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Environment and Communications Legislation Committee

McCREADIE, Ms Sue, National Director, Media, Entertainment and Arts Alliance

MacRAE, Mr Drew, Federal Policy Officer, Media, Entertainment and Arts Alliance

CHAIR: We have present Media, Entertainment and Arts Alliance representatives. Thank you for coming along to talk to us tonight, Ms McCreadie and Mr MacRae. Does anyone wish to make an opening statement?

Ms McCreadie : Yes. I will make a brief one. Thank you very much, Senator Cameron and other members of the committee, for the opportunity to appear. I appear on behalf of Actors Equity, which, as you probably know, is a division of the Media, Entertainment and Arts Alliance, which also includes journalists and media workers. Of course, there is a lot of interest in their issues. I appear tonight to, I guess, represent the issues of our actor members—professional actors throughout Australia—many of whom earn their primary living from television drama. Along with directors, screenwriters, producers, cinematographers, editors and production designers, they collaborate to produce the dramas that you see every night on your screens.

I think the whole of the production industry is united in being very troubled by the Australian content provisions of the Broadcasting Legislation Amendment (Convergence Review and other Measures) Bill. Actors Equity, along with all the other organisations, engaged very closely with the convergence review on the issue of Australian content. Of course, that is a major issue for us and has been a major issue for many decades. It is an issue we have campaigned very strongly on. We feel that that panel consulted our industry widely and over a lengthy period. In our view, in the final report of the convergence review on Australian content, the recommendations were well-reasoned and well-considered. Those recommendations included both transitional and longer term measures to support new Australian content in the digital environment. Those transitional measures included allowing the commercial networks some flexibility insofar as recommending that they be allowed to fulfil their subquota obligations for drama, documentary and children's drama to spread those obligations, which are currently on the main channels, across on to the digital channels but—and it is a very big but—with the proviso that the quotas be increased by 50 per cent.

So what we have in this bill instead is that they are allowed to spread those subquotas, but there is absolutely no increase, as you know, in the obligation. Of course, we acknowledge that in the bill that we are discussing there is a requirement for minimum Australian content on the multichannels. But the hours requirement is set at a level which is well below what the networks are already showing on the multichannels. Most importantly, that quota can be met through repeats and through genres which, historically, it has been acknowledged do not really require any particular support. They are genres such as news, sport, quiz shows and reality TV.

The new standard does nothing to encourage the most vulnerable genres, in particular drama, which has been historically recognised as needing its own subquota—that is, its own specific quota. The final report of the convergence review explicitly recognised that drama, documentary and children's drama need ongoing support. I would just like to quote what the report said about drama, which is:

Drama contains the most artistically rich content and has the greatest capacity to tell complex stories and convey social and cultural messages.

Well, unfortunately, the bill as it stands—and it looks tragically like it will go through as it stands—will result in a dilution of Australian drama on the main channels. Insofar as it is fulfilled on the digital channels, it is likely to result in lower average licence fees. Clearly, the licence fees which the networks will pay for content on the digital channels are significantly lower due to the lower audience numbers and the lower advertising revenue. So it is quite problematic in terms of a sustainable screen production industry. I have not seen the transcript, but I believe yesterday Channel Ten acknowledged that they would pay less for content on the multichannels. Certainly in our experience dealing with contracts every day and agreements, we know that the licence fees on the digital channels are substantially lower.

So this is a huge concern for the screen production industry. Ultimately, it is a concern for Australian audiences. It is a great shame that with all the noise around the media reforms, this issue in this bill, which is part of one of six bills, has had really, I think, very little debate and very little public exposure and there is very little public understanding of what is going on, especially since Australian audiences have really demonstrated an increased appetite for Australian drama in recent years. They have got very used to high quality dramas, such as Rake, Howzat!, Puberty Blues and the Slap, just to name a few. Really it is quite ironic that at a time when Australian drama is enjoying a considerable resurgence it has never been more under threat in the digital environment. We do not have a sensible transition plan and we do not have a plan for going forward into the bigger converged environment. Had the convergence review recommendation been implemented, it would have equated to no more than 30 to 60 minutes a week of adult drama per network and no more than 20 additional minutes a week of children's drama per network, which I think is a very modest ask and pales into insignificance when compared to the licence fee rebates that are being provided to the networks.

