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Thursday, 22 May 1969

Bill received from the House of Representatives.

Standing Orders suspended.

Bill (on motion by Senator Dame Annabelle Rankin) read a first time.

Second Reading

That the Bill be now read a second time.

When, on 14th May 1969, I introduced the Broadcasting and Television Bill 1969, I indicated that it was hoped, during this session of Parliament, to introduce subsequent Bills to amend the Broadcasting and Television Act in certain further directions. Accordingly, I now present for the consideration of the Senate the Broadcasting and Television Bill (No. 2) 1969.

Honourable senators may recall that, on 24th September 1968, I informed the Senate of proposals to extend to broadcasting stations some of the ownership and control provisions currently applying to television stations, while on 19th March 1969 I informed the Senate of the intention to bring down an amendment to the Act to correct a shortcoming which had been found to be present in respect of the ownership and control provisions relating to television stations. This Bill deals with these matters and, in addition, provides for the grant of licences for small television stations to serve remotely situated communites and amends the existing provisions relating to the broadcasting and televising of election matter.

I do not propose in this second reading speech to cover in any great detail the various clauses of the Bill. On the face of it, they are fairly complex and can, I think, be better dealt with in the committee stage. I propose, however, to outline for the information of honourable senators the background and broad import of the proposed amendments.

In 1960 and later, in 1965, Parlaiment enacted legislation to deal with the question of the ownership and control of television stations. Broadly, the intention was to limit the extent of the control or influence which might be exercised by any one person or group over companies holding licences for television stations. The provisions which were enacted appear as Division 3 of Part IV of the Act and it is gratifying to record that they had been most effective in ensuring compliance with the will of the Parliament. In contrast, the existing provisions relating to broadcasting stations, which have remained virtually unchanged since 1942, not only have, in the light of developments, proved to be inadequate but leave open ways for the evasion of the basic intentions of the provisions. In consequence, there has been an increasing trend towards a concentration of control arising from transactions in shares in licensee companies or in companies which are themselves shareholders in licensee companies.

As I explained in my statement to the Senate on 24th September 1968, the Act now provides that a person shall not own or control, directly or indirectly, more than 4 commercial broadcasting stations, including 1 metropolitan station, in any one State, and more than 8 stations, including 4 metropolitan stations, in Australia. In this context, the Act does not define 'control' as is the case with television stations and, in respect of shareholding changes, the provisions do not extend beyond the beneficial ownership of shares in a licensee company. It has been necessary to provide for transactions of an indirect character through conditions of licences - an unsatisfactory procedure.

The position with respect to ownership of broadcasting stations is, therefore, that a person may own or control a. total of eight stations in the Commonwealth and may. in addition, hold up to 50% of the shares in any other number of companies holding licences. It is not proposed to change the present limitation on the number of stations which may be owned or controlled but it is proposed to restrict the interest which may be held directly or indirectly in any additional licensee company. This is to be done by extending to broadcasting stations some of the existing provisions of the Act currently applying to television stations, and I now propose to explain, briefly, the main features of these.

Proposed section 90c of the Bill provides that a person shall contravene the provisions of the Act if he has a 'prescribed interest' in licences for:

(a)   more than one metropolitan commercial broadcasting station in any one State;

(b)   more than four metropolitan commercial broadcasting stations in Australia;

(c)   more than four commercial broadcasting stations in any one State; or

(d)   more than eight commercial broadcasting stations in Australia.

Proposed section 90 (2.), in turn, provides that a person has a 'prescribed interest' in a licence if he is:

(a)   the holder of the licence;

(b)   in a position to exercise control either directly or indirectly, of the licence; or

(c)   the holder of shareholding interests in the company holding the licence exceeding in amount 15% of the total of the amounts paid on all shares in that company.

