Sussan Ley (Farrer, Liberal Party, Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 amends the Broadcasting Services Act 1992 (the BSA)  to increase flexibility in the operation of the 10 per cent requirement for new spending on drama on subscription television.

The bill also amends the BSA to give the Australian Communications and Media Authority (ACMA) a discretion to allow the transfer of a community broadcasting licence to another person which represents the same community interest. This is intended to deal with changes of corporate arrangements by licensees.

On 29 December 2005 the government announced changes to the 10 per cent requirement for new spending on drama on subscription television. With these changes the government has reaffirmed its commitment to the new eligible drama expenditure requirement.

Currently, subscription television broadcasting licensees who broadcast channels predominantly devoted to drama programs, and their program providers, are required to spend at least 10 per cent of their drama program expenditure each year on new Australian drama.

The requirement continues to ensure that the subscription television industry contributes to the production of high quality local drama. It also ensures the promotion of high quality and innovative programs by providers of broadcasting services.

This remains an important policy objective for the government. It reflects the role of drama in shaping a sense of ‘Australian identity, character and cultural diversity’, which is one of the objectives of the BSA.

The new eligible drama expenditure requirement commenced on 1 July 1999. It has annually delivered $15 million to $20 million in funding support to a variety of Australian productions, ranging from multi award-winning feature films such as Somersault to television series such as Love My Way.

A review of Australian and New Zealand content on subscription television broadcasting services has been conducted, as required by the BSA. The report of the review, which was tabled in parliament on 16 March 2005, found that the 10 per cent new eligible drama expenditure requirement remains an appropriate measure.

The review also found that the requirement is highly valued by the production industry and underpins a wide range of drama projects for theatrical, subscription and free-to-air television release.

Whilst the requirement is considered successful in meeting its objectives, the review recommended some changes to ensure its continued effectiveness. The government has therefore drafted this bill to reflect these recommendations and to ensure the ongoing success of the requirement.

Currently there is a disincentive for licensees to spend more than the 10 per cent requirement for new drama production in one financial year. The then Australian Broadcasting Authority (ABA) found that the inability to carry forward expenditure from one year to the next has previously resulted in decisions not to finance new programs that would have otherwise met the new eligible drama requirement.

The government has therefore introduced this bill to amend the BSA to allow spending in excess of the 10 per cent requirement to be carried over into the following financial year. This will provide the subscription broadcasting industry with increased flexibility in its investment decisions and will encourage a higher level of investment in quality local drama productions.

The bill provides for more flexible arrangements for the treatment of preproduction expenditure on script development. This will encourage greater investment in script development and encourage licensees to become more involved in the earlier stages of drama production in Australia.

In addition, the bill seeks to amend the definition of ‘drama program’ for the purposes of the subscription broadcasting expenditure scheme to make it consistent with the definition of ‘Australian drama program’ within the Australian Content Standard that applies to free-to-air television broadcasters.

Expenditure consistent with the proposed changes incurred after 1 January 2006 will be able to be treated as new eligible expenditure. This will provide the industry with some certainty in relation to proposed investment in Australian drama, allowing investment decisions to be implemented ahead of the legislative process.

A further review of the new eligible drama expenditure requirement will take place in 2008 to take account of the changes occurring in the subscription television sector.

Part 6 of the BSA provides for the allocation of community broadcasting licences by ACMA. Part 6 currently contains no provision for the transfer of a community broadcasting licence. This can lead to difficulties when a licensee changes its corporate identity or ceases to exist, leaving ACMA with little alternative but to seek the surrender of the licence and conduct a new allocation process. Such situations have arisen in relation to changes in the corporate arrangements of governing councils of remote Indigenous communities and arrangements for Radio for the Print Handicapped services.

The bill amends the BSA to allow ACMA to approve the transfer of community broadcasting licences where there is a change of corporate identity, provided that the new licensee continues to represent the community of interest that the licensee represented either at allocation or most recent renewal (whichever is the later).

Any decision to refuse to approve a transfer will be reviewable by the Administrative Appeals Tribunal. I commend the bill to the House.

Bernie Ripoll (Oxley, Australian Labor Party, Shadow Parliamentary Secretary for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

I rise to speak on the Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006. This legislation deals with two discrete issues. The first relates to how the subscription television industry meets the legislative requirement to invest in the production of local drama. The second issue concerns ACMA’s ability to facilitate the smooth transfer of community broadcasting licences in circumstances where a licensee changes its corporate identity or dissolves. I can indicate at the outset of this debate that the opposition support the government’s proposals for dealing with these two matters and that consequently we will be supporting the passage of this bill through the House.

I would like to start with the issue of subscription television drama. Schedule 1 of the bill contains a series of amendments to division 2A of part 7 of the Broadcasting Services Act. This part of the act provides that subscription television licensees must spend at least 10 per cent of total program expenditure on new eligible drama programs. For the purposes of the act ‘eligible drama programs’ include Australian and New Zealand programs. The inclusion of New Zealand programs reflects the requirements of the closer economic relations agreement. These provisions were inserted into the Broadcasting Act in 1999.

The local content requirements for Australian television reflect a point long acknowledged by both sides of politics in Australia: that, in the absence of government intervention, the market is unlikely to produce desirable levels of Australian content. Producing Australian drama is an expensive business. It is far cheaper to fill program schedules with foreign programming. Labor strongly supports the continued retention of local content requirements for free-to-air and pay television.

Drama programs play a crucial role in shaping our national identity and reflecting our national character and cultural diversity. It is important that our kids see Australian stories and hear Australian voices. While other countries produce excellent programs that we all enjoy, government must ensure that there remains a significant place for Australian talent to be showcased.

At present the local content requirements for pay TV are substantially less than the free-to-air networks. All commercial free-to-air television broadcasters must show at least 55 per cent Australian programming between 6 am and midnight. In addition there are specific minimum annual subquotas for Australian adult drama, documentary and children’s programs. At this stage of the development of the subscription TV sector it is appropriate the requirements for local content are less demanding than those for the mature and extremely profitable free-to-air sector. Nevertheless, it is reasonable that in return for a licence to operate pay TV services in this country licensees like Foxtel and Austar be required to put something back into the community.

Under the current legislation the pay TV sector is making a significant contribution to Australian drama production. The pay TV industry spent $15.9 million on Australian drama in 2004-05. Programs like Somersault and Love My Way have received critical and audience acclaim. Love My Way, starring Claudia Karvan, has won the best drama Logie for the last two years. It also won the best television drama category at the AFI awards.

Eleven years after the previous Labor government introduced pay TV in Australia, the sector is growing in strength. It is estimated that around 1.8 million households, around 25 per cent of the population, have access to pay TV. Industry analysts have forecast that it will reach 30 per cent of households in the next three or four years. Revenue and profit forecasts in the sector are strong. There is strong evidence that, once people adopt pay TV, consumers strongly value the extra choice that it provides over free-to-air networks. In households with access to pay TV, pay TV viewing accounts for around 55 per cent of all TV viewing. These statistics emphasise the importance of ensuring that Australian content has a place on what is an increasingly popular platform.

Pay TV has also been at the forefront of introducing new digital technology to Australian consumers. Labor supports the development of a viable and strong pay television industry to provide choice to consumers and to enhance competition. As the industry continues to grow, it will be appropriate to review the local content requirements for the sector. Under the US Free Trade Agreement, Australia can increase the existing 10 per cent expenditure requirement on drama channels on pay TV up to 20 per cent if it is deemed necessary. However, Labor does not believe that any increase in the drama expenditure requirement is appropriate at this time. The government has announced that a review of the drama expenditure requirement will be conducted in 2008. This review will provide a suitable opportunity to reconsider this matter in the future.