I was going to say that I think the bill should not pass, and I still believe that, but it looks unfortunately like it could go through. It is a real shame because it is a waste of three years of engagement around the convergence review. What I would say, though, is that at the moment there is no provision for a review. There really does need to be some provision for a review of what the impact is of this one-sided flexibility, which allows the commercial networks to spread this obligation for drama, documentary and children's drama on to the multichannels to look at the impact on audiences, to look at the impact on licence fees and to look at the impact overall on our culture and our production industry. What we need above everything, of course, is a plan for going forward, which we do not have, because we have had no sensible response, I think, on the Australian content side to the convergence review. So what is the process for dealing in the coming years with supporting Australian content? What sort of mechanisms are we going to have? It can be regulation or it can be subsidy and it can be, as it has been for several decades, a mix of regulation and subsidy. I think this is a failure of regulation, so really we will have to pick up the ball on the subsidy side, if that is the way we are going forward. But we need a mechanism, essentially. We need the independent regulator, I think—ACMA—to be pulled in more to this process. We need some kind of process for involving the industry as well as the broadcasters and perhaps organisations like Telstra and Google going forward. Thank you.

CHAIR: Thanks, Ms McCreadie. Are you making any submissions on any of the other bills?

Ms McCreadie : No. Our media division will make a submission on the other bills. But we will not be tabling that tonight.

Senator BIRMINGHAM: I have a few questions. I have to duck out in a minute and so I apologise for that. Obviously, you are very critical of the process that has been applied here. That is in relation to issues that have engendered less criticism elsewhere. The media companies, when asked about the content quotas, indicated that they had reached a point of agreement with the government in November last year. What engagement or consultation did you have with the government over these matters?

Ms McCreadie : Well, to be frank, since the convergence review final report came out, there was initial engagement and we made clear our support for those recommendations. But I think once that deal was done, it was quite hard to get a conversation going.

Senator BIRMINGHAM: Once the November deal was done?

Ms McCreadie : That is right, yes. In fact, in the lead-up to it, it seemed that was the case, yes.

Senator BIRMINGHAM: You make the contention that drama produced on the multichannels is of less value than drama produced on the primary channel or is likely to be produced at a lower cost basis. Why, when the networks have a desire to increase their viewing audience, wherever it may be, would that hold to be the case over the longer term?

Ms McCreadie : Well, I think the viewing audience is only one of their considerations. The whole rationale for specific subquotas for genres such as drama in particular, including children's drama—children's drama is not so much a ratings issue—is that adult drama does rate very well. But imported drama can be purchased for a fraction of the cost. So the networks are looking at costs and they are looking at ratings and they are balancing the two. The ratings relate to their advertising revenue.

Senator BIRMINGHAM: Do you dispute the figures given by the networks, which I think are that 47 of the top 50 rating programs last year were Australian produced content?

Ms McCreadie : Well, I am not disputing that. But very few of them were drama. I think Howzat! was in that, but I do not think any others were in that list.

Mr MacRae : They would be reality television type programs, news and sport.

Senator McKENZIE: So what are the numbers for drama?

Senator BIRMINGHAM: I will leave it to Senator McKenzie, actually.

CHAIR: Thanks, Senator Birmingham.

Senator McKENZIE: Thanks, Senator Birmingham. So what are the numbers?

Ms McCreadie : In terms of what?

Senator McKENZIE: In terms of the top rating programs that were dramas?

Ms McCreadie : Well, I think Howzat!was well rated at over 2½ half million. Underbelly, I think, held the record earlier, which was over two million, which had been the highest rating drama program. So the ratings have been going up for these high production value programs. But the issue is that for the networks, ratings is only one thing that they take into account. Clearly, cost is an issue. There is fabulous imported drama as well, and that rates well. But our concern is that Australian audiences see Australian stories and Australian performers on screen. The rationales, really, for the content quotas have historically been cultural rationales.

Senator McKENZIE: Thank you. In the conversation around content by 2015, you released a statement on 12 March that said Minister Conroy, and I quote:

...was pulling a swiftie on the Australian community in regards to mandating additional hours of Australian content on Australian TV screens.

Why did you think this was the case?

Ms McCreadie : Well, because he claimed that it was going to create additional Australian content, and clearly it is not, because the requirement is for 730 hours on the multichannels and they are currently doing, I believe, something like 1,400 hours a year. So it is not much more than half of what they are currently doing. The ultimate goal is also only about what they are doing now. So it is not an incentive to increase what they are doing. I think it is a way of saying, 'Well, okay, we'll set a minimum, but we're not addressing a problem.' I've called it smoke and mirrors in the past, and I think that is the same thing as a swiftie.

Senator McKENZIE: I think you are not alone there.

