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Tuesday, 2 December 2003
Page: 18664


Senator MINCHIN (Minister for Finance and Administration) (4:16 PM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

BROADCASTING SERVICES AMENDMENT (MEDIA OWNERSHIP) BILL 2002 [No. 2]

Technological progress and globalisation are changing the structure of media markets and patterns of media consumption both in Australia and overseas. Consumers are no longer confined to the traditional media of radio, free-to-air television and newspapers available in their local area. And existing and potential media operators are forging innovative commercial strategies to secure their position in the new market place.

Internationally, media businesses are being driven by the imperative of delivering readily adaptable content across multiple platforms. Consolidation and diversification have created substantial global communications groups.

The Government has long maintained the view that the regulatory framework for ownership and control of media assets in Australia unnecessarily constrains this sector within outdated and, in the long term, detrimental regulatory structures. Existing restrictions impede commercial flexibility and access to capital for infrastructure and content investment. They hinder the ability of Australian media organisations to succeed and grow in the new international market.

At the last federal election, the Government committed itself to reforming the foreign and cross-media ownership restrictions in the Broadcasting Services Act 1992 (BSA). The Broadcasting Services Amendment (Media Ownership) Bill 2002 (the bill) seeks to give effect to this commitment.

The Government's proposed reforms will improve the ability of Australian media companies to invest in new technologies. They will enable media companies to grow and expand in the new content-driven converging global media environment. And they will ensure that Australian consumers have access to high quality media products.

When the Government originally introduced its cross-media reforms, it invited sensible debate on these important media ownership issues. The Government's response to the report of the Senate Environment, Communications, Information Technology and the Arts Legislation Committee on the bill, and to the debate on the bill in the Senate, reflects the Government's willingness to take into account the genuine concerns of Senators while still achieving substantial reform.

I turn now to the specific measures contained in the bill.

The current foreign ownership and control restrictions in the BSA, which apply to free-to-air and subscription television services, serve as a major deterrent to investment in Australian media organisations.

The bill therefore repeals the media-specific foreign ownership and control restrictions contained in the BSA. Foreign ownership of Australian media assets will continue to be regulated by the Foreign Acquisitions and Takeovers Act 1975 and Australia's general foreign investment policy. These provisions have the ability to address national interest concerns that might arise in relation to a particular investment.

Repealing these restrictions will improve access to capital, increase the pool of potential media owners and act as a safeguard on media concentration.

I turn now to measures to reform the cross-media rules.

Reform of the cross-media rules will clear the way for renewed market interest in Australian media assets. They will allow media companies to take greater advantage of investment opportunities as they arise.

The proposed changes will not affect existing limits in the BSA in relation to audience reach and the maximum numbers of commercial broadcasting licences that can be controlled in the same licence area.

The Australian Competition and Consumer Commission will also continue to have an important role to play in considering the competition effects of mergers. The bill in fact provides assurances that nothing in the bill, or in the ownership and control provisions as a whole, prevents the Trade Practices Act from applying to cross-media acquisitions.

The bill authorises the Australian Broadcasting Authority (ABA) to grant cross-media exemption certificates on application. The ABA must maintain a Register of active cross-media exemption certificates which is to be available on the Internet.

Holders of exemption certificates are not in breach of the cross-media rules in relation to the media entities which they control, provided the conditions of the certificate are satisfied, and they satisfy the separately-controlled newspaper test and provided an unacceptable three-way control situation does not exist. Linking control of more than one associated newspaper to continuing exemption from the cross-media rules will ensure that a cross-media exemption certificate holder will not be able to, over time, control both or all of the newspapers in a licence area. Certificates become active upon a person assuming control of two media entities in a way that would otherwise breach the cross-media rules.

The Government is committed to ensuring ongoing diversity of opinion and information in the Australian media. The Government recognises the need to ensure that media owners do not exploit their co-ownership of media organisations in a way that prevents those organisations from exercising separate editorial judgements.

To this end, the bill provides for a transparent and effective test in relation to maintaining separate editorial decision-making responsibilities in cross-controlled media organisations. An exemption certificate can only be issued if the ABA is satisfied that the conditions included in the application will meet the objective of editorial separation for the set of media operations concerned. This objective is that separate editorial decision-making responsibilities must be maintained in relation to each of the media operations.

Three mandatory tests are prescribed for the objective of editorial separation to be met. They are the existence of:

(a) separate editorial policies;

(b) appropriate organisational charts; and

(c) separate editorial news management, news compilation processes and news gathering and interpretation capabilities.

These requirements will not preclude the sharing of resources or other forms of co-operation in newsgathering between organisations that could assist owners seeking to realise efficiencies from jointly owned organisations.

The bill provides that once an exemption certificate is active in relation to a set of media operations, those media operations must meet the objective of editorial separation as a condition of their licence.

The BSA gives the ABA the ability to investigate bona fide complaints of failures to adhere to licence conditions and to publish the outcome. 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 timeframe. 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. Such action may be appropriate in the case of repeated or severe breaches of the editorial separation condition.

