print media generally and the role and modus operandi of the Foreign Investment Review Board.

  Notwithstanding the provisions of the Foreign Acquisitions and Takeover Act, FIRB's publication Australia's foreign investment policy—a guide for investors makes special reference to all foreign investment in mass circulation newspapers being restricted. All proposals for foreign interests to establish a newspaper or acquire an interest in an existing newspaper business in Australia are subject to a case by case examination, irrespective of the size of the proposed investment.

  The 1991 level of foreign print media ownership permitted by the government was based on a caucus decision of 10 October 1991 limiting foreign voting ownership to 20 per cent. Both foreign bids in broad terms—and ultimately—made the obvious determination that their bids must comply with this. Both bids came under examination under the Foreign Acquisitions and Takeover Act, in addition to the requirement applying to mass circulation newspapers referred to previously, and could have been blocked under the act. Both bids were approved by the government but the Black bid only became competitive by an 11th hour change. The nuts and bolts of these last minute machinations can only be speculated upon. Against the approved foreign buyers stood the all-Australian Australian Independent Newspapers bid which had an offer to the receivers that can only be described as more than competitive.

  However, it was not successful and neither was the O'Reilly bid, the winner being Mr Black. A number of reasons have been advanced for Black's success but Mr Burrows says basically it revolved around the lower risk of completion that could take place almost immediately. Clearly there was a trade-off between the early completion by Black and the higher price of the AIN bid which could have taken some weeks to bed down.

  It is fair to say that the receiver was looking at considerably more money if he had chosen the AIN offer. It is not appropriate for me to say more except that it is very puzzling in hindsight why the AIN bid was not successful; why the government took such a dim view of AIN's ability; why the FIRB refused offers to be briefed on AIN; and, why the FIRB gave damaging and incorrect advice to the government on AIN as Senator Ellison just mentioned.

  Before I speak of the substantive and long-term value of the committee, namely, the changes to FIRB, there is another matter with regard to foreign and Australian ownership of the print media I wish to canvass. Mr Cameron O'Reilly submitted to the committee that, notwithstanding the FIRB interest in all print media purchases, restrictions on foreign investment in regional newspapers should be removed. Regional newspapers are defined as those with a circulation limited to less than 50,000 per day operating in a restricted geographical area. In practical words, what is in the national interest for regional newspapers, those papers not setting the national agenda, is obviously different to the Fairfax situation which may, of course, never happen again.

  Mr O'Reilly pointed out by way of international comparison that Australia's foreign investment guidelines for the media are substantially more restrictive than any other significant country. As far as I am concerned, the relaxation of foreign investment in the print media generally is not something with which I have a problem although I have the obvious jingoistic belief in Australian ownership. Concern about what is in the national interest does not come down to a bald and abstract determination exhibited as a percentage only of foreign ownership. This may, of course, simply be a disguise for real foreign control with the existing media guidelines. I cite the example of the control that Canwest presently has on Channel 10 as the obvious example.

  The committee's recommendations, concerning the operation of FIRB, flow directly from the total lack of confidence that the majority of the committee felt about what, in this case, was a highly political transaction. A number of witnesses, reflecting not only the 1991 decision, said that the rules by which FIRB operates must inevitably lead to a lack of foreign investor confidence and a diminution in our international reputation.

  Clearly, FIRB relishes its lack of accountability. It has not been subject to an efficiency audit nor even an Auditor-General's inquiry with any regularity. Further, a system which allows for very important foreign investment decisions to be at the mercy of unfettered discretion, exercised at the highest political level, is an encouragement to improper political influence.

  This concern is strengthened by the Prime Minister's unguarded admission that the 1993 decision had virtually nothing to do with genuine national interest criteria and everything to do with balanced coverage. This makes a mockery of what is in the national interest.

  The committee recommends the setting up of a foreign investment commission, the FIC, which will not only be an application processor, which the present FIRB appears to be, but also a body empowered to make binding decisions in respect of certain important categories of application, and will give the government, through the Treasurer, the power on the FIC's recommendations to make decisions on more important or significant applications. It will be an entirely transparent organisation.

  The FIC should be in tune with the 1990s, not giving the appearance that FIRB gave to the committee of being something more in tune with the 1950s, operating out of a grey building in downtown Moscow. I am sure that, when the FIRB personnel reflect on their evidence, they will not see it as a high point of their careers. But I do agree with Senator Ellison's comments that it was not they who were at fault. They were acting properly, as they should, under the direction of the government. The opportunity for change is now being presented to the government and I commend Percentage Players to the Senate and thoroughly endorse the recommendations concerning FIRB.

  Before I finish, I would like to thank Richard Gilbert, Bruce Howley, Michael Dupe, Shane Holt and Dianne Kelsey for the mammoth effort in bringing this report down, under the most difficult circumstances. All worked hard, but I must commend Richard Gilbert, who showed a professionalism and intellectual rigour that really was remarkable. The Senate and the Australian people are fortunate indeed to have a public servant of such high calibre. I also commend Senator Alston and Senator Kernot for a job well done. I thank Senator Minchin and Senator Ellison for the commitment they brought to this inquiry and I join with Senator Ellison and say that I feel very privileged to have had the opportunity so early in my career in the Senate to have been on such an important and long lasting inquiry in the terms of what it has recommended and the impact that it will have on the future policy direction of a coalition government. I feel very pleased and honoured to have had the chance to play a small part in it.