I would now like to turn to the detail of the changes proposed by the bill. The amendments to division 2A of part 7 of the Broadcasting Services Act contained in this bill flow from a review of the drama requirements conducted by the Department of Communications, Information Technology and the Arts in 2004. The report of the review was tabled in March 2005. The report recommended the continuation of the drama expenditure requirements. The report also stated that the current legislation ‘is highly valued by the production industry and underpins a wide range of drama projects for theatrical, subscription and free-to-air release’. However, the review did recommend changes to give licensees more flexibility in meeting the requirements.

The bill proposes that pre-production expenditure on script development should count towards the fulfilment of that quota. This is intended to stimulate investment in script development and encourage pay TV licensees to support projects at an earlier stage. The bill also allows licensees to carry over new drama spending in excess of 10 per cent of the total program expenditure to the following financial year. This change is consistent with the regime that applies to commercial free-to-air broadcasters in relation to Australian content and better reflects the commercial reality of how programming decisions are made.

The changes in the bill will have retrospective application from 1 January this year. These changes should further improve the quality of Australian drama on pay TV by encouraging investment in quality scripts. Labor is persuaded that these amendments improve the operation of the regulatory regime by enhancing flexibility for pay TV channel operators and licensees. It is essential that these amendments do not operate in such a way as to subvert the intention of the local content requirements of the Broadcasting Services Act. Labor will carefully scrutinise and review their operation.

Before I conclude on this issue of local content, I think it is important to state that quality Australian drama should not be available only to Australians who can afford subscriptions to pay TV. It is vitally important that the government also ensure that the ABC is properly funded so that it too can play a role in promoting Australian culture. This is, after all, a key element of its charter. Local drama produced by the ABC has fallen to record lows in recent years—a very disappointing outcome. Last year the ABC broadcast only 13 hours of drama. In contrast, when Labor left office in 1996 the ABC showed 73 hours of Australian drama.

In the budget the government did provide an extra $30 million over the next three years, but that was just half of what the ABC had deemed necessary for it to improve its services. Based on the ABC’s triennial submission, the extra funding granted by the government will only allow the production of 28 hours of local content next year. It will pay for just six additional hours of drama. Surely a government sitting on a massive budget surplus can do better than that and can support our Australian Broadcasting Corporation. Australians are entitled to a world-class public broadcaster that is able to adequately invest in local drama.

Turning to the issue of community broadcasting, I refer to proposed section 2 of the bill, which contains amendments to allow the regulator, the Australian Communications and Media Authority, ACMA, to license community broadcasters. Labor supports the community broadcasting sector as a vital part of our national media landscape. There are around 500 community radio and television broadcasters across Australia, including specialist broadcasters such as Indigenous broadcasters, ethnic broadcasters and religious broadcasters. Our democracy depends on different and diverse voices in our media community. The community broadcasting sector is a critical part of this diversity and should be supported. It is estimated that around 25,000 Australians are involved in the community broadcasting sector. It is important that the regulatory regime governing the sector appropriates efficiently.

Schedule 2 of the bill addresses an anomaly in the existing legislation. At present, ACMA is not able to transfer community broadcasting licences. In recent times, ACMA has encountered difficulties where companies operating community broadcasting services for Indigenous communities or Radio for the Print Handicapped have dissolved or changed identity. The bill proposes to allow ACMA to approve the transfer of a licence where the new licensee represents the same community of interest without the need to go through the full licence allocation process. This will save the regulator and community broadcasters both time and unnecessary expense. Under the amendments contained in the bill, the company taking up the broadcasting licence must notify ACMA within seven days of the transfer. ACMA’s decisions on whether to approve the transfer are subject to merits review by the Administrative Appeals Tribunal. These changes will give regulatory certainty to broadcasters and are supported by Labor.

While this House is considering issues related to community broadcasting, I would like to raise another matter which is of great importance to that sector. The single most important issue confronting the community broadcasting sector over the next few years is the need to ensure that the sector is able to make the transition to digital broadcasting. In her recent discussion paper, the Minister for Communications, Information Technology and the Arts, Senator Coonan, indicated that the government would like to switch off analog broadcasting between 2010 and 2012. The minister promised to develop a digital action plan to facilitate this transition. There will be an advertising campaign to encourage Australians to buy a digital television or a set top box timed to coincide with that.

Digital television is supposed to offer Australians increased picture quality and more choice. That is not the case with community television, however. More than five years after the commercial and national television broadcasters began digital transmission in Australia, there is still no plan to assist community broadcasters to go digital. Consequently, consumers are faced with the absurd situation that when they make the switch to digital they actually get less choice. You cannot receive community television on Briz31 in Brisbane with a set top box. Labor believes that it is essential to provide a pathway to get community television into the digital age. If we do not, community television will simply die. This cannot be allowed to happen. I commend the bill to the House.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 deals with subscription television and it follows a review that was done some time ago. The current provisions allow for a 10 per cent expenditure by subscription broadcasters on Australian drama. However, following the review, there have been proposals for change. The Broadcasting Services Act defines a subscription television drama service as a service devoted predominantly to drama programs—that is, more than 50 per cent of the programming consists of drama programs and includes such channels as Showtime, Fox 8 and UKTV. Some of the productions included are films such as The Proposition and drama series such as The Alice, McLeod’s Daughters and Love My Way. The subscription television industry spent $15.9 million on new Australian and New Zealand drama programs in 2004-05. There are 17 available subscription television drama channels: Boomerang, Cartoon Network, Turner Classic Movies, Hallmark, the Disney Channel, Fox 8, Fox Kids/Classics, Movie Extras, Movie Greats, Movie One, Movie One Take 2, Nickelodeon, Showtime, Showtime 2, Encore, TV1 and UKTV.

Let me give the House some idea of the spread of these proposals. The review found that the local documentary production sector remains well supported but that we need to give more attention to the drama provisions. That is what this legislation does: it encourages the use of Australian drama at 10 per cent of all programming. It does not sound like too much; it is only a bit over three per cent of actual airtime. The review, apart from looking at drama, looked at documentaries. One might say, ‘Why not include documentaries in this as well?’ but the review found that documentaries were well catered for. The production centre remains well supported, with 62 per cent of finance provided through direct and indirect government sources. The sector is fully supported by broadcast quotas for commercial free-to-air broadcasters. The subscription TV sector already invests significantly in Australian documentary production without a formal requirement for us to do any more. This legislation moves to change some of the provisions of drama production.

New Zealand is included in these provisions. One may ask, ‘Why do the Kiwis get a run under Australian regulations and legislation?’ Under the Australia New Zealand Closer Economic Trade Agreement, the CER—the scope of which includes the production of programs for television and broadcasting of programs on television—New Zealander and services provided by New Zealanders—

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, I would like to draw your attention to the state of the House.

Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Link to this | Hansard source

In accordance with standing order 55(b), the House will be counted at 8 pm if at that time the member so desires. We do not take any divisions or quorum calls between now and eight o’clock. I call the honourable member for Mitchell.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

I wanted an audience, but I am pleased with your ruling. The scope of the CER includes broadcasting programs on television. New Zealanders and services provided by New Zealanders are allowed access to the Australian market for television programs which is no less favourable than that allowed to Australians or services provided by Australians.