Ms McCreadie : I think it has created an illusion, unfortunately, for the Australian community that something is being done and it is not actually going to make any difference. If there is any change, it is going to be a negative one because of this new flexibility arrangement.

Senator McKENZIE: In terms of the public interest test, are you happy to comment?

Ms McCreadie : It is not so much our area.

Senator McKENZIE: But in terms of the comments around doing anything to protect or promote diversity of voices in the media, what do you think is the greatest threat to diversity of voices in the media?

Ms McCreadie : Well, I think what our media division has said is that they think it is a shame that none of these bills or none of this discussion is really addressing the major crisis in the media sector. Twelve thousand journalists—twelve hundred, sorry; I just added a zero—have lost their—

CHAIR: You did a Barnaby.

Ms McCreadie : Twelve hundred journalists lost their jobs this year. Clearly, that has an impact on diversity. So I think what the union would like to have seen is a plan for increasing investment and increasing the sustainability of good journalism going into the future. They do not feel that this package addresses that at all.

Senator McKENZIE: So in terms of the convergence review and the huge amount of scrutiny and purported consultation right across industry and stakeholders in the media conversation over the past few years, is this the iconic response we were expecting to take us forward into the 21st century?

Ms McCreadie : What, these six bills?

Senator McKENZIE: That is right. I am assuming this is the minister's response to all those consultations, conversations and reviews.

Ms McCreadie : Well, I guess we would be hoping that it was not the response. As I said, I think that going forward into the future, we have always had a mix of regulation and subsidy for this sector. I think it is acknowledged in the convergence review that certain genres need support going forward into the future. There is nothing here that does that. So I would hope this is not the iconic response and that there was some mechanism for further discussions, yes.

Senator McKENZIE: Have you had any conversation with the government that would suggest there is more to come?

Ms McCreadie : Not particularly. But I guess we are hoping that there is, yes.

Senator McKENZIE: Thank you, Chair.

CHAIR: Ms McCreadie, the submissions we have had in the last couple of days have concentrated on the changes to the Press Council and the establishment of the PIMA. You are raising an issue that has not had much debate over the last couple of days except to say that the media companies are saying continually that local shows are the top rating shows and that more and more money is going into them. But you say that is in a narrow area of sports and what else?

Ms McCreadie : I think the increase has been in others. We were looking at some figures earlier. These are slightly out of date. Certainly the increase has been in areas such as news and current affairs and light entertainment. In fact, children's drama has been going down. There has been quite a lot of pressure on children's drama. There has been a shift from live action drama to animated drama, essentially to, I suppose, save money and fulfil the quota in a cheaper way. That is a concern for us, I think. If you look at it long term—if you looked over, say, about seven years, it goes up and down—you see that there has not been a substantial increase. But there has been a substantial increase in some other areas. Indeed, in sport there does seem to be a significant increase there. Looking at 2000, it was $261 million going up to $330 million in 2008-09. Some of the figures are out of date, but that is not entirely our problem, of course. There are ACMA figures.

Mr MacRae : We just have some figures from ACMA detailing figures that have not been released about 2009-10 and 2010-11. It is quite clear that all the increased expenditure is going towards sport, news and current affairs, light entertainment and variety programming—so your reality shows—and a very minimal increase to adult drama of roughly about $5 million. Documentaries are down quite significantly, as is children's drama.

CHAIR: Is the ABC included in those figures?

Mr MacRae : No. These are just the commercial networks.

CHAIR: Have you got any views on the ABC?

Mr MacRae : The ABC received an injection a few years back in 2008-09, I believe. That was a significant boost to Australian drama. They have carried that through. As you can see, the output has increased vastly.

CHAIR: In other hearings, not this hearing, it has been put to me that the costs of Australian drama are quite prohibitive for some of the commercial stations, given their financial position. How do we deal with that issue?

Ms McCreadie : Well, there is significant subsidy on offer. There is the producer offset of 20 per cent for television. We and other industry organisations have supported an increase in that perhaps for a premium fund or an overall increase. Obviously, there are some fiscal limitations on that, but we have supported that. But that is there and the Screen Australia subsidy is there. So I think they need to take into account that it is heavily subsidised as well as regulated. So it is perhaps not as prohibitive as they see it.

CHAIR: What about the reduction in the licence fee issue? Would that provide an incentive for more local products?

