Bills Digest no. 15, 2016–17
PDF version [708KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Dr Rhonda Jolly
Social Policy Section
29 September 2016
Contents
The Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government
parties/independents
Opposition
Greens/Independents
Position of major interest groups
Free-to-air commercial broadcasters
Figure 1: Licence fees
comparison: fees as a percentage of revenue
Subscription
broadcasters
Other responses
Financial implications
Table 1: Loss of revenue from
commercial broadcasting licence fee reduction
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Date introduced: 15
September 2016
House: House of
Representatives
Portfolio: Communications
and the Arts
Commencement: the
day after the Act receives Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at September 2016.
The Bills Digest at a glance
Purpose of the Bill
- The
purpose of the Broadcasting Legislation Amendment (Television and Radio Licence
Fees) Bill 2016 (the Bill) is:
– to
amend the Television Licence Fees Act 1964 and the Radio Licence Fees
Act 1964 to reduce licence fees payable by commercial television
broadcasting licensees and commercial radio broadcasting licensees by 25 per
cent.[1]
Structure of the Bill
The Bill consists of one Schedule which is divided into two
parts:
- Part
1 of Schedule 1 proposes to:
– reduce
commercial television and radio broadcasting licence fees by 25 per cent and
– insert
a new provision to allow regulations to be made under the Radio Licence Fees
Act in relation to rebates of radio licence fees.
– provides
for transitional arrangements regarding licence fees payable by commercial television
and radio licensees.
Background
Free-to-air commercial television and radio licensees are
required under the Broadcasting Services Act 1992 to pay annual licence
fees.
The broadcasters have argued that the fees they pay are
excessive; they are also considerably higher than those paid by their
counterparts overseas. They have lobbied governments for some time for
reduction and have achieved a number of fee reductions since 2010.
As part of its commitment to media reform
the Turnbull Government announced in the 2016–17 Budget that it would further
reduce fees by 25 per cent.
This Bill realises the Budget commitment.
Key issues
The free-to-air broadcasters would like to
see licence fees abolished altogether. They argue this would better enable them
to fulfil their local content obligations and assist them to remain financially
viable in a new media environment where subscription and online media operators
do not pay licence fees.
Subscription broadcasters argue that
reducing licensing fees for free-to-air commercial broadcasters amounts to
preferential treatment as the free-to-air operators are being given discounts
to use the public resource of spectrum, while also enjoying market protection
as the result of other government regulation.
Some stakeholders argue that licence fee
reductions should be accompanied by reciprocal requirements to increase local
content production, but this is not a feature of this Bill.
Purpose of
the Bill
The purpose of the Broadcasting Legislation Amendment
(Television and Radio Licence Fees) Bill 2016 (the Bill) is:
- to
amend the Television Licence Fees Act 1964 and the Radio Licence Fees
Act 1964 to reduce licence fees payable by commercial television
broadcasting licensees and commercial radio broadcasting licensees by 25 per
cent.[2]
Structure
of the Bill
The Bill consists of one Schedule which is divided into two
parts:
- Part
1 of Schedule 1 proposes to:
– reduce
commercial television and radio broadcasting licence fees by 25 per cent and
– insert
a new provision to allow regulations to be made under the Radio Licence Fees
Act in relation to rebates of radio licence fees.
– provides
for transitional arrangements regarding licence fees payable by commercial
television and radio licensees.
Background
Under the Broadcasting Services Act 1992 (the BSA)
a person or entity providing a commercial broadcasting service (as defined by
section 14) on radio or television must hold a commercial radio or television
broadcasting licence.[3]
Under the Radio Licence Fees Act and the Television Licence Fees Act,
a licence fee is payable annually by the holder of a commercial radio
broadcasting licence or a commercial television broadcasting licence respectively.
