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Wednesday, 11 November 1964

Senator BUTTFIELD (South Australia) (1:38 AM) . - In expressing my views on the Bill before us I wish to say at the outset that although I do not disagree with it in principle I think it has been introduced at the wrong time. I also believe that the levy to be made and the effect of the legislation are wrong. I quite agree with the Minister that the Bill sets out to solve some of the injustices resulting from the method of assessment of licence fees which gave rise to stations underestimating by up to 30 per cent, the amount of revenue on which the licence fee is based. I believe that the legislation will not encourage the inclusion of Australian productions in programmes, but will have the opposite effect. I am sure that all honorable senators want to see Australian material of good quality included in television programmes.

I shall refer now to some of the comments made by Senator Cohen. He said that, judging by the present position in the television industry, the legislation is well called for. I maintain that it is not. The Minister, in his second reading speech, and Senator Cohen have both quoted the amounts of profits earned by television stations during 1962-63. It seems to me that profits of this magnitude are no longer available, perhaps because of the imposts on the television industry, in taxes and otherwise. Profits earned by commercial television stations are falling. I shall deal with some of the reasons why there is a downward trend in the profits of commercial television stations. The rate of company tax has risen by 6d. in the £1. The greatest effect has come from the allocation of a fourth channel. As far as I can see the allocation pf a fourth channel has upset the present licensees in three ways. Firs?, they will have to share their advertising revenue three ways. Obviously the amount of advertising revenue formerly available to commercial stations will be reduced. Secondly, the advent of a fourth bidder has helped to raise prices being paid for American productions. Admittedly, because the stations sought to obtain Australian rights for overseas productions they began to bid high prices for them, but I assume that that was normal business practice if one wanted the Australian rights to a production. Bidding against each other for those rights caused the upward trend. But the real increase in the price of American films has occurred since it was announced that a fourth channel would be allocated. It has been evident in the last year that the cost of the best American productions has risen threefold.

Senator Hannan - Does the honorable senator mean 300 per cent.?

Senator BUTTFIELD - I mean threefold. The cost has increased by three times from, say, 1,000 dollars to 4,000 dollars. That is not quite 300 per cent., I think.

Another factor associated with the allocation of a fourth channel is that owing to the shortage of technical and professional people the stations are now forced to bid against each other for the services of these people. Naturally, the increase in the basic wage has affected the stations. Performing right payments for the use of music have risen enormously in the last year. In the case of a station in Adelaide those payments have increased from £1,200 to £7,500 in one year. In the case of the larger stations in Melbourne and Sydney they have risen from £5,000 to £25,000. That is an enormous increase simply for the right to use music. Now comes this latest imposition of an increase in the licence fee. Perhaps the increase, in itself, is not large but it amounts to an increase of 400 per cent, in the case of the larger stations. Coming on top of all the other increases in costs this increase in licence fees is a heavy blow to the stations. That is why I say it has come at the wrong time. I am not opposed to increasing licence fees but I think, the increase should have been announced after next year's profits had been announced so that we could see the real position of the stations and whether by increasing the licence fee we were imposing difficulties on them.

Senator Cohen - Perhaps we should have reduced the fee.

Senator BUTTFIELD - No, but I think the Government should have waited until details of this year's profits are available. Senator Cohen said that in view of the fact that station revenues have risen considerably the licence fees should be increased, but the Australian Broadcasting Control Board, in its latest report, points out that as profits have risen so the licence fee payable has risen. The total licence fees paid have risen from £7,325 in 1956 to £112,000 last year. The licence fee has risen with the rise in revenues.

We cannot get away from the fact that we did agree when the stations were licensed that a certain fee would be charged. Now we are saying that we want more revenue from the stations and that we will alter the method of charging licence fees. Unfortunately, in calculating the revenue on which the licence fee will be paid this Bill will add the revenue derived from the sale of advertising time to revenue derived from the sale of programmes. This is already having the effect of reducing the Australian content of programmes. This is the aspect which disturbs me so much. The most expensive programmes to produce are the Australian programmes. I admit that stations cannot sell all their programmes because sponsors simply will not pay the prices asked in many cases but sponsors will now have to pay more for the programmes that they do buy. Obviously they will reduce the amount of money that they spend on the production of Australian programmes, which in turn means that the better type of Australian programme is likely to be cut back. None of us wants to see that happen.