The bill also includes changes to scripting and production up to the point of photography. Under the current framework, licensees are unable to claim expenditure for script development. This shortcoming is picked up in this legislation. Expenditure on new eligible drama does not include script development at the moment unless the project progresses to principal photography. It is not until the cameras actually start to roll that production costs, which include scripting, are included under the current legislation. However, in the proposals we are introducing tonight, if principal photography commences in a financial year, the program is not at that time an eligible drama program and the claim for an earlier year must be reduced by the amount claimed in the earlier year if that should occur. So there is a protection if there is a rollover from one financial year to another, but the amendments do allow script development expenditure to be incurred as part of the drama production.

Licensees may not be able to claim their entire year’s expenditure quota on script development. They can claim only 10 per cent of the total expenditure on script development. The capacity to roll over is restricted, and the amount that can be spent on script development is also limited. The bill introduces new measures to allow the spending in excess of the 10 per cent requirement in any one year to be carried forward to the next year—

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, with great respect, I rise on a point of order in relation to the operation of standing order 133, which is a provision for deferred divisions on Mondays and Tuesdays. I would indicate that it is not my intention to call a quorum, but I do rise on this point of order and ask that you reflect on standing order 133 in your advice to the honourable member for Shortland.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I will rule on that point of order, Chief Opposition Whip. I ruled in accordance with standing order 55(b). I repeat my ruling, and that is the ruling that stands. I call the honourable member for Mitchell.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

The bill amends the definition of drama production to provide for consistency between the definition applying to subscription television broadcasters and the Australian content standard applying to free-to-air broadcasters. Australian drama production is a program which has a partially scripted screenplay in which the dramatic elements of character, theme and plot are introduced and developed to form a narrative structure and has actors delivering improvised dialogue that is based on a script outline or outlines developed by a writer or writers. So it is a creative process that we are looking at.

I was saying that it is possible under these new provisions to carry overexpenditure forward into following years so that the 10 per cent can be achieved across two years or, if there is an underexpenditure in any one year, that shortfall can be carried forward as well. I think this is a very commendable change and I think that the lifting of Australian content and drama is something that most Aussies would like.

I would like to see the ABC move ahead in much the same way as the BBC has moved to split production from broadcasting. I know that people do not always find this an attractive process, but I think if the ABC were to establish a separate production house they could win contracts to supply programs to a range of stations and to sell internationally. Not only subscription television but also free-to-air television would be covered by a production house, which would be an ABC government based production house, and they would have to compete on merit to sell or screen their productions either through the ABC or elsewhere.

It seems to me that the production house of the ABC needs to compete for audience and for content against all-comers, whereas an in-house production process—such as we have now—limits the capacity of the ABC to be challenged on the basis of artistic merit, content and relevance. I would like to see a change. That would mean to the ABC core business that they would become a broadcaster and they would focus on looking at the best programs of any type, basically Australian, and continue very much as they are now but be able to shop a little more widely and to take up Australian programs produced by their own production house or to rely on others—principally, to a high degree, productions from the UK, but not entirely. I think we have in that process a sensible future for the ABC that is not privatised but is challenging, exciting and which would produce some excellent results for the Australian broadcaster.

Whilst I am on Australian broadcasting, I believe that we have moved into a situation where we need some more definite guidelines in the classification of television drama, video games and the internet—all media—for parents in particular. I am not so much worried about the adults in our society. I feel they should be free to choose what they watch with some limitations, but not oppressive limitations. I think that parents are having difficulty in making assessments about the various classifications applied by Australian government regulations on the internet, video games, film and television. I would like to see a drawing together of those areas that are covered by the portfolios of the Attorney-General and the Minister for Communications, Information Technology and the Arts so that so there is a predictable approach to classification.

When Daryl Williams was Attorney-General he made some changes to the classification program. He said that it was not a loosening up. I found inconsistencies and imprecise wording in the language adopted in the classification program. A presentation given by the Attorney-General at that time has allowed, in a number of instances, some unfortunate films to be released in Australia. Some have been blocked; some have been released. The complaint about films such as Hostel and Wolf Creek is that they are dreadful films with violence, torture and mistreatment of women in a sexual context, and I oppose those sorts of things completely. Those sorts of films encourage violence and completely wrong attitudes to develop in males, particularly young males. I think we need these changes and a predictability across the various modes of communications, whether they be internet, tape, video, DVD, television, film or literature. If there is a consistent approach then I believe that, as a civilised community and as parents, we can, where necessary, make sensible judgments about screening out information that it is better children do not see and to put a limit on some of the really weird and deviant material that encourages unsatisfactory and dangerous behaviour. Drawn to my attention—and I know drawn to yours as well, Madam Deputy Speaker Bishop—have been the problems in Indigenous communities in Australia with pornography and violence on film and video. That is something that I find detestable both in the attitudes it creates in men towards women and in its impact on children, particularly young children, in those communities.

When one looks at the 18-plus restricted category, one sees under the heading ‘Violence’, for instance, that it is defined currently by Daryl Williams as:

Violence is permitted.

Sexual violence may be implied, if justified by context.

I believe that violence may be permitted but it would be sensible that it should not be excessively frequent, prolonged or detailed and sexual violence may only be implied and must be justified by context even in the implication. The depiction of sexual violence should be barred from R18-plus classifications. I do not see any value in the depiction of sexual violence, artistic or otherwise. It could be implied if the context justified it but under no other circumstances. I am not seeking in these comments to suggest that a harsh regime should be resurrected but, in fact, that there should be greater clarity in what we are actually seeking to achieve. So at the top end there is sexual violence.

There are a couple of other changes I would like to see, but one that I particularly want to mention is drug use. Drug use is permitted under the current classifications. I would suggest that drug use should not be permitted to be depicted in that R18-plus classification under the changes. I think we ought to look at the G category. Parents have come to me and said, ‘We don’t quite know how to handle the G category because there seems to be an inconsistency in television, which can vary the hours.’ That is another component of television that does not apply to film, literature or the internet. The hours of screening also need to be taken into account with television. The impact test for G category currently reads:

The impact of the classifiable elements for material classified G should be very mild only.

What is ‘very mild only’? Producers are always pushing the envelope. A better wording would be something such as, ‘The classification G is for a general audience and must not contain material which is harmful or disturbing to children.’ That is what parents would expect. When children see a G classification movie or television, parents would not expect very mild classification material, whether it be sex, violence, language or drug use. They would not expect any of that to occur even to a very mild degree. They would expect it to be perfectly safe to allow children to watch a G classification without supervision. So with respect to drug use for G classification, the current situation is:

Drug use should be implied only very discreetly—

mind you—

and be justified by context.

I cannot believe that we are allowing that sort of depiction for children. I would have thought that for drug use a better classification would be, ‘Verbal references to drug use are not permitted.’ I do not think there should be any reference to drug use and I think that violence also needs a clarification that is not there currently.

In conclusion, I support the legislation before the House. I think it is sensible to advance Australian film and Australian television for subscription television. This is good legislation. On the other hand, we have to be very careful about how we continue to classify the whole range of electronic and other types of media that can be damaging to children and, where extreme material is used, I believe we need to be more careful to ban some elements. (Time expired)

Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Reconciliation and the Arts) Share this | Link to this | Hansard source

Labor recognises the important role that the pay television sector plays in the development of Australian culture in our country. It is a relatively recent form of broadcasting but very clearly, over time and into the future pay TV will contribute substantially by way of the broadcast of Australian generated material—Australian content, Australian stories and Australian dramas. It will employ Australians and take Australian stories out to the viewing audience. We certainly recognise that this industry will be a critical part of Australia’s broadcast future, particularly for Australian material that is broadcast to people.