The BSA requires that within six months after 30
June each year (by 31 December), licensees must give the Australian
Communications and Media Authority (ACMA) a broadcasting licence fee return to pay a proportion of their gross earnings as fees for using the
scarce public asset of radio spectrum.[4]
Few changes were made to the commercial licensing
fees regime before 2010 and those changes that were made were more likely to involve
increases in licensing fees.[5]
Since 2010 there have been a number of
reductions in licensing fees for commercial television licensees. In
2010, the Minister for Broadband, Communications and the Digital Economy,
Stephen Conroy announced a rebate of 33 per cent for 2010 and 50 per cent for
2011.[6]
The 50 per cent reduction was extended to the end of 2013 by regulation and confirmed in legislation at that time. [7] The reduction in fees from nine per cent of gross annual earnings to 4.5 per cent was
justified as a move to protect local content, and it was argued it
would help counter the significant financial pressures faced by commercial
television stations as a result of emerging and convergent technology and an
‘increasingly challenging operating environment. [8]
The free-to-air networks have not been
satisfied with the licence fee reductions granted since 2010. They consider
that ‘onerous and restrictive licence fees’ should be removed completely as
they consider this will deliver a fairer competition environment and give them
capability to invest in Australian jobs and production.[9]
As part of its commitment to media reform
the Turnbull Government responded to the commercial broadcasters call for more
licence fee relief by announcing in the 2016–17 Budget that it would further
reduce fees by 25 per cent.[10]
In announcing the reductions the Minister for Communications, Mitch Fifield
said:
The Government's decision to reduce the fees recognises that
the Australian media market has changed significantly since broadcasting
licence fees were first introduced, with the move to online and on-demand
content fragmenting the market for media services and increasing competition
for audiences and advertising dollars.
In turn, this is placing increasing financial pressure on
Australia's commercial broadcasters whose main competitors, including online
operators such as Netflix and Apple, pay no licence fees.
The Government will consider further reductions in
broadcasting licence fees later in 2016 as part of a broader package of reforms
that will include consideration of the pricing of broadcasting spectrum.[11]
Committee
consideration
At the time of writing the House of Representatives
Selection Committee, the Senate Selection of Bills Committee and the Senate
Scrutiny of Bills Committee have made no comment on this Bill.
Policy
position of non-government parties/independents
Opposition
The Labor Opposition has made no comment on this Bill at
the time of writing this Digest. However, it has been supportive of licence fee
reduction in the past. With reference to the television licence fees component
of its 2013 government legislative package, it argued that a decrease in licence
fees would ‘enable commercial television broadcasters to continue to innovate
and thrive in Australia's rapidly changing media landscape’.[12]
Greens/Independents
In the debates surrounding the previous fee reduction, the
Greens were concerned that broadcasting fee reductions served only the interest
of commercial television broadcasters and not the public interest. Greens’
Member of the House of Representatives, Adam Bandt believed that the ‘gift of
public spectrum’ to be provided to commercial television broadcasters should
come with increased Australian content obligations, and so proposed that these
obligations were doubled from 1 January 2015.[13]
Greens’ Senator Scott Ludlam argued also that a less significant licence fee
reduction than had been proposed in 2013 would still have recognised the
commercial pressures faced by the television industry. The Senator added to Mr
Bandt’s comments that broadcasting spectrum was not a free gift, it was a
public good, the use of which carried with it obligations, such as delivering
Australian content.[14]
Senator Nick Xenophon has been supportive of reductions in
licence fees for commercial free-to-air broadcasters. The Senator has argued
for the imposition of a turn over tax to be imposed on outlets such as Google
and Facebook who ‘cannibalise’ free-to-air networks’ revenue and for that to be
used to offset the loss of revenue from licence fees.[15]
Position of
major interest groups
Free-to-air
commercial broadcasters
The Parliament is currently considering
media reform legislation which proposes to remove audience reach and certain
ownership regulations and owners of print, commercial television and commercial
radio support these proposals. While there is no doubt that commercial
free-to-air broadcasters are very supportive of this media reform legislation,
some of them consider licence fee reform is more important.[16]
Indeed, one industry source remarked in in 2015
that licence fees are the priority issue for commercial free-to-air
broadcasters.[17] Seven West Media’s Tim Worner has claimed that
abolishing licence fees may do more to assist commercial broadcasters to remain
financially viable than removing cross ownership and reach rules.[18] In arguing previously for
the removal of licence fees, Seven West Media has pointed out that Australia’s
licence fees are substantially more than those paid in other countries.[19] In Britain, for example,
licence fees are 0.18 per cent of broadcasters’ revenues[20] (see a comparison of ten
countries in Figure 1 below). In addition, Seven West Media has observed that
Australia’s content obligations are greater than those imposed by many
