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Monday, 7 November 2016
Page: 2878

Ms ROWLAND (Greenway) (11:45): The Broadcasting Legislation Amendment (Television and Radio Licence Fees) Bill 2016 proposes to amend the television Licence Fees Act 1964 and the Radio Licence Fees Act 1964 to reduce the licence fees paid by commercial television and radio broadcasting licensees by 25 per cent. It is instructive to look at the history of licence fees and at how we have arrived at this point. Labor supports the passage of this bill and considers the proposed reduction in licence fees to be a sensible step towards improving the international competitiveness of Australia's media sector and promoting the production of local content. It is instructive to briefly revisit the history of broadcast licence fees to understand how things have changed in this area and why this bill before us is important.

As the Productivity Commission stated in its report of the inquiry into broadcasting, licence fees 'seek to recover some of the value inherent in commercial broadcasting licences from commercial broadcasters and provide a return to the public for their use of scarce radiofrequency spectrum'. Commercial television and commercial radio broadcasters are required to pay broadcasting licence fees, which are levied as a proportion of their gross earnings from televising or broadcasting, as the case may be, advertisements or other material or matter during the return period. Under the Broadcasting Services Act, a person or entity providing a commercial broadcasting service on radio or television must hold a commercial radio or television broadcasting licence. Under the Radio Licence Fees Act and the Television Licence Fees Act, a licence fee is payable annually by the holder of a commercial radio broadcasting licence or a commercial television broadcast licence respectively. The sector-specific licence fee levied on commercial broadcasters has formed part of the social compact that has been a central theme in how broadcasting policy and legislation has been approached in Australia. This compact provides broadcasters with privileged access to use the airwaves, the radiofrequency spectrum—the highly valuable, finite and public resource used to transmit programming. It also affords other marketing advantages that, in turn, provide commercial broadcasters with unique access to a mass market of television viewers and radio listeners across Australia.

Historically, this business model delivered strong revenue and profits in an environment that is less competitive than what we have today. In exchange for these privileges, broadcasters were required to pay licence fees and were also subject to regulation that aimed to promote a range of public interest objectives, such as promoting a sense of Australian identity, character and cultural diversity; encouraging fair and accurate coverage of matters of public interest and appropriate coverage of matters of local significance; respecting community standards concerning program material; and protecting children from exposure to program material that might be harmful to them. In 2014-15 the Australian Communications and Media Authority collected roughly $153.9 million in licence fees from the commercial television sector.

I would like to turn to the issue of competitive pressures in the sector. The rise of the internet as a channel to aggregate and distribute content has had a significant impact on the media landscape. The structure and economics of media are changing, and broadcasters are facing increasing competition from new breeds of content providers who do not use the broadcasting spectrum and are not subject to the same level of regulation. For example, over-the-top content providers such as Netflix, Google and Facebook do not pay tax in the same way as Australian media companies and are not subject to detailed Australian media regulation requiring investment, for example, in local content, talent or production staff.

As noted recently by Network 10 to a Senate inquiry, Australian media companies are now competing directly against the foreign internet companies that are exempt from local media regulation, do not pay television licence fees and pay minimal corporate tax, despite taking billions in advertising revenue in this market.

It was further noted by Ten:

PwC forecasts that by 2020 internet advertising will dominate the advertising sector, reaching $10 billion, or approximately 50 per cent of the sector.

Unfortunately, local journalism and local production will not benefit from this growth, with an estimated 70 to 80 per cent of total Australian digital advertising revenue going overwhelmingly to two foreign technology companies, Google and Facebook …

The challenges facing the television sector were also highlighted by PwC, who forecast the share of total advertising revenue between 2013 and 2017 for the commercial television sector will fall from 29 to 27 per cent, while the internet share is forecast to rise.

Commercial Radio Australia has also emphasised that the reduction in licence fees is a welcome relief to Australian radio broadcasters who continue to carry regulatory obligations and costs well in excess of unregulated online competitors. The radio sector incurred roughly $24.83 million in licence fees across 273 licensees for the 2014-15 period. As noted by Commercial Radio Australia, it is important that pricing of spectrum licences for commercial free-to-air broadcasters be considered 'in the broader context of heavy regulation, local and Australian music content requirements, advertising restrictions and mandatory tags required of radio broadcasters, as well as the key role of radio in emergency situations'.