In ascertaining whether a person has a prescribed interest' in a licensee company, the Bill provides in section 90b for indirect interests to be taken into account by the tracing back of shareholding interests through a series of companies. Tracing back through voting rights is provided for by proposed section 90e. This section, it will he noted, provides for 'control' of a company to embrace 15% of voting rights, the holding of 15% of the shares in a company carrying unrestricted voting rights or the holding of 15% of the total share capital of a company and, in effect, applies the principle of 'one share - one vote'. Such a provision becomes necessary in order to prevent the manipulation of articles of association of a company with the intention of restricting voting rights, no matter how large the shareholding, for the purposes of preventing a contravention of the purely voting., rights test of control of a company. . .

Changes in the ownership of shares in a company holding a licence, or of shares in a company having a shareholding interest in a licensee company, are dealt with in proposed section 90j. It provides that the Minister's approval must be sought in respect of transactions defined in that section which include the acquisition of shares which would amount to a prescribed interest and also where the holder of a prescribed interest becomes the holder of additional shares. Proposed section 90j (4.) states the grounds on which the Minister may refuse bis approval.

The remaining proposed sections of the Bill relating to the ownership and control of broadcasting stations, with one exception, are extensions of similar provisions currently applying to television stations and are, I think, clear enough. The exception is proposed section 90a referring to companies limited by guarantee, to which 1 shall refer later.

At this stage, I should say that consideration has been given to the position of persons or companies who, by virtue of their present shareholdings in licensee or related companies, would be in breach of the Act when amended. However, as was the case in respect of the 1965 legislation concerning television stations, it has been concluded that there would be serious difficulties in making Che provisions of the Bill apply retrospectively in such cases. Accordingly, as indicated in my statement of 24th September 1968, it is proposed that no shareholding arrangement existing as at that date will be invalidated by the new provisions or will constitute an offence against the Act as amended. However, if a person, or company, who has acquired excess interests prior to 24th September 1968 subsequently divests himself of such interests he will not thereafter be entitled to recapture those holdings although he will be able to participate in any new issues of shares which may be made. This position is covered by section 90c.

Finally on this aspect of the Bill, I should point out that the provisions now proposed in respect of broadcasting stations differ from those currently in force in relation to television stations only insofar as the amount of shareholding interest constituting a 'prescribed interest' is concerned and no regard is paid to loan interest. In the case of 'prescribed interests' in relation to television stations a level of 5% shareholding was adopted whereas in the case of broadcasting stations a level of 15% is proposed. This course, together with the omission of any reference to loan interests, has been considered to be justified having regard to the fact that in the main the licences are held by private companies having a relatively small share capital.

As I mentioned earlier, my announcement of 19th March 1969 foreshadowed an amendment to the ownership and control provisions of the Act relating to television stations to correct a shortcoming which had come to notice. I repeat here the relevant terms of my earlier statement on this matter. Section 92b (l.)(a), in dealing with control of television stations through voting rights, treats a person who is in a position to exercise control of more than 15% of the maximum number of votes that could be cast on a poll at, or arising out of, a general meeting of Che company holding the licence as being in a position to exercise control of that company. The limitation of this provision to the company holding the licence means that control based purely on more than 15% of voting rights cannot be traced through a series of companies. This limitation was unintentional. In most cases, the defect would not matter in practice, as other provisions of section 92b would operate to enable control to be traced through shareholding interests, irrespective of voting power. However, it appears that it may be possible to avoid these other provisions by the interposition of companies that do not have a share capital but are limited by guarantee.

In order to close these loopholes, a new section 91aa, together with an amendment to existing section 92b, is proposed. In clause 19, provision is made to protect any arrangements which may have been made prior to my announcement of 19th March 1969 on this matter, although it is fairly certain that there are none. The amendments to the Act which are now proposed to cover the position of companies limited by guarantee have also been extended to embrace broadcasting stations. Proposed section 90a deals with this aspect.