The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 amends the Broadcasting Services Act in two ways. Schedule 1 proposes an amendment to division 2A, part 7 of the BS Act to change the requirements of subscription television licensees for producing Australian content on drama channels and has the potential to produce some important results for the film and television industry in Australia. Schedule 2 of the bill gives the Australian Communications and Media Authority, ACMA, the capacity to transfer community broadcasting licences.

Under current arrangements, the act provides a requirement for subscription television licensees to spend at least 10 per cent of total program expenditure on new drama programs in each financial year. The effect of this bill is to amend that requirement so that subscription television licensees, the pay TV licensees, can count preproduction expenditure on script development as part of the quota. Additionally, the bill will allow the licensees to carry forward any drama spending in excess of the 10 per cent requirement to the following financial year. There is, I think, some sense in having arrangements of that kind reflected in this bill.

The additional amendment to the community broadcasting element of the act will allow the Australian Communications and Media Authority to approve the transfer of a community broadcasting licence where the new licensee represents a common interest or constituency. That approval process would be subject to a merits review by the AAT. That is important particularly, as I am sure members are aware, with Indigenous community broadcasting stations, which quite often find themselves having to go back to the authority because their circumstances change and there is a requirement that there be a new licensee.

Labor supports the bill, but we do believe it is very important to both scrutinise and review the operation of the changes that are proposed, particularly in relation to the amount of locally produced drama on pay TV. The changes to community broadcasting will give some certainty to broadcasters and make for a better regulation of that aspect of the industry, and we support those changes. We will watch very closely, though, the progress once this bill comes into law to make sure that the licensees themselves are not subverting the original intention of the Broadcasting Services Act.

I will reprise some history that led to this bill coming into the House. In March 2005 the government tabled the report Review of Australian and New Zealand content on subscription television broadcasting services. As an aside, New Zealand generated content does fulfil the requirements under the existing legislation and under this legislation. It was this review that informed the government’s decision and led to this bill coming into the House. The review looked at the act and identified the fact that the legislation of the original Broadcasting Services Act was enacted because of the importance of drama in contributing to a sense of Australian identity—that is one of the objects of the BSA—and because the greater costs of local production could mean that imported material might threaten their viability. This is indeed one of the great challenges that local producers of documentary, drama and other locally originated material face in meeting the cost requirements for getting a product like that script developed, filmed, produced and put to air. They face significant competition from the importation of programs, documentaries, dramas and other forms of broadcast material and works whose costs have been recouped through broadcast in other territories, particularly the United States.

An example that is probably well known to the House would be the television series Lost. I do not know, Madam Deputy Speaker, whether you are familiar with this piece of entertainment, but the preproduction costs were somewhere in excess, if my memory serves me correctly, of $100 million, which is way in excess of the sort of budget that we would expect for an entire program to be generated and developed by Australian producers, featuring Australian talent. As a consequence, it is extremely important, given economies of scale that operate to the benefit of overseas producers who seek to have their material sold into the Australian market, that there be a requirement for pay television licensees to show a certain amount, in this case in terms of their budgets, of locally originated material—Australian drama, Australian stories—on pay TV.

In August 2002 the Minister for Communications, Information Technology and the Arts directed the ABA to see whether the legislation needed to be amended to change eligible drama expenditure requirements for subscription TV, and that resulted in the review. It found that the production industry values the new eligible drama expenditure requirement imposed on subscription television operators, that it underpins many drama projects for subscription and free-to-air TV releases and that that particular requirement led in the years 2000, 2001 and 2002 to investment of more than $45 million in film and television projects, mainly supporting feature films.

The review also found that the current 10 per cent requirement that is identified under the existing act meets the intent of the act without being a burden on the industry and contains an implicit growth component that will apply to a growing range of drama channels post-digitisation. I will come to digitisation in a second. The government has decided as a result of the review that there is no need to increase the 10 per cent new eligible drama expenditure, although it may be necessary to re-examine that requirement. I want to put on notice that I do think it is necessary to re-examine that requirement. My personal view is that, for the present time, 10 per cent is probably not sufficient. In any event, we certainly support 10 per cent and, as we scrutinise the effect of this legislation, we will consider whether it ought to be increased. Under the USFTA it can go to 20 per cent. As I will mention later, as pay TV becomes more profitable I think there will be some strong arguments that it could come up.

The ABA also reported that no pay TV entity has reported any pre-production expenditure under the scheme to date and that the current rules were providing insufficient incentive for the subscription television industry to direct funds towards new and innovative programming. It also reported that, if limited pre-production expenditure on script development were allowed to count towards the requirement for new eligible drama production, that may encourage the production of higher quality screenplays and involve subscription TV entities in projects early in their development—and I think that is everybody’s hope.

The government has decided to allow limited preproduction expenditure on script development to count towards the new eligible drama expenditure requirement. To the extent that this would, hopefully, provide for a more robust development of scripts—certainly with more time spent on that as part of the process—that could and should be a good thing. Allowable spending on script development, though, will be limited to third parties for eligible projects and the script development expenditure will be allowed prior to the commencement of principal photography and will be capped at a maximum of 10 per cent of the total eligible drama obligations. I think those statistics make for at least a reasonable framework for these new arrangements to operate in.

The other issue considered through this review process was the treatment of the carryover of qualifying expenditure, and that is clearly what this bill goes to. The review considered, on the basis of data that the ABA provided, that it did not find there was any lack of compliance with the scheme, but it did find that the requirement in its current form offers little incentive for expenditure in excess of the minimum requirement and that there has been evidence of a tension between commercial pressure to spend funds in one financial year to ensure that particular programs are produced—for example, television drama series—and the timing of payments to meet a regulatory expenditure requirement. As a result of that review the government has decided that expenditure in excess of the 10 per cent requirement will be allowed to be carried forward and treated as new eligible expenditure in the following year. The government hopes that this will provide greater incentive for expenditure in excess of the minimum 10 per cent. Additionally, this measure is intended to remove potential constraints on investment decisions. As a consequence of these things, this bill has come into the House.

I have to say that Labor is generally concerned at the state of the film and television industry in Australia. Whilst it is true that there has been a mini revival of sorts, and many of us look hopefully to a continuation of whatever mini revivals may be on the landscape, with films such as Wolf Creek and the nomination at Cannes of Ten Canoes for certain criteria and awards—and there are a number of other Australian films that some of us would have seen and know about—the commercial success that the industry has previously and historically enjoyed has become less and less. Certainly fewer and fewer films have been capable of reaching the gross in terms of box office receipts that were a feature of a number of films produced during the 1980s and early to mid-1990s.

The Australian Film Commission’s 2004-05 national survey of feature film and TV production provides some statistical reinforcement of what is a pretty subdued and at times dour picture of the film and television landscape. Its findings are well known so I do not intend to rehearse them at great length this evening in the House. But it is worth while noting that in Australia, for the period 2004-05, the feature film and TV drama production industry spent $536 million. That is a reasonable amount of money, although not high. But it was 10 per cent down on the preceding year, which is a little surprising given that the economy generally was buoyant, and whilst the number of local feature productions increased slightly from some 16 to 19 it still remained below the 10-year average of 24. We produce very few feature films in this country in comparison with countries of similar population and gross national income size, and we seem to be producing fewer and fewer. I think there is a strong argument to say that the fewer feature films we produce the less likelihood there will be of having successful feature films.