I would now like to return to Labor's support for a strong broadcasting sector. When Labor were in government we recognised the convergence driven challenges faced by commercial television broadcasters. Labor in government announced a rebate of 33 per cent for 2010 and 50 per cent for 2011. The 50 per cent reduction was extended to the end of 2013 by regulation and confirmed in legislation at the time. In announcing licence fee reductions in February 2010 then Minister Conroy conveyed that Labor were committed to reviewing the future role of licence fees in the face of significant change and also articulated the importance of a strong and vibrant broadcasting sector, saying

Broadcasters have a unique role in preserving our national culture and the commercial television sector invests hundreds of millions of dollars each year in the production of local content.

I think it is also instructive at this point to have a look at some of the comments made by then Minister Conroy on 21 February 2010 on the Insiders program. He was being asked by the host about how networks are struggling to meet their local content requirements. Then Minister Conroy said:

What we're seeing around the world is firstly that there is a long-term structural decline in commercial TV's business model. That's acknowledged around the world.

In the UK in response to that a couple of years ago, they slashed licence fees. In Canada licence fees are around 1 per cent. So Australian commercial TVs are still paying the highest in the world even after this cut.

What we're seeing is the advent of IPTV that's coming on-stream as part of the national broadband network, but it's arriving on existing networks today. Enormous competition is coming to the commercial TV sector.

At the same time, the Government has taken from them an enormous amount of spectrum which we we'll be auctioning in the next few years which will be of enormous benefit both in a straight-dollar return from the auction, but more importantly, the productivity-enhancing boost that will come from allowing this spectrum to be used far more efficiently than it has been used in the last few years.

I contend those comments stand true today.

Labor remain committed to preserving a strong and vibrant broadcasting sector and recognise the positive effect that a competitive sector has on local jobs and our sense of Australian identity. We also recognise the competitive pressures facing the sector and the need for meaningful and effective measures by government to ensure broadcasters can continue to invest in local content and production.

Reducing licence fees is a sensible step. This brings me to the reasons that Labor considers justify support of this bill. In light of revenue declines and the regulatory asymmetries that I have outlined, commercial broadcasters have argued that the licence fees they pay are excessive, particularly when compared to their overseas counterparts. International comparisons have shown that the licence fees imposed on Australian broadcasters are higher than comparable overseas jurisdictions. For example, licence fees in Australia are currently 4.5 per cent of revenue. This is compared to 0.41 per cent in the UK, 0.27 per cent in New Zealand and only 0.05 per cent in the United States.

This bill proposes to reduce the fee by a further 25 per cent, which would bring it down from 4.5 per cent of gross revenue to 3.375 per cent. This reduction has been estimated to reduce the financial burden on industry by $163 million over the forward estimates. I note the ongoing spectrum review, which now appears to be continuing into another year. This has been a source of ongoing concern for the broadcasting sector. There remains a lack of certainty about how the revised spectrum legislation will operate in practice and the arrangements for broadcast spectrum moving forward, particularly on matters of pricing. We urge the government to ensure the legislative package it ends up bringing before the parliament is cohesive and does provide certainty for stakeholders moving forward.

There is, of course, an argument that current licence fees reflect the value of public spectrum and other advantages enjoyed by commercial free-to-air broadcasters. I have no doubt this debate will continue for some time to come. Nonetheless, for the reasons that I have outlined, the current schedule of licence fees should be adjusted in a manner that is both sensible and proportionate. As you well know, Mr Deputy Speaker, the job of parliament is to promote the public interest and, given the centrality of the broadcasting sector to our system of democracy, any substantive decision impacting this sector will require careful consideration that is both informed by evidence and guided by the enduring policy objectives that we aim to promote. Labor is satisfied that the evidence supports the proposed measure whilst preserving and indeed promoting the policy objects central to the Broadcasting Services Act through the provision of support for a sector that invests in local Australian content and jobs. For these reasons, Labor supports the passage of this bill.