Ms McCreadie : Well, not unless there is some serious obligation. I think that is the problem. At the moment, the reduction in the licence fee is going to happen. To date it has not resulted in an increase in Australian content. Now we have got locking in the reduction. I do not see that, without an effective change to the Australian content standard, that will happen. There needs to be an obligation to go with that reduction.

CHAIR: Briefly, walk us through the areas of concern you have with this block of legislation.

Ms McCreadie : Well, the first concern is that it is being presented as an increase in Australian content. The transmission quota requirement, which is effectively a transmission quota for the digital channels, the multichannels, is less than what they are currently doing. Secondly, in the genres which are most vulnerable and historically acknowledged as being most vulnerable, such as drama, documentary and children's drama, there is no subquota for the multichannels. Worse still, there is a flexibility proposal to allow the subquota on the main channel to be fulfilled by being spread across on to the multichannels, which will result in a dilution in those genres on the main channels and potentially drive down the licence fee. Certainly there will be lower licence fees insofar as the networks choose to shift their obligation on to the digital channels. I think that would be the main short-term problems. The longer term problem is there not a long-term process or plan.

CHAIR: It seems to me that the multichannels are being used as a filler.

Ms McCreadie : Yes.

CHAIR: I do not know whether that makes any sense. I do not know what the technical term is. They just fill the space with repeats.

Ms McCreadie : Yes. A lot of repeats.

CHAIR: And some of them are okay. I think some of the channels have got reasonable audience reach. So would it really matter if these multichannels actually do put in some new drama?

Ms McCreadie : Well, it would be great, but the trouble is that at the moment it is a zero sum game. It will take away from the main channels. The networks rarely exceed their obligations, so that is the trouble.

CHAIR: It is not so much membership, but how many artists or actors are actually working on a regular basis in the Australian industry? Is there such a figure? There is a bit of casual in and out. Give us an idea how it works.

Ms McCreadie : What are you saying? Nine thousand?

Mr MacRae : No. One thousand.

Ms McCreadie : One thousand working really regularly. There would be 9,000 people probably who make a significant living from acting or see themselves as actors. So our estimate is 1,000 for those who are working at any one time.

Mr MacRae : That would cover television, theatre and film. But it is a very intermittent job. It is very insecure. It is one of the most insecure jobs you could get. There is usually at any one time about 90 per cent unemployment. So you can have a one-day job and then the next day you do not have the job.

CHAIR: So you are unhappy with the bill. What are your options or your recommendations to us?

Ms McCreadie : Well, our recommendation, in the best of all worlds, would be to implement recommendation 18 of the convergence review, which is the list of transitional recommendations to deal with the transitional environment. Since that is not in there, we certainly think there should be a review process or mechanism to look at the impact and to see whether the licence fee rebates have indeed led to increased Australian content. We would be particularly interested in drama and documentary and children's programming being highlighted in there to see what the impact is.

CHAIR: Are you saying that if this legislation goes through, there should be a review?

Ms McCreadie : Yes, definitely.

CHAIR: So what timeframe are you looking for?

Ms McCreadie : Twelve months would be good.

Senator McKENZIE: We have heard of a review before. They were suggesting three years. I wonder why you would pick 12 months? Is that long enough given the production timelines and contractual negotiations that I assume you go through?

Ms McCreadie : Well, I suppose it is open to discussion how long the review should take. I suppose we are in a fairly rapidly changing environment, though. It is debatable, but some would say that the current landscape in three years or five years is going to be very different. So given that we are looking at the transitional arrangements, I would think maybe shorter than three years could be justified. Essentially we just think there should be an independent review, perhaps by ACMA.

CHAIR: Do you have any draft terms of reference that a review should look at?

Ms McCreadie : We could do some. We would say: have the licence fee rebates resulted in increased Australian content, with special reference to the genres currently covered by subquotas? What has been the impact of the flexibility arrangements which allow the subquota obligations to be spread across the digital channels?

CHAIR: Senator Ruston, do you have any questions?

Senator RUSTON: Sure. If there is time.

CHAIR: Yes, sure.

Senator RUSTON: You commented before that the major crisis in the media sector was the loss of 1,200 jobs for journalists. Could you expand a little on that, particularly in the context of how or whether these bills address this issue or not address this issue? How would you like to see them address this issue? Having had a look at the bills to some degree, I am not quite sure how that comment actually can be addressed by the context of what we are dealing with today.

Ms McCreadie : You do not see how the bills could have addressed that one way or the other?

Senator RUSTON: I do not see how they do.