international regimes.[21]
Further to Seven West Media’s claims, Nine
Entertainment has argued that multinational content companies, such as Netflix,
pay no licence fees; nor do they invest in Australian content, talent or
production staff.[22]
On the other hand, Nine Entertainment argues, free-to-air television directly
employs over 7,000 people and contributes $4.7 billion in direct value to the
Australian production industry.[23]
In responding to the announcement of licence
fee cuts in the May 2016 Budget the Chairman of the television lobby group Free
TV, Harold Mitchell, called the degree of fee reduction ‘disappointing’.[24] Mr Mitchell added that
although Free TV appreciated the ‘modest first step’ towards reform, the
proposed 25 per cent fee reduction does not acknowledge that in the new media
environment, action needs to be taken urgently ‘to make sure broadcasters can
continue to invest in great Australian programming and in transforming
[commercial free-to-air broadcasting] businesses’.[25]
Free TV responded to the introduction of this Bill with a
call for the complete removal of licence fees. Free TV’s arguments remained
constant, with Mr Mitchell insisting that in an ‘unrelenting new media
environment’ Australian free-to-air broadcasters can only continue to invest in
Australian programming and transform their businesses to meet advances in
technology and changing consumer viewing habits if licence fees are abolished.[26]
Figure 1: Licence fees comparison: fees as a percentage of revenue
Source: Venture Consulting.[27]
Commercial Radio Australia’s (CRA) Chief
Executive Officer, Joan Warner, considered the May budget announcement would
deliver ‘a welcome relief’, for broadcasters.[28]
But from the specific perspective of radio broadcasters Ms Warner added that
the radio industry body was disappointed that ‘the relief is not greater’.[29] Ms Warner noted further
that fee relief was tied to a need for commercial radio ‘to be able to better
compete against global players who are largely unregulated and do not carry the
many costs, obligations and restrictions that local radio broadcasters do’.[30]
CRA had also previously noted the higher licence
fees paid by Australian commercial radio broadcasters in comparison with those
paid by their overseas counterparts.[31]
In response to a review of spectrum by the Department of Communications, for
example, CRA argued that it was important that the pricing of spectrum for
commercial free-to-air radio is considered in the context of ‘heavy regulation,
local and Australian music content requirements, advertising restrictions and
mandatory tags required of radio broadcasters, as well as the key role of radio
in emergency situations’.[32]
Subscription broadcasters
In contrast to the positive response from
free-to-air broadcasters, when the commercial licence fees reduction was
announced in the 2016–17 Budget, the Australian Subscription Television and
Radio Association (ASTRA) lobby group was ‘deeply disappointed’.[33] ASTRA labelled the then proposed
licence cut a ‘taxpayer-funded gift’.[34]
ASTRA’s Chief Executive Officer, Andrew
Maiden, denied the validity of the free-to-air television broadcasters’ claims
that they face significant financial pressures. According to Mr Maiden, the
licence fees commercial free-to-air broadcasters pay actually ‘reflect the
value of unusually significant protections and privileges enjoyed by the major
broadcasters, rendering invalid any comparison with fees paid by their
international peers’.[35]
In Mr Maiden’s view, in exchange for paying licence fees,
free-to-air broadcasters ‘enjoy a legislated ban on competition, guaranteed
access to broadcasting spectrum and the world’s most protected market for
sports broadcast rights’.[36]
Other
responses
The Budget licence fees cuts announcement
prompted the Australian Communications Consumer Action Network (ACCAN) to call
for free-to-air networks to use the savings to improve accessibility features
such as better captioning and audio description. ACCAN Disability Policy
Advisor, Wayne Hawkins, considered the funding could be used to improve
captioning on free-to-air television for people who are deaf or hard-of-hearing
and to put in place technology that would allow the networks to introduce audio
description for people who are blind or vision-impaired.[37]
Screen Producers Australia Chief Executive, Matthew Deaner,
had previously called for any savings from licence fee reductions for
free-to-air broadcasters to be accompanied by further obligations to invest in
local content.[38]
Following the Budget Mr Deaner stressed again that Screen Producers supported
the reduction in spectrum licence fees:
... so long as these are balanced by content obligations and a
commensurate increase in the level of expenditure on local production. In
particular, commercial free-to-air's investment in drama, documentary and
children's production is around $160 million annually, less than half that
spent by these broadcasters on sports ...[39]
Moreover, according to Mr Deaner:
From anti-siphoning to sub-quota obligations, there has
historically been a delicate balance of Government regulation and interventions
to ensure that commercial free-to-air investments in local production are wide
ranging, across low cost per hour genres like news and current affairs to
higher cost content like documentaries and drama. Diversity of programming is
an obligation they must continue to carry.[40]
One free-to-air commercial spokesperson indicated that the
commercial television networks would not be adverse to such conditions—as local
shows rate highly.[41]
However, the Government has not responded to Mr Deaner’s suggestions.
There are no reciprocal content commitments in this Bill.
