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Thursday, 21 March 2002
Page: 1929

Mr McGAURAN (Minister for Science) (5:25 PM) —I move:

That this bill be now read a second time.

The communications environment is experiencing a period of rapid change. Existing and potential media operators are forging new commercial strategies to maintain or establish their position in the new marketplace. Consolidation and diversification have brought about the emergence of substantial global communications groups. Consumers are no longer confined to the traditional media of radio, free-to-air television and newspapers available in their local area.

The regulatory framework in relation to the ownership and control of Australian media assets is out of place in such a dynamic environment. The current restrictions impede commercial flexibility and access to capital for infrastructure and content investment. They hinder the ability of Australian media organisations to succeed in the new market environment.

The government is committed to reforming the regulatory framework governing foreign and cross-media ownership of media assets. This bill seeks to give effect to this commitment and allows Australian media organisations to take fuller advantage of the rapidly evolving communications environment.

The government is introducing this legislation with a view to enabling the commencement of sensible debate on these important media ownership issues. The government will seek to have this legislation immediately sent to a Senate committee to enable public input into the proposed changes prior to debate in either house of parliament. The government recognises that this input may result in recommendations for further changes and safeguards and is willing to give these suggestions due consideration so that there is every opportunity for this important reform to be progressed with widespread support.

Like other sectors of the economy, Australia's media industries are under pressure to become more global in their technology and equity links. Media convergence encourages existing players to take strategic positions in the marketplace and to strengthen their competitiveness through better use of economies of scale and scope.

These measures are necessary because technological convergence in the communications sectors has resulted in increasing pressure on media operators to invest in digital technologies. Digitisation of production and transmission could enable new types of interactive services to be offered and reduce the cost of producing content. However, investment in digital technologies requires large capital outlays.

Giant media companies which own both content and the means of delivery have emerged in the US and Europe. Preventing increased foreign investment in Australia restricts the capacity of Australian media enterprises to access technology and managerial expertise and be in a position to compete on an equal footing.

The current foreign ownership and control restrictions in the Broadcasting Services Act 1992—hereinafter referred to as the BSA—which apply to free-to-air and subscription television services serve as a major deterrent to the degree of investment which can take place in Australian media organisations.

The bill 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.

Technological progress and globalisation are changing the structure of the Australian media market and patterns of media consumption—undeniably. Australian media organisations are responding to these changes by investing in new technology enterprises and forming broader strategic partnerships, but the regulation of ownership and control of Australian media has been largely static. This creates ongoing tension between the trend towards convergence in the communications market and a regulatory framework which is based on sector-specific regulation and an assumption that influential sources of news and opinion are limited to the traditional domestic media outlets.

Reform of the media ownership rules will clear the way for renewed market interest in Australian media assets and will allow media companies to take fuller advantage of investment opportunities as they arise.

The government is committed to the need for ongoing diversity of opinion and information in the Australian media. It does not believe that diversity of ownership is necessary to achieve this. Nevertheless, the government recognises the need to ensure that media owners do not exploit their co-ownership of media organisations in a way which prevents those organisations from exercising separate editorial judgements.

To this end, the bill provides for a transparent and effective public interest test in relation to maintaining separate editorial decision making processes in cross-controlled media organisations.

Diversity of opinion is further protected by existing provisions in the BSA relating to limitations on the number of licences able to be controlled by an individual organisation, and on the percentage of audience share able to be controlled by a person or organisation. These provisions will be preserved.

The Trade Practices Act 1974 will continue to apply to proposed media mergers and acquisitions. Any such proposals will be subject to a test for the effect on competition, which is administered by the Australian Competition and Consumer Commission.

The bill provides for a process whereby exemption certificates are issued to applicants who would otherwise be in breach of the cross-media provisions. Holders of exemption certificates will not be in breach of the cross-media rules in relation to media entities which they control, provided the conditions of the certificate are satisfied. Certificates become active upon a person assuming control of two or more media entities in a way which would otherwise breach the cross-media rules. The Australian Broadcasting Authority (ABA) must maintain a register of active cross-media exemption certificates which is to be available on the Internet.

The certificate must 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:

(1) separate editorial policies;

(2) appropriate organisational charts; and

(3) 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 cooperation in newsgathering between organisations that could assist owners seeking to realise efficiencies from jointly owned organisations.

The conditions for exemption included in the bill are straightforward, reasonable and transparent. They provide certainty for industry by clearly setting out expectations for editorial separation. They also provide a guarantee to the Australian public that diversity of news and opinion will continue to be protected.

It is important that there be adequate monitoring and compliance measures to ensure public confidence in the new provisions.

The BSA allows for specific requirements to be placed on broadcasters as licence conditions. Provisions include financial penalties for breaches and suspensions, and removal of licences in the case of repeated or severe breaches of licence conditions. The BSA provides for the ABA to have the ability to investigate bona fide complaints of failures to adhere to conditions and to publish the outcome.

If the ABA determines that a licence condition has been contravened, it may issue a notice requiring the licensee to address the contravention within a specified time frame. The ABA could impose financial penalties or as a last resort suspend or withdraw the relevant broadcasting licence.

Enforcement options are also available against controlling parties. When an undertaking is not adhered to, the exemption certificate will cease to apply and the controlling party will therefore be in breach of the cross-media provisions. In these circumstances the BSA allows the ABA to require the controlling party to divest.

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 ensuring that important information is relayed in a timely fashion. The government's election commitment stated that organisations seeking exemptions from the cross-media rules would be required to make undertakings in relation to minimum levels of local television and radio news and current affairs. This bill strengthens the nature of that commitment to ensure that substantial measures are taken to ensure the continuation of local news services.

The bill amends the BSA to impose a condition on broadcasting licences in relation to which cross-media exemptions have been granted that requires broadcasters 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.

This bill provides for the timely reform of the regulatory framework governing the ownership and control of Australian media organisations. It balances the need to encourage competition and innovation with the need to safeguard diversity of opinion and ensure the continued provision of local news and information services. It facilitates greater investment from both domestic and foreign sources in the Australian media to enable greater roll-out of new and exciting communications services and the continued production of high-quality Australian content.

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. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Ms Livermore) adjourned.