Ms McCreadie : Right. I defer to our media section, because I am here representing the performers section. Their view would be that there is nothing that addresses the crisis in the business model, which has resulted in the loss of 1,200 jobs. There is a shift towards outsourcing and offshoring of some jobs. So clearly there is—

Senator RUSTON: Journalist jobs?

Ms McCreadie : Subeditors jobs, yes. The journalist jobs have been lost, but subediting is being outsourced, basically. There has been a shift away from subeditors being, I guess, local. They are being outsourced so that they are distant. Some have been moved to New Zealand, I understand, yes.

Senator RUSTON: So how would you like to see that addressed?

Ms McCreadie : Well, I think that is the subject of a bigger discussion about how you promote investment in new media.

Senator RUSTON: I suppose I ask the question only because there is an obvious change out there in the media space of recent times, which has seen many things change. I suppose if you were a blacksmith 20 years ago, you could not reasonably expect to continue to be a blacksmith. So is the change in the media space just—

CHAIR: There are still some blacksmiths.

Senator RUSTON: There is one, apparently, in our chamber. I use it only as an example. Is the change in the media space driving change? I only draw it to your attention because you said the major crisis in the media sector is the loss of 1,200 journalist jobs. I wonder whether that is just not a result of a change in a space as opposed to being a crisis that should be averted.

Ms McCreadie : Well, I do not know if it is so much averted, but how do you deal with that adjustment and how do you maintain diversity in that sort of environment? Clearly, when you lose a lot of journalists from a particular newspaper, for instance, there is less diversity and there is a lot more pressure on people. I think there is probably less scope for in-depth investigation and journalism. It feels that way.

Senator RUSTON: You made a comment about the ratings in relation to drama were high but you said spending generally tends to focus on sport and reality TV, obviously, because they must be live. Has anybody actually had a look at the costing mechanism that would suggest that? Ratings run how television put their programs on, I would suggest. How high do ratings need to be to absorb the cost of production of local drama in comparison to the other things? I understand your point, but I wonder how much the market is allowed or could drive the outcome of that?

Ms McCreadie : I do not know that I would have the figures. I guess what I was saying is that there is a trade-off between cost and revenue. The ratings lead to the revenue. They are related to the advertising revenue. So the network has to balance the two factors. Yes, I am sure there is probably a demand and supply curve we could draw, but we would have to look at how that would work. It would be very high, I would suggest.

Senator RUSTON: I suppose it is just a question whether there has been any cost-benefit analysis. We would all like everything to be perfect, but you just cannot afford it sometimes. If the cost is so prohibitive, the people of Australia probably need to make the decision as to whether they want the drama or whether they are happy to have the sport and reality TV.

Ms McCreadie : Well, I do not think it is prohibitive. I think that probably the subsidies that have gone into the industry have been fairly modest. The networks, of course, have got free access to scarce spectrum. Part of the deal has been, 'Well, you've got that for nothing. In exchange, there's regulation that obliges you to do certain things for cultural reasons.' I would not suggest it is prohibitively high. I think probably the amount that each taxpayer pays in order to get access to Australian content on television is fairly low. I do not know if you have ever seen a figure on that, Drew?

Mr MacRae : No. It is certainly the case that there is market failure here. We do not have the audience size and the population base in Australia to support the production of program at such a high level in terms of the amount of money that goes into these programs. We cannot recoup that. When that is played up against a US drama that can be bought on the cheap, both of them may rate 1.8 million viewers one night. The broadcaster needs to make a decision which one. But that is why Australian governments for the past 60 years have all agreed that there should be Australian drama quotas.

Senator RUSTON: If we are getting American dramas dumped on Australian TV, there is no reason why we cannot be dumping Australian dramas on the stations of other countries. Why is it that we have not been as successful as the American producers of drama? We all live in the same English speaking drama market, do we not?

Ms McCreadie : Well, I think they recover their costs in the American market, which is much larger. Clearly, we want our programs to be culturally relevant. It is possible that they do not travel as easily as an American program. Basically, there is a global cultural hegemony from the United States. The economics are that they do not need regulation and subsidy. What they are doing is selling into the Australian market at a marginal cost, so it is a huge disparity in terms of costs. We could just produce, I suppose, American programs here. I do not think they would travel as well.

Senator RUSTON: No. I do not mean that at all.

Ms McCreadie : But it is about cultural resonance. The American programs rate culturally in America. They recover their costs in their home market. Then they are selling them to the rest of the world at a marginal cost.

CHAIR: Thanks, Senator Ruston. Any further questions? If not, thanks, Ms McCreadie and Mr MacRae.