Additionally, the Australian Film Commission national survey also showed that the increase in foreign feature activity during the past decade has meant that Australian productions in terms of total spending have fallen—and I think this is the key statistic here—from 60 per cent in 1995 to 18 per cent in 2004-05, and that spending on locally produced drama for television has fallen significantly over the past five years as well. In 2001 the total expenditure was $393 million, while in 2004-05 the figure was $205 million—a decline of some 50 per cent or more. Australian children’s television drama is at a 15-year low as well.

The fact that the number of hours of locally produced drama on television has also fallen suggests that policy is awry in terms of the ability of our story makers, our actors, our producers and our directors to get their product onto screen and for it to be seen and appreciated by people. We have about a million young Australians currently overseas. There is a great diaspora of talented and creative Australians who have had to go elsewhere to work, quite often in the film industry. I note that the United Kingdom has introduced a number of reform measures to deal with the lack of health of its film industry, which has included the restructure of its public funding arm for film. The UK Film Council, which has responsibility for the British Film Commission, British Screen Finance and the British Film Institute, as a consequence of consolidating and restructuring has made real headway in developing a much more healthy and vital export oriented film industry.

There is no doubt that subscription television licensees—pay TV—have scope for further investment in Australian content, particularly locally produced drama. Kim Williams, Foxtel boss, said last year, ‘We remain on track to reach cash flow break-even before 30 June 2006.’ Now that they have established themselves and now that their infrastructure costs have been depreciated, those profits are most likely to increase over time. So subscription television licensees do have the capacity to generate higher levels of locally produced drama, and we on this side of the House would certainly encourage them to do that.

One concern that I need to mention in the time left to me is that subscription television licensees have had annual shortfalls in their actual expenditure on local drama. This is clearly a problem in the way in which the industry has approached both the spending of the money and the requirements that it has to meet to spend the 10 per cent within the period of time designated in the act. But clearly there is also a problem in the way in which they are organising themselves and the priority they place on making sure that they get local drama projects up. To get a local drama series away is not an easy task. There are many skills, long time lines, a lot of development, a lot of work and a lot of investment that go into them. But I do not think it is an unrealistic expectation from this parliament that pay TV licensees should be meeting the expenditure they are required to, including with the changes that are forecast in this bill, as a matter of course. They should be seeking to do better than that, but they certainly should be seeking to meet it.

In closing, let me look quickly at the budget. I make mention of a couple of issues that arise from it, one of which is the provision of a subscription arm for the ABC. The ABC remains relatively underfunded. Certainly we welcome a budget commitment of some $30 million for a subscription arm to produce local drama and other material, but it is equally important that the subscription TV industry play its role. We have a deficit in our balance of trade in royalties from the screen industry, and in the audiovisual sector we run a deficit of around four to one. Yet we have an abundance of talent, capacity and ability in this country that could be utilised if the policies and the enthusiasm, particularly of the sector, were brought to bear.

The minister has announced an expansion of the review of tax incentives 10B and 10BA to go further and to consider additional measures that may assist generally in getting private sector investment in our film and television industry. I think the government must look much more seriously at further ways of harnessing scarce private investment to boost the production of local drama on our screens. It is not an exaggeration to say that many in the industry feel that things are in stasis, that they have effectively ground to a halt, that people have to go elsewhere to seek out employment and that the structures—the financial frameworks and the tax arrangements—are not of such an order as to generate increasing amounts of good, local Australian drama and material for our television screens—both free-to-air and pay.

I draw to the government’s attention the fact that, in relation to community broadcasting and community television, there is a lack of any provision for the digital roll-out of community television in the government’s recent proposals on media reform. It is absolutely essential that the government address this issue, because the community broadcasting sector, particularly community television, will be absolutely stalled unless they have the capacity to get onto the digital platform, and that will take necessary investment by this government. Many are concerned that a requirement that sits at 10 per cent and allows costs to be adjusted over a longer period is not sufficient, but for the moment Labor will carefully scrutinise and review the way that these changes play out.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Australia prides itself on having a unique culture that is not only special to us but also recognised as being unique and special by people from other nations around the globe. The scenes during the World Cup currently under way in Germany are a testament to that. I must say that it was encouraging to see supporters of both Brazil and Australia celebrating together after the match between the two countries on Monday. Brazil, like other nations, clearly admires the easygoing and friendly nature of Australians, our respect for others and our determination. Right around the globe these are some of the good things that, as a nation, we are known and respected for.

It is really important that these and other cultural attributes are encouraged and supported in many areas of the wider society, including in the dramas that are broadcast on television. The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 helps to encourage new Australian drama on subscription television by removing some of the rigid requirements relating to spending on new drama.

The television production industry is characterised by some unique attributes—and these attributes are not dissimilar to those also faced by the film industry. There are times in these industries when a great deal of money, time and effort can be invested in a project, only for those behind the project to witness the eventual collapse of the project for a number of possible reasons. As a result, all those things invested seem to have no resulting financial payoff. It is one of the recognised and accepted risks inherent in an industry that relies on high levels of creativity and dedication and that a very high number of pitfalls and hurdles must be negotiated before the seed of an idea finally makes its way onto the screens in our lounge rooms.

Up to now, the legislation has not adequately taken into account some of those intangibles. This has a significant impact on the requirement, as set out in the Broadcasting Services Act 1992, that at least 10 per cent of the program expenditure of subscription television broadcasting licensees go towards new Australian drama. This is a legislative requirement that is obviously designed to ensure that Australian dramas maintain a safeguarded presence on our televisions. However, it is important to note that pre-production of a TV project can involve story and script development, including research, that can, in some cases, take a number of years. Yet the funds spent in this area cannot be credited towards the 10 per cent new drama spending until the said drama is actually at the stage of principal photography. This bill recognises this predicament. It will bring about a change that accepts the spending on script development as part of the 10 per cent spending requirement on new drama more immediately.

It is obvious to see that the intent of this change is to encourage greater development of drama projects. As most in the industry will tell you: ‘You can make a bad film out of a good script, but you can’t make a good film out of a bad script.’ This argument applies equally to TV drama. The change proposed in the Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 can expect to boost script development activity while also ensuring projects that do reach the photography stage are of the highest possible standard.

In addition, the bill before the House will allow production companies which spend more than the required 10 per cent on new drama to carry that over to the following financial year. I think most people in the House would accept that that is an important, substantial and essential change which will improve the industry to a very great extent. It is encouraging to think that some production houses are spending greater than 10 per cent of their annual program budget on new Australian drama. Frankly, it would be a good thing to see spending on Australian drama continue to increase. As an aside, Madam Deputy Speaker Bishop, over the years you have taken a very great interest in the arts, in Australian television, the Australian film industry and Australian drama. I suspect, without wanting to impact adversely on the neutrality of the chair, that you also support the bill currently before the chamber. I think all of us would like to see spending on Australian drama continue to increase.

While the changes suggested in the bill will give producers somewhat of a financial safety net, it is important that it does not become an excuse to take on risky projects simply because the safeguards are in place. It is also vital, in my view, that producers do not rely entirely on script and story development to meet their new drama-spending responsibilities.

The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 also includes other changes, including allowing the transfer of community broadcasting licences. I have to admit that this has been a difficult situation, because there has been no allowance for such transfers, even in the case of changes to a licensee’s corporate identity or where a licensee ceases to exist. The bill gives power to the Australian Communications and Media Authority to approve the transfer of licences in certain cases. The bill is another important initiative on the part of this government. It will substantially improve the industry, and I commend the bill in its entirety to the House.