Prior to issuing an exemption certificate, the ABA must also be satisfied that the proposed merger will satisfy the minimum number of media groups test. The test applies to all media operations, other than remote areas, and provides a guarantee that a media merger resulting from a cross-media exemption certificate will not result in fewer than four media groups in markets in regional Australia, or five media groups in the larger markets of the state capitals. This provides another assurance of diversity in the media sector and will prevent any mergers in some smaller markets in regional and metropolitan Australia which will not have the minimum number of media groups required to allow any merger activity.

The bill will also ensure that no person in any market may control more than two types of media covered by the cross-media rules (the `two out of three' rule). The ABA must not issue a cross-media exemption certificate if it would enable a person to be in a position to control all three types of media in a single market.

Relevant media include commercial television broadcasting licences; commercial radio broadcasting licences; and associated newspapers (the BSA defines a `newspaper' as an associated newspaper that is in the English language and is published on at least four days in each week, but does not include a publication if less than 50 per cent of its circulation is by way of sale).

Small local newspapers are included in the `two out of three' rule in regional areas in certain circumstances. Any media group with accumulated holdings of local newspapers which together have a circulation of 25 per cent or greater in the licence area will be subject to the two out of three limit as if it held an associated newspaper. This means that small newspapers that provide relevant local voices will be counted in the application of the two out of three rule.

The bill also provides that a cross-media exemption certificate will have no effect if the holder controls more than one newspaper in the relevant market, either at the time of application for the exemption certificate or in the future. This provides additional reassurance that diversity of opinion will be maintained.

The bill imposes a general obligation to disclose a cross-media relationship on media outlets subject to the same exemption certificate.

The bill details two means of disclosure:

the `business affairs' model, which will apply to commercial television broadcasters and newspapers, and which will be the default disclosure model for commercial radio broadcasters; and

an alternative `regular disclosure' model which will only be available to commercial radio broadcasters.

The Government recognises public concern about declining levels of local and regional news and information programs on both television and radio. Local services are important for developing community identity and for ensuring that important information is relayed in a timely fashion.

The bill amends the BSA to impose a condition on commercial radio broadcasting licences that have regional licence areas. This condition requires them to comply with prescribed minimum levels of local news and information services or to retain existing levels of local news and information where these are higher than the prescribed minimum.

The prescribed minimum levels include at least five news bulletins per week containing matters of local significance, broadcast of local community service announcements and the ability to broadcast emergency warnings if and when required.

The bill contains a provision requiring the ABA to impose licence conditions that require all commercial television broadcasters in four regional aggregated commercial markets, as well as Tasmania and the metropolitan markets, to broadcast a minimum amount of material of local significance.

The ABA has already imposed such conditions in relation to the regional aggregated markets of regional Queensland, northern New South Wales, southern New South Wales and regional Victoria. This was a result of its 2002 inquiry into the adequacy of local television news and information programs in rural and regional Australia. The inclusion of this requirement in the bill is designed to ensure that these conditions will continue to be in force in the future.

The bill also extends the requirement for the ABA to impose licence conditions to include Tasmania, which was not included in the ABA's inquiry, and the metropolitan markets (the mainland State capitals). This will ensure that broadcasters in these markets also satisfy their audience's need for local news and information. The requirement for the ABA to impose a relevant licence condition on broadcasters in these markets will enable a proper investigation to be undertaken into the appropriate level of local content for those markets.

The bill also allows datacasters to show programs that deal with local sporting events. This change has the potential to allow sport not previously broadcast on free-to-air television to be televised under a datacasting licence to increase coverage of local sporting events and to assist in promoting local sport.

The Government is concerned to maintain a diverse range of commercial radio services of broad general appeal, especially in regional areas. Therefore, the bill prohibits contracts and arrangements that attempt to restrict the program format of commercial radio broadcasting services.

These provisions address a situation where contractual or other arrangements limit the program format of a commercial radio service, reducing the diversity of radio services and competition for audience and advertisers, particularly for the benefit of an incumbent commercial radio broadcaster. Civil penalties, including fines of up to $275 000 for a body corporate, will apply for entering into such contracts or arrangements. Furthermore, the bill renders the contract or arrangement void.

As well as written contracts, the prohibition will also apply to agreements or understandings that do not constitute legally binding contracts. An arrangement of this sort could be formal or informal, written or unwritten.

The prohibition will not apply to contracts or arrangements exempted by regulation. The ABA will also have the power to exempt particular contracts or arrangements. This is intended to allow some flexibility once the provisions commence, where there are legitimate types of transactions that should not be prevented.

The proposed changes will not affect the ability of the ACCC to scrutinise both existing and future arrangements that might have the effect of limiting competition.

The bill restricts the circumstances in which an approval of a temporary ownership or control breach could be granted under section 67 of the BSA. These provisions will restrict the capacity of broadcasters to use the temporary approval mechanism to engage in conduct designed to manage regional radio markets.

The bill forms an integral part of the Government's commitment to respond to the rapidly changing communications sector, with progressive communications policies which reflect evolving market conditions. Hence it is logical that the Government include a provision in the bill which will ensure the media ownership rules retain their currency in the near future and beyond. The bill therefore requires a statutory review to be undertaken of the broadcasting ownership and control provisions contained within Part V of the BSA, and tabled by 30 June 2007.

The bill will ensure that Australian media organisations, as well as the Australian public, are positioned at the forefront of an exciting new communications era.

Debate (on motion by Senator Buckland) adjourned.