Financial
implications
The 2016–17 Budget papers predicted a cost of loss of
revenue of $163.6 million from 2016–17 over the forward estimates to 2019–20.[42]
This figure incorporates the effect of lower tax deductions resulting from the
lower fees paid by broadcasters (see the table below).
This figure does not account for ongoing loss of revenue
from the period from 2020–21.
Table 1: Loss
of revenue from commercial broadcasting licence fee reduction
| Revenue ($m) |
|
2015‑16 |
2016‑17 |
2017‑18 |
2018‑19 |
2019‑20 |
| Australian
Communications and Media Authority |
‑ |
‑48.4 |
‑48.4 |
‑48.4 |
‑48.4 |
| Australian
Taxation Office |
‑ |
‑ |
10.0 |
10.0 |
10.0 |
| Total — Revenue |
‑ |
‑48.4 |
‑38.4 |
‑38.4 |
‑38.4 |
Source: 2016–17 Budget papers.[43]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act.
The Government considers that the Bill is compatible as
measures in the Bill ‘apply only to corporations, as natural persons are not
eligible to hold a commercial television broadcasting licence or radio
broadcasting licence’. [44]
Parliamentary
Joint Committee on Human Rights
At the time of writing the Parliamentary Joint Committee
on Human Rights had made no comment on this Bill.
It should be noted that as part of an investigation into a
package of Bills which included the Bill to implement the last television
licence fees reduction, the Parliamentary Joint Committee on Human Rights accepted
arguments that reducing television licence fees would increase regulatory
certainty for the commercial television industry and enable broadcasters to
continue to support the production of Australian content.
The Committee concluded that reducing television licence
fees may, therefore, promote the right to participate in cultural life and the
right to freedom of expression.[45]
Key issues
and provisions
Radio License Fees Act 1964
Section 5 of the Radio Licence Fees Act states that
commercial radio licensees pay licence fees ‘by way of tax in respect of the
licence’ in accordance with the requirements set down in sections 6 and 6A of
that Act.[46]
Section 6 states that the licence fee amounts to a ‘relevant percentage’ of gross
annual earnings.
Item 3 proposes to amend subsection 6(2)
of the Act by including the words, ‘that is 75% of the amount’. The item does
not change the formulae to calculate the gross annual earnings of licensees.
Instead, it provides that only 75 per cent of the total amount derived under
the formulae is payable as a fee.
Item 2 of Schedule 1 Part 1 proposes to
insert a new subsection (2) in section 5 of the Radio Licence Fees
Act to allow for regulations to be made which can provide for rebates of
radio licence fees. Such a regulation making power already exists under the Television
Licence Fees Act (subsection 5(2)).
Television Licence Fees Act 1964
Section 5 of the Television Licence Fees Act
requires commercial television broadcasting licensees to pay licence fees,
which are worked out in accordance with sections 6 and 6A of that Act.[47]
The fees are calculated based on annual gross earnings. Item 4 of Schedule
1 Part 1 proposes to amend subsection 6(2) by inserting the
words, ‘that is 75% of the amount’. The item does not change the formulae to calculate
the gross annual earnings of licensees. Instead, it provides that only 75 per
cent of the total amount derived under the formulae is payable as a fee.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Television Licence
Fees Act 1964 and Radio Licence Fees
Act 1964.
[2]. Television Licence
Fees Act 1964 and Radio Licence Fees
Act 1964.
[3]. Broadcasting
Services Act 1992.
[4]. Australian
Communications and Media authority (ACMA), Broadcasting
licence fee requirements handbook for commercial radio and television
broadcasting licensees, ACMA, Canberra, September 2015; see Appendices
B and C for licence fee formulae.
[5]. For
example, costs associated with the conversion to digital
television were recovered from the commercial television industry under an amendment
to the Television Licence Fees Act in 1999 and
legislation introduced in 2007 required that revenue earned from
analogue and digital radio broadcasting services is counted for the purposes of
calculating the radio broadcasting licence fee. B Jaggers, Radio
Licence Fees Amendment Bill 2007, Bills digest, 144, 2006–07,
Parliamentary Library, Canberra, 2007.
[6]. S
Conroy (Minister for Broadband, Communications and the Digital Economy), Government moves
to protect TV content, media release, 8 February 2010.
[7]. More
detail can be found in the Bills digest for the legislation: A Holmes, Television
Licence Fees Amendment Bill 2013, Bills digest, 95, 2012–13,
Parliamentary Library, Canberra, 2013.
[8]. Conroy,
Government moves to protect TV content, op. cit.