Lindsay Tanner (Melbourne, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 before the parliament has Labor’s support. It deals with a couple of ultimately relatively minor but noteworthy changes to the broadcasting services legislation. One change slightly broadens the obligations that are imposed on pay TV with respect to Australian content and the other enables a more flexible transfer of community radio licences, as governed by the Australian Communications and Media Authority. Both of these are worthy changes. They are really issues of detail relevant to people in the sector and Labor supports both propositions.

I want to make some remarks about media reform, the particular changes concerning parts of the media sector and some of the broader issues that are still to be addressed. Having been shadow communications minister for three years from 2001 to 2004, I have had extensive exposure to structural, market and regulatory issues in the communications sector, particularly in broadcasting. There is a gaping need for major deregulatory reform in the sector. Although the government has made one or two half-hearted attempts at this, it has spectacularly failed to advance the cause. In the last couple of days we have seen yet another example of that spectacular failure. In many respects, the most disappointing aspect of the legislation before the parliament today is that it is so limited that its scope in providing sensible reform in the media sector is so small, albeit at least positive.

The issue of local content on pay TV is quite a vexed one. Unlike the free-to-air TV network, it is more complicated to regulate. Rather than dealing necessarily with a single network per se, you are actually dealing with a platform that broadcasts any given number of channels and particular kinds of content that, almost by definition in some cases, are not amenable to local content. If you are broadcasting, for example, international sport on a particular channel then it seems to me to be a bit absurd to impose an obligation that X per cent of that channel should be for local sport, particularly when you consider that there are other channels that broadcast very substantial amounts of local sport—for example, the footy channel in the case of Foxtel. It is more complicated to regulate local content on pay TV but, nonetheless, it is a worthy pursuit.

I would like to place on record—and I suspect other speakers have also done this—that there are some very positive things happening on pay television with respect to local content. In particular, I applaud the locally produced and scripted series Love my way. I think I saw most of the episodes—not every one—of both the original series and the second series. It was an excellent example of high-quality Australian drama, with interesting and innovative scripting and top-class acting performances. It is the kind of cutting-edge Australian drama that we would like to see more of on both pay TV and free-to-air TV. Anything that encourages more of that kind of investment—which, in the case of Love my way, I think, in the long term will prove to be a very positive thing for Foxtel—certainly has my support and the support of the opposition.

Community radio is a sector that I have a connection and involvement with going back many years and I think it is worthy of greater government support. In the recent budget there was a small increase in funding for community radio. That was the first funding increase for many years. I think it was a fulfilment of an election promise by the government. Certainly, I commend the government on extending that small but significant additional support to the sector. Community radio represents in the vicinity of 250 radio stations around Australia. There is also a significant community television network or an array of stations that has emerged in recent years. All of them are underfunded, all of them are running on the smell of an oily rag, all of them are getting by hand to mouth and all of them are relying on an army of volunteers. They all play a very significant role in Australia’s broader cultural and media life. They provide an array of services to sections of the community that often do not get proper services from mainstream media. In particular, they provide very effective training opportunities for young people, mostly to get an early entree into mainstream media and to acquire skills. In many cases, whether as performers, technicians, announcers or script writers—all sorts of different skills—people get their first step into community radio or TV before moving on to bigger and better things.

Community radio and television plays a very important role in Australia’s creative life and the media sector. It deserves, I think, greater recognition, greater funding and greater support not only from government but also from the community generally. Although the provisions of the legislation before the House tonight are only modest and specific reforms, I commend the government on introducing them. I would urge the government, and indeed all members of the House, to pay greater attention to community broadcasting and to provide greater support.

Community broadcasting is one of the hidden success stories of Australian media and, in particular, it is an outstanding example of how government assistance to community organisations can be provided in an efficient and very cost-effective way. Prior to the changes in the budget, total annual funding by the government of community broadcasting was in the vicinity of $6 million a year. This was distributed through the Community Broadcasting Foundation, an organisation on which the government nominates one board member and the remaining members are from the sector itself. The total budget for running the Community Broadcasting Foundation is in the vicinity of $300,000 to $400,000 a year and the remainder of the money is, in effect, distributed in grants to the 250-odd community radio stations around Australia.

Although inevitably there are arguments and debates about how that is done, one thing is absolutely clear: the taxpayer gets real value for money out of this funding because the vast bulk of the money ends up providing direct assistance to a vast array of community radio stations all around Australia, assistance which translates immediately and directly into the kinds of things that those stations need to function. It is a very good model for distributing government assistance in a way that is at arm’s length from politicians; the actual decisions about who gets what money are not being taken by ministers, bureaucrats or members of parliament. Those decisions are effectively being taken by the sector collectively and large amounts of money are not being siphoned off in administration costs. Community radio is one of the quiet achiever sectors of the Australian economy. Community television, a much younger and in some respects a more problematic sector, is also worthy of the same support.

But the question I would like to ask tonight, which I think this legislation really raises, is: where is the rest of the government’s reform agenda? Where is the serious reform agenda in communications, media and broadcasting? When you look across the spectrum in the broadcasting sphere, you see a negligible take-up of digital television. Fewer than 10 per cent of Australian households have a digital TV capability, unlike those in the United Kingdom where there is a free-to-air product—digital TV called Freeview—which has roughly 30 channels which, for the cost of less than $100 for a set-top box, any ordinary citizen with an analog TV can gain access to. The end result is that—as of the last time I looked, which is about a year ago—over 50 per cent of households in Britain have taken up this option. Although many of those 30 channels are not exactly showstoppers, nonetheless they still constitute a significant enhancement to viewing choice in the UK, a driver for the take-up of digital TV and a basis on which we can assume that in the future there will be a significant further enhancement of digital options in United Kingdom broadcasting.

We have seen similar things occur in other parts of the world. In Berlin, for example, all television broadcasting is now digital and this is gradually being undertaken in other regions of Germany. Whereas many other developed nations are moving ahead in leaps and bounds in digital broadcasting, we are still stuck in the straitjacket of the 1998 legislation. I concede it was supported by Labor, so the original decisions that were taken by the government on these issues had our support. Many of those decisions were wrong. Many of those decisions were well-meaning and well-motivated but were taken in ignorance or with a lack of understanding of where things were likely to head. We as a society remain shackled by those decisions, which are essentially designed to inhibit the development of digital and to ensure that digital is really nothing other than a direct reflection of the existing analog regime, rather than being—as is the case in the UK—a new, different product which in some respects is competing with analog.

To compound this problem, despite a slight recent improvement, our level of broadband access is still rated as only 17th in the developed world. That is on the basis of an extraordinarily generous interpretation of what constitutes broadband—256 kilobits, which in many parts of the world would be regarded as a joke in terms of speed, where megabits is the more appropriate magnitude of broadband. Even with that extraordinarily generous OECD definition, we in Australia still manage to only get up to 17th in the world while equivalent countries like Canada, the United States and most of the western European countries are way ahead of us. It is a long and complicated story as to why we have been so recalcitrant in broadband access, most of it to do with Telstra’s continuing market dominance, Telstra’s unwillingness to really push the envelope on broadband and the government’s unwillingness to put in place market structures and genuine competition arrangements which ensure that Telstra is forced to do that under truly competitive pressure from other players in the market. But that is a separate albeit related issue.

