Malcolm Turnbull (Wentworth, Liberal Party, Minister for Communications) Share this | Hansard source

I thank all honourable members for their contribution to this debate on the Communications Legislation Amendment (SBS Advertising Flexibility and Other Measures) Bill 2015, and I will now seek to sum up the debate to date. I must refer to the contribution of the member for Greenway. Her rebuke of me for expressing a view about the interviewing style of journalists on television and the inappropriateness of my daring to comment on anything that occurred on public television was still hanging in the air when she proceeded to give a fairly forthright critique of the Struggle Street program on SBS. The reality is that we are all—ministers, parliamentarians, citizens, adults, children, anybody—entitled in a democracy to express our views about what happens on television, just as we are entitled to express our views about what happens here, and may it long be so.

This bill, I stress to honourable members, does not change the current restrictions on the overall amount of advertising per 24 hours that the SBS has, and it does not represent any further commercialisation of the SBS. The SBS is a hybrid model already—most of its revenue comes from the government, and I will come to that in a moment, but it has an advertising component. What we are seeking to do, while retaining the absolute number of minutes—120 minutes a day—is to give the SBS the flexibility to have not more than 10 in any given hour which, as honourable members obviously apprehend, will mean that they will run more than five minutes, which is their current hourly limit during the more popular and prime time programs.

It is very clear how we got here. During the six years of Labor government, as I was saying to the House earlier today, for every $1 of additional revenue the government received they spent $2. When we came into government we inherited a growing mountain of debt and a budget that was deeply in deficit. We have had to make savings, and in my own portfolio that includes savings at the national broadcasters, the ABC and the SBS, which receive $1.4 billion every year from the government. I asked the Department of Communications, my department, to undertake an efficiency study to identify savings that could be made by improving efficiencies in the back-of-house departments of the ABC and the SBS; in other words, savings that could be made without reducing the resources available for programming. It was very important from my point of view to ensure that the public broadcasters were able to continue to deliver the same quality content to the public but in a more efficient way. Savings have been achieved, inspired by—if not entirely in accordance with—the study.

One of the recommendations from the efficiency study was that advertising flexibility be given to the SBS. In November last year I announced that the national broadcasters will return $308 million in savings to the budget over five years. This means the SBS's operating budget will be reduced by $25.2 million and, along with the revenue of $28.5 million generated as a result of this bill, the SBS's total savings returned to the budget over the five-year period amount to $53.7 million. In the short term this bill allows additional advertising revenue to be directed towards meeting the government's efficiency savings applied to the SBS from 1 July 2015, without affecting its programming. If these advertising measures are not passed before the end of this financial year the SBS will need to find other ways to achieve the necessary savings, which it has indicated may involve reductions in programming and services.

In the longer term the government's intention from these changes is for the SBS to become a stronger and more sustainable broadcaster. Advertising flexibility strengthens the SBS by making it less dependent on government and helps to secure its future and independence. It is not part of this government's policy, but honourable members should be very well aware that for many years there have been advocates on both sides of the House and right through the television industry, and certainly at the ABC, that the SBS should be folded into the ABC. That, of course, is something that the SBS is not very keen on. Giving the SBS greater advertising flexibility, greater financial independence, will help to secure its independence in the years ahead.

It is anticipated that the SBS advertising measures will result in a total increase in the SBS's advertising revenue of $28½ million over four years. In later years, if SBS exceeds that run rate the additional revenue can be directed towards delivering more distinctive and innovative content and services in line with its charter responsibilities. I should note—because this is important, given that the free-to-air commercial television broadcasters have argued that this is a very bad development, a very bad proposal, because it will result in some advertising dollars being taken from them—that the two highest television results for SBS since it started to carry advertising in 2003 were $72.3 million in 2009-10 and $73.4 million in 2013-14, and these were in large part due to the FIFA World Cup being broadcast. I contrast this to the advertising revenue earned by commercial broadcasters, of $3.9 billion in 2013-14.