Very briefly I want to reply to some of the points made by Senator Cohen. He related the licence fee in Australia to that in the United Kingdom. He did say it was not expected that we should impose a similar fee here. But he did not say that the significant difference in the United Kingdom is that there is no competition between the commercial stations. In no area are two commercial stations televising at the same time. That makes a big difference and, in addition, the Independent Television Authority owns the equipment and merely rents it out to the programming companies. Therefore, they do not have anything like the capital cost that the stations in Australia have. All that they are expected to do is to sell their programmes. Therefore, their return is much more profitable.

I want to refer to the quantity and quality of programmes, which was mentioned by Senator Cohen. At page 103 of the report of the Australian Broadcasting Control Board for the year ended 30th June 1964, the Australian content of programmes is dealt with. The Board points out that 46.7 per cent, of the television programmes on commercial stations consist of light entertainment programmes, which include talent programmes and variety, the latter occupying 10.2 per cent, of the time. At the bottom of the page is the statement that 1 per cent, equals 171 hours. So, taking the two items which I have mentioned, that is, the talent programmes and the variety programmes, together they occupy 1,881 hours on all stations in Australia That is not a bad figure, but I would like to see it improved, I would also like to sec the quality of the programmes improved. My main concern is: How do we improve the quality of the programmes?

Senator Henty - By putting on " Whiplash ".

Senator BUTTFIELD - Let us have " Whiplash " then. For 39 half-hour episodes this programme cost £750,000 to produce. This works out at about £20,000 per halfhour programme. What station or what sponsor can afford to put on a programme which costs that amount of money? It is a good programme, I agree, but it is economically impossible for a station or a sponsor to spend that amount of money on a half-hour programme. " Whiplash " is being shown overseas but it will be years before it shows a profit. It is not reasonable to expect Australian producers to put on that type of programme which costs so much money. We are able to afford variety programmes and I think that we should encourage more of them. Unfortunately, with the trend in television as it is now, stations are getting rid of at least part of their orchestras, their ballets, their choirs and their children's programmes which are put on locally. All of these things have been cut back. This is what disturbs me when we suddenly announce in the Budget that we propose to put on this additional impost, amounting in some cases to a 100 per cent, increase in licence fees. For that reason I foreshadow an amendment which I Shall move at the committee stage.

I do not agree with the first part of Senator Cohen's amendment. For the reasons 1 have stated I do not think that we should raise the licence fees to the extent that he proposes. The second part of the amendment suggests that all the fees should go into a special fund to be used solely to assist the production of Australian television programmes. I do not believe that this is the way to achieve what we want. I think that it is quite reasonable to expect the fees to go towards the payment of the cost of the Australian Broadcasting Control Board. But do not let us forget that half of the fees will be sufficient for that purpose because fees are also paid by the broadcasting stations. I do not think that the establishment of a fund to be operated by the Government is the way to achieve an improvement in the quality of the Australian content of programmes. I believe that the station itself, or some form of private enterprise, should set up a school for the purpose. I agree that there should be some way of training actors and technicians, but I think it would be far better if this were done by private enterprise and not by the Government. For that reason, I do not support the amendment as proposed by Senator Cohen.

Senator Cohen - Do you want to see all of the proceeds go into Consolidated Revenue?

Senator BUTTFIELD - I would like to see them go into subsidising private enterprise to establish some sort of school. If half of the revenue could be used in that way it would be a constructive and positive step.

Senator Cohen - Then why not support my amendment?

Senator BUTTFIELD - I have explained why I do not support it. I think it is reasonable that half of the fees should go towards the cost of financing the Australian Broadcasting Control Board, and I would like to see the other half used to subsidise private enterprise for the establishment of a school of some sort. The honorable senator's amendment implies that the Government will conduct such a school. I think it sufficient to say that 1 do not support the amendment in its present form although I appreciate that Senator Cohen is endeavouring to correct the present situation. I propose moving an amendment which I suggest offers a better solution of the problem. At this stage, I foreshadow that when the Bill is being discussed in Committee 1 shall move that clause 4 be amended by adding the words - provided that if the licensee satisfies the Minister that any such earnings have been received in connection with the televising of, or the provision by him of, musical, dramatic or other artistic material wholly produced or originating in Australia, as defined by the Australian Broadcasting Control Board in its categories of programmes, then only one-half of those earnings shall be included in the gross earnings of the station.

In other words, I shall be proposing that the station be allowed to retain part of the fee as an incentive.

Senator Ormonde - That is about the same idea as is suggested by Senator Cohen.

Senator BUTTFIELD - No . I shall be offering my proposal as an incentive to the station itself to produce a better quality Australian programme. The incentive will be provided by a rebate of part of the fees to be used for the production of such programmes.

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