The question we need to be asking is: why is it that, after years of recycling the failed, discredited policies of former communications minister Richard Alston, we are still stuck in the same place? The new Minister for Communications, Information Technology and the Arts, Senator Coonan, puts out a set of proposals, which are only draft proposals or discussion options, which include a warmed up, reheated, rebaked version of the discredited datacasting model, which was unique to Australia and designed to enable the government to say to the existing TV networks, ‘Don’t worry; there’ll be so many restrictions on this that they won’t be able to compete with you in free-to-air broadcasting,’ and at the same time to say to would-be new entrants, such as Fairfax and News Ltd, ‘Well, we’re not going to give you a TV licence, but we’ll give you the next best thing; it is datacasting.’ The end result was that nobody bid for those licences. They lapsed and the spectrum that was available for use—for competition, greater choice for consumers and innovation—was not used, and of course now the government is attempting, in a sense, to recycle the same discredited ideas.

Similarly, the government seems unable to bite the bullet on multichannelling, mainly because two out of the three commercial TV networks are opposed to it. There is an extraordinary situation here. The basic argument of two of the three commercial TV networks on multichannelling—the third, the Seven Network, actually wants to do it—is that they do not believe there is a viable business model for sending out more than one signal over their digital spectrum, even though technically they can send out several signals. I think this must be one of the rare cases in the history of regulation where private businesses are asking a government to ban them from doing something because they do not believe they can make money out of it. I find that quite extraordinary. In my view, the answer on that front should be simple: if you do not believe you are able to make money out of it, don’t do it—but why should we ban people from doing it?

A couple of days ago in the Senate, the minister, Senator Coonan, effectively scuttled the government’s reforms to cross-media ownership and foreign ownership laws, which, again, have been floating around for almost five years. In September 2001, the Prime Minister first floated the prospect that the government was proposing to abolish the restrictions on cross-media ownership and foreign ownership, and throughout the following parliament attempts to do this were eventually blocked in the Senate. The government has dillydallied and messed around ever since, frightened of the National Party and frightened of the proprietors—not wanting to actually take anybody on and not wanting to have a serious reform agenda but simply trying to please the media moguls.

Yet again they have discovered that it is pretty difficult to go into a genuine reform agenda with the aim of just pleasing established vested interests. News Ltd, in their submission to the government’s discussion paper process, has indicated that the abolition of cross-media ownership and foreign ownership laws no longer has their support because of the associated proposals with respect to datacasting and the government’s clear indication that it will leave open the possibility of that additional spectrum being used for subscription television purposes—that is, for other players to compete against Foxtel—and the fact that the government is refusing to allow a fourth TV network to be established.

It is hardly a surprise that the News Ltd position is essentially driven by self-interest. I do not criticise them for that—they are a private business. They are entitled to put a position that reflects their business interests, and in particular they are entitled to run an argument which says that their business interests are being unfairly disadvantaged. Frankly, broadly I agree with them. I think their assessment of the government’s reforms is essentially fairly accurate. So it is hardly surprising that they are taking the position they have, and the mere fact that it is obviously driven by self-interest does not necessarily make it wrong.

The government’s cross-media ownership and foreign ownership laws reform agenda has effectively been scuttled, and that creates a real opportunity for the government to literally go back to the drawing board. Instead of starting from the premise of pandering to media moguls—instead of starting from the premise that they want to give a few free kicks to powerful media companies that might deliver political support for them in the future—why do they not start from the premise that a fundamental liberalisation of broadcasting and media in this country is long overdue and that there should not be restrictions on ownership. The Productivity Commission had it right. The Productivity Commission report in 2000 went through all of the issues that need to be addressed and essentially said that, once you have addressed the issues—the use of the spectrum, more competition, multichannelling and all of those kinds of issues—and got the market structure right with a greater degree of competition, openness and lighter regulatory arrangements, it is appropriate to ask questions about cross-media ownership rules.

Basically, those rules are a product of a restricted regime. Where you have a regime that says, ‘There shall be no more than three commercial TV networks,’ almost by definition you create circumstances where, in order to ensure that you do not have outrageous monopoly power and abuse of that power, you have to have ownership restrictions. You have to use regulatory mechanisms, and in some cases fairly crude prohibitions, to ensure that you have a minimum level of diversity, because you are precluding the market from delivering that diversity. It is long overdue for the government to go back to the drawing board genuinely on these issues and acknowledge that, in certain respects, the world has moved on.

It is a bit of an open secret that, in years gone by, I have broadly been a supporter of the idea of a fourth TV network. I would have to say that that proposition is gradually becoming less and less significant because, at the early stages of broadcasting over the internet, we are starting to offer very serious competition to the existing TV networks and, indeed, to Foxtel. That is a good thing, but it should be on equal terms and in genuinely liberalised markets, not on the basis of this incredible hodgepodge and patchwork of conflicting and competing regulatory arrangements, quid pro quos, deals for mates and special arrangements that are designed to cobble together something that does not offend this person or that group.

We really need to go back to first principles in all these issues and recognise that, gradually, technological change is sweeping away the antiquated regulatory arrangements that the government has tried to preserve in the wake of that technological change. For the benefit of Australian consumers, creative producers, artists, scriptwriters, actors and all those people who have contributions to make, we need to revitalise this whole sector. The starting point has to be to get away from the 1998 regulatory regime, to admit that it was a mistake and go back to first principles, ensuring that no existing player in the industry is unduly disadvantaged but acknowledging that overall, in the necessary reform, while there will be some pain and some gain for everybody, the Australian community, consumers and producers will be the beneficiaries. (Time expired)

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

The Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006 is a relatively small bill compared to many that we consider in this House but a quite significant one for two reasons. Firstly, it relates to regulation and structures in broadcasting that bring diversity and cultural benefit to Australian audiences—and we should always be concerned that our broadcasting industry is doing that in the most efficient way possible. Secondly, in a world surrounded by mountains of regulation, this bill is actually a simplification. The government is known for creating another piece of paper every time it breathes, yet this bill quite cleverly reduces some of the paper for two important sectors of the broadcasting industry by dealing with two completely unrelated issues.

The first one relates to the requirement that subscription television channels that broadcast predominantly drama direct 10 per cent of their drama production expenditure to new Australian drama. This bill makes some amendments that simplify the process and change some of the definitions of what can be included in that 10 per cent. The second one is a mechanical matter that allows the Australian Communications and Media Authority some discretion to transfer community broadcasting licences from one person to another under quite specific circumstances—again, extremely important amendments that will ease the way for two sectors in the broadcasting industry: the subscription television channels and our community broadcasting sector.

Schedule 1 amends the Broadcasting Services Act 1992 to increase flexibility for subscription television companies as they seek to spend the required 10 per cent of their drama budgets on new Australian drama. This follows a review back in 2004 of Australian and New Zealand content on subscription television and broadcasting services, as required under the Broadcasting Services Act. The review was tabled in parliament in March 2005. It found that the requirement for expenditure of 10 per cent on new eligible drama was quite appropriate and should be maintained, but it did suggest a few ways to simplify the process. Under the old act, pre-production costs cannot be claimed as part of the 10 per cent until the project progresses to principal photography. Also, that 10 per cent cannot be carried over year by year—the 10 per cent claimed on Australian drama must be spent within the one financial year. Both of these requirements are incredibly harshly prescriptive for an industry which does not work on an annual basis in respect of its new productions.