The reality is that the SBS's revenues are a very, very tiny part of the total advertising revenues of the television industry. The additional advertising revenue received by SBS is highly unlikely to have any material impact on the advertising revenue of the commercial broadcasters. As I noted earlier, the 2013-14 figure of $73.4 million was a high point due to the FIFA World Cup. In the previous year, without the FIFA World Cup, it was only $58 million. Free TV, the commercial television stations' lobby group, claims that this proposal will result in SBS earning $148 million over four years from 2015-16, or $37 million per annum. These are so optimistic that I would say that they border on the fanciful. But even if one were to accept them, $37 million per annum represents less than one per cent of the $3.9 billion total commercial television advertising pool in 2013-14.

SBS already competes for advertising with the commercial free-to-air broadcasters, and the proposed bill simply does not change this. Audience size is fundamentally what attracts most advertisers, and SBS has a niche audience that simply does not compete with the commercial free-to-air sector in this respect. I have noted honourable members from the opposition saying that it would be terrible if the SBS were to carry more advertising in prime time, because it would encourage them to produce programs that were popular. This of course shows the impossible task that public broadcasters are set. On one hand, if they produce program after program of remote interest to the public—say, Sophocles in the original Greek—they will be accused of being elitist and a waste of taxpayers' money. On the other hand, if they produce programs that people actually want to watch, the commercial broadcasters will say, 'Stop, stop; you're taking our audience.' The reality is that both SBS and ABC have to tread a line down the middle. It is a question of judgement. But, on any view, the SBS is an absolute niche broadcaster. For example, over the past five years the SBS has had no more than four of the top 500 top-rating free-to-air television programs in the mainland state capital cities for any given year on either main channels or multichannels. Excluding football and cycling, this figure drops to between nil and one program.

So, the reality is that this is a sensible, commercial, responsible change to SBS. It will make it more independent financially. It will give it more flexibility in terms of advertising. It is simply changing the way in which it can schedule its advertisements; it is not increasing the number of advertisements that are broadcast on any day. It will increase SBS's revenues. At one level I would love to think that the free-to-air television stations are right in their forecast, but they simply are not. The SBS and the Department of Communications have gone over these figures very carefully, and the figure that we are assuming—$28½ million—is a prudent and conservative one and we think achievable. The figures of $37 million a year that the commercial television stations have proposed is, as I said, so extreme as to be fanciful.

In its submission to the Senate inquiry on this bill, the SBS itself said:

SBS’s ability to earn commercial revenue is critical to its operating model and sustainability. As a hybrid funded organisation since 1991, SBS has a highly evolved workplace culture, operating systems and codes and guidelines in place to manage the complexities of being a public broadcaster with commercial activities. The organisation is well-positioned to responsibly and sensitively manage increased flexibility in advertising and sponsorship in line with audience and stakeholder expectations, whilst maintaining the integrity of the SBS Charter.

To summarise for honourable members, to put this all in context: SBS has traditionally received around 75 per cent of its funding from government, including its base funding, tied funding for the production broadcast of NITV, and funding for transmission itself. This financial year, 2014-15, government revenue to SBS was $286 million. In the same year, SBS's total revenue from all commercial sources is predicted to be $96 million. Advertising and sponsorship spikes every four years during the FIFA World Cup, and in 2014-15, a World Cup year, SBS's revenue, advertising, sponsorship and subscription channels will be $85.2 million, and that includes additional commercial revenue from sources such as television royalties, merchandising, rental income and interest.

So, the changes proposed in this bill have only a minor impact on SBS's overall revenue make-up, with its commercial revenue share projected to increase from 25 to 29 per cent of its total revenue over the forward estimates, and its impact on the rest of the commercial television industry is somewhere between nil and negligible in real terms.

If this bill is not passed, given the reality that budget efficiencies have already been signed off on and will be implemented from 1 July, there will be an immediate, significant and negative impact on SBS. That is the reality. We were left a growing mountain of debt and an enormous deficit because of Labor's profligacy. We have had to make savings. SBS is making its contribution. It surely is outrageous for the Labor Party, having created the debt problem because of their reckless spending, to then stand in the way of the government responsibly addressing it. On that note, I commend the bill to the House.

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