I turn now to the provisions which are proposed for the purposes of facilitating the establishment of television services in remotely situated areas. As honourable senators will be aware, continuous and persistent efforts have been and are being made to extend television to areas which are at present not being served. The present position is that when the current sixth stage of development is completed during 1969-70 a coverage of Che order of 96% of the population will have been achieved. The remaining 4% of the population is widely distributed over about 85% of the total land area. The low density of population in the areas remaining without service and the remote locations of such concentrations of population as do exist present technical and economic difficulties in providing service and special measures become necessary. I have mentioned this matter because it bears on the amendments which are proposed in this Bill in clause 10 to permit the licensing, of What has been termed 'television repeater stations'.

There are a number of small and remote communities in the Commonwealth, mainly mining centres, to which it is unlikely that service would ever be provided by normal type commercial stations and to which, because of the costs involved, the establishment of national stations is difficult to justify. A number of mining' companies have indicated that they are prepared to establish and operate television stations of a modest character if the way can be made clear for them to do so. The scheme which has been proposed is that the companies concerned would meet the cost of establishing the transmitting facilities while the programmes would be provided by the Australian Broadcasting Commission at a central recording centre established for the purpose.

The establishment of the type of station to which I have referred gives rise, however, to some difficulties of a procedural and legal nature as the Act now stands. In the first place, the Act provides only for the grant of licences for commercial television stations, as defined, involving a fairly complex procedure of inviting applications and the holding of public inquiries into them by the Broadcasting Control Board. Secondly, section 92d of the Act restricts overseas interests in television licences to 20% in the aggregate or . 15% individually. Having regard to the present constitution of mining companies, the latter provision would have the effect of placing an insurmountable obstacle in the way of such companies erecting and operating stations.

In the special conditions which prevail in respect of the particular areas concerned, no real objection can be seen to the control by mining interests of television stations which such companies may be prepared to operate in their area of activity. Indeed, it is evident that unless the mining companies are placed in the position of being able to establish services there is little, if any, prospect of the residents of these remote areas having access to television. It is also clear that there is nothing to be gained from adhering to the present procedures prescribed in the Act in relation to the grant of licences. It is apparent that the only enterprise which would be interested in providing service in the areas concerned would be the organisation conducting the mining operations.

Accordingly, it is proposed in clause 10 that the Act be amended to include a new Division 5b to provide for the grant of licences for television repeater stations and for their operation. The main features of the proposed provisions are that the Minister may grant licences on the recommendation of the Board and that the Board shall not recommend the grant if, in its opinion, satisfactory reception of programmes is already being received in the area concerned. In clause 11 it is proposed that a new section 113a be inserted to authorise the Commission to make its programmes available to the type of station in question. I should point out that clause 4 proposes the insertion in section 4 of the Act a definition of 'television repeater station'. It will be noted from this definition that the proposed stations in this category will be of low power and will be capable of transmitting only programmes recorded on magnetic tape. The definition will also have the effect of excluding such stations from the ownership and control provisions of the Act which are found in Division 3 of Part IV and the procedural requirements as to the grant of licences in Division 1 of Part IV.

The last matter I wish to mention is that relating to the broadcasting or televising of election matter. Honourable senators will, I think, be very familiar with the existing provisions of section 1 1 6 of the Act and will recall that I have on several occasions indicated that the Government was examining the whole question of the implications of the provisions of that section. As a result of this examination, it is now proposed in clause 12 of the Bill to amend the section to provide that the existing restriction on the transmission of election matter, as defined, from midnight on the Wednesday preceding polling day to the close of the poll will apply only to stations which are deemed to serve the area in which an election is being held. It is proposed that the Board will, in respect of any by-election or State election, grant exemptions from compliance with this requirement to stations the transmissions from which are not ordinarily received in the area to which the election relates. The adoption of this amendment will considerably alleviate the many difficulties which the operators of stations have experienced in presenting programmes from which it has been necessary to exclude election matter during the restricted period. I think that 1 have covered in the foregoing the main features of the Bill. As I said at the commencement, it can be dealt with in greater detail during the Committee stage. 1 commend the Bill to the Senate.

Debate (on motion by Senator Cohen) adjourned.

Sitting suspended from 12.53 to 2.15 p.m.







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