Productions may develop over several years, with several different partners and each with their own time frames. Essentially the old act was bad regulation. It unnecessarily impacted on the creative and financial decisions of a company which was seeking to do the right thing. This amendment adds considerable and needed flexibility. For a start, it allows pre-production such as script development to be included in that 10 per cent well before the project progresses to principal photography. It is hoped that this will encourage subscription television companies to invest more heavily in the script development phase. There is quite a belief in the Australian industry that there is insufficient development of scripts in the early stages because of a lack of funds. This amendment encourages subscription television to invest in the early stages, allowing for considerably greater risk-taking and more creative projects in the early stage before they are obliged to continue to the second stage. It also allows for a carryover of the 10 per cent into the next financial year, which reflects the fact that, in this industry, projects are not begun and ended in any particular financial year and may stretch over several years. So this amendment reflects the reality of the expenditure pattern in the creation of television drama.

The bill also amends the definition of drama to bring it into line with regulation for free-to-air television. This is important given that in the film and television industry producers often deal with several different investors, quite often from different countries. At the recent Screen Producers Association conference in Brisbane, I attended an extremely amusing trivia quiz. A number of producers were asked specific questions—for example, how many Australian actors do you need in a Swiss-French co-production with the ABC? What percentage of a budget must be spent in France if your co-producers are Canada and Australia? It was fascinating to see the extraordinary detail that these producers carried around in their heads simply to be able to access the range of moneys that they needed to get a project off the ground.

One could argue that this is just the beginning for them. It is a very small step to bring subscription television and free-to-air television into line in Australia, but there is clearly a great deal of work needed to bring the range of parties that invest in film into the same regulatory framework so that producers can make decisions around what the project needs and not what the regulators need. This is a significant step that not only will bring it into line with free-to-air television but also will allow businesses to develop their projects around the context of the project itself and not around the needs of government regulation. This is particularly true for companies that essentially are trying to do the right thing, not necessarily the wrong thing.

The second part of this bill relates to community broadcasting. It is quite a simple change which recognises that community broadcasters may start quite small and change their corporate structures as they grow. Currently a community broadcaster may be an incorporated association and may, some time down the track, seek to change into a company limited by guarantee. Under the old act it is not possible for the Australian Communications and Media Authority to transfer that community licence from the incorporated association to the company limited by guarantee. It has to suspend the licence and call for new applications. This change is quite a simple one but it allows the Australian Communications and Media Authority to make that change without a fuss. The change recognises that we need flexibility for organisations that essentially are doing the right thing.

Going back to the subscription television industry: while this regulation does allow greater flexibility both in quality control and business decisions, one must recognise that with greater flexibility comes the need for greater scrutiny. The regulation is due for review in 2008, which perhaps is a little too early to tell because of the long lead-time for television production that will allow only two years in what is often a much longer cycle. Nevertheless, the need for review is even greater once one introduces this kind of flexibility into the system. It is extremely important that the new flexible legislation is not used by those who are uncommitted to Australian content to avoid their obligations.

The Film Commission, in a submission to the review in 2004, talked about the need to assess the number of hours and not just the number of dollars. I would question that, given that we hope that subscription television will invest in a range of product, some of which may be quite expensive and designed for export. So the number of hours will not necessarily reflect the commitment or the actual value to the Australian film and television industry of the work produced. However, it is important that we carefully scrutinise the outcome of this amendment over time so that we do not find companies using preproduction as a way to limit their exposure—spending their 10 per cent in areas which they can essentially write-off quite easily because the project does not go to filming at all. I know there is some concern on the producer side that that will be the case with some, but again this bill allows those who are doing the right thing to well and truly get on with their job—and it must always be a priority that those who are doing the right thing are not unnecessarily regulated or have barriers put up preventing them from doing that in the best possible way.

In closing, I would like to commend the government for finally making these amendments. They are an important simplification for two very important parts of the broadcasting sector, and I am sure they will be well received. They are not, of course, all that the producer side of the sector would like to see. In the submissions prior to the review, there was considerable argument put from the production side of the industry that the 10 per cent quota was too low. It is, of course, considerably lower than the free-to-air television industry and there is some argument put by producers that it should be raised. The review found that this was not appropriate at this time, and this amendment does not deal with raising that level. But it is worth noting that, as the industry changes, becomes more profitable and has a greater role to play in the development of Australian television, there will no doubt be even greater pressure from the producer side of the industry for that quota to change. The Australia-US Free Trade Agreement does allow Australia to increase that quota up to 20 per cent, and there is no doubt that the producers in the industry will continue to pursue that objective.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

We appreciate the contributions from the members for Oxley, Mitchell, Kingsford Smith, Fisher, Melbourne and Parramatta. I thank the members because each has expressed their support for this bill, the Broadcasting Services Amendment (Subscription Television Drama and Community Broadcasting Licences) Bill 2006. This bill amends the Broadcasting Services Act of 1992, referred to commonly as the BSA, to increase flexibility in the operation of the 10 per cent requirement for new spending on drama on subscription television. Perhaps I should quickly nominate what subscription television is. There are currently 17 available subscription television drama channels in Australia: Boomerang, Cartoon Network, Turner Classic Movies, Hallmark, Disney Channel, Fox 8, Fox Kids/Classics, Movie Extra, Movie Greats, Movie One, Movie One Take 2, Nickelodeon, Showtime, Showtime 2, Encore, TV1 and UKTV.

The subscription television drama expenditure scheme requires that subscription television broadcasting licensees spend at least 10 per cent of the total program expenditure on new Australian and New Zealand drama programs in each financial year. Licensees have consistently met the expenditure requirements. This requirement reflects the role of drama in shaping our sense of Australian identity, character and cultural diversity and underpins a wide range of drama projects for cinema, subscription and free-to-air television released, including the movie The Proposition and the drama series Love My Way. In fact, the subscription TV industry spent $15.9 million on Australian and New Zealand drama in 2004-05.

This bill amends the BSA to allow limited preproduction expenditure on script development to be claimed in the financial year it is incurred rather than when the principal photography commences, which is the case under the current scheme. These amendments will encourage greater investment in script development for local drama. I note the member Fisher said that you can make a bad film out of a good script but you cannot make a good film out of a bad script. I am encouraged that money can be spent and claimed on developing up the proposal and the script for a film but also note that only a maximum of 10 per cent of the quota can be carried forward on script development. So, in essence, one per cent on script development can be carried forward in the year.

This bill also amends the BSA to allow expenditure in excess of the annual 10 per cent quota to be carried forward into the next year. The amendments will better accommodate the way in which commercial and investment decisions regarding new drama projects are made. The carry forward measures in the bill will provide the subscription broadcast industry with increased flexibility in its investment decisions and will encourage a higher level of investment in quality local drama productions. The proposed amendments have the support of the subscription television broadcasting sector and the production industry.

The bill also amends the BSA to give the Australian Communications and Media Authority a discretion to allow the transfer of community broadcast licences to another person which represents the same community interests. This is intended to deal with changes of corporate arrangements by licensees. Community broadcasting enjoys bipartisan support. The community broadcasting amendments will enable licensees to make sensible changes to their corporate arrangements without putting their licences at risk and thereby remove a degree of uncertainty from the sector. Again, I congratulate those members who spoke to this bill for their contributions. I commend the bill to the House.

Duncan Kerr (Denison, Australian Labor Party) Share this | Link to this | Hansard source

It being nearly 8 pm, I observe that earlier today the honourable member for Shortland drew the attention of the Deputy Speaker to the state of the House. In accordance with standing order 55(b), I will count the House if the member so desires. The member not being present, the matter lapses.

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I call your attention to the state of the House.

(Quorum formed)

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The question is that this bill be now read a second time.

Question agreed to.

Bill read a second time.