[9]. Nine Entertainment, Submission to Senate Environment and
Communications Legislation Committee, Inquiry into the Broadcasting Legislation
Amendment (Media Reform Bill) 2016, March 2016, p. 4. Submission cites
information from Deloitte Access Economics, Economic contribution of the film and television industry in Australia, [report for] Australian Screen Association, Deloitte Access Economics
, Canberra, February 2015.
[10]. Australian Government, ‘Part 1: Revenue measures’, Budget measures: budget paper no. 2: 2016–17, p. 8.
[11]. M
Fifield (Minister for Communications), Supporting
public broadcasting and creating a more competitive environment for commercial
broadcasters, media release, 3 May 2016.
[12]. A
Albanese, ‘Broadcasting
Legislation Amendment (Convergence Review and Other Measures) Bill 2013,
Television Licence Fees Amendment Bill 2013’, House of Representatives, Debates,
19 March 2013, p. 2629.
[13]. A
Bandt, ‘Second
reading speech: Broadcasting Legislation Amendment (Convergence Review and
Other Measures) Bill 2013, Television Licence Fees Amendment Bill 2013’,
House of Representatives, Debates, 19 March 2013, p. 2632.
[14]. S
Ludlam, ‘Broadcasting
Legislation Amendment (Convergence Review and Other Measures) Bill 2013,
Television Licence Fees Amendment Bill 2013’, Senate, Debates, 20
March 2013, p. 2261.
[15]. N
Xenophon (Independent Senator), Deal or no deal: media law changes must include licence fee cuts and
a fair tax on Facebook, Google and Netflix,
media release, 1 September 2016. Note: A turnover tax is a tax levied on turnover (revenue)
at a specific rate, irrespective of the source of revenue and whether or not
the revenue is associated with any profit or loss to the entity (as defined by
Economics Section, Parliamentary Library).
[16]. Parliament
of Australia, ‘Broadcasting Legislation Amendment (Media Reform) Bill 2016 homepage’,
Australian Parliament website.
[17]. D White, ‘Malcolm Turnbull expected to play hard ball on TV licence fee cuts’, Sydney Morning Herald, (online edition), 22 July 2015.
[18]. D Crowe and J Mitchell, ‘Forces massing to fight Fifield's media reforms’, The Australian, 2 March 2016, p. 6.
[19]. Seven West Media, Submission to Senate Environment and
Communications Legislation Committee, Inquiry
into the Broadcasting Legislation Amendment (Media Reform Bill) 2016,
March 2016, p. 13.
[20]. Ibid.,
p. 43.
[21]. Ibid.
[22]. Nine Entertainment, Submission to Senate Environment and Communications
Legislation Committee, op. cit., p. 4. Submission cites information from
Deloitte Access Economics, Economic contribution of the film and television
industry in Australia, op. cit.
[23]. Ibid.,
p. 5.
[24]. FreeTV Australia, Budget licence fee change, media release,
3 May 2016.
[25]. Ibid.
[26]. Free
TV Australia, Free
TV calls for abolition of broadcasting licence fees, media release, 15
September 2016.
[27]. Venture
Consulting, Placing
a value on free to air broadcasting spectrum in Australia, report for
FreeTV Australia, Venture Consulting, Sydney, 13 February 2012, p. 19.
[28]. Commercial Radio Australia (CRA), Commercial radio welcomes licence fees cut in Federal Budget, media release, 3 May 2016.
[29]. Ibid.
[30]. Ibid.
[31]. CRA, Commercial radio industry welcomes Government response to Spectrum Review, media release, 25 August 2015; and CRA,
submission in response to open call for submissions to the Department of
Communications Spectrum Review, pp. 40–41 (citing Venture Consulting, Australian
Commercial Radio Licence Fees: International Comparison Study, 2011 as
cited in Convergence Review Committee, Convergence
Review: final report, Department of Broadband, Communication and the
Digital Economy, March 2012, p. 93. Note: this submission is no longer available
online or on the CRA website.
[32]. Ibid.
[33]. Australian Subscription Television and Radio Association (ASTRA), Taxpayers foot $150 million handout to ‘free’ television, media release, 3 May 2016
[34]. Ibid.
[35]. Ibid.
[36]. Ibid.
[37]. Australian Communications Consumer Action Network (ACCAN),
Free-to-air networks should use budget windfall for improved
accessibility features, media release, 4 May 2016.
[38]. M
Mason and D White, ‘Free
and pay TV row over licence fees’, The Australian Financial Review,
14 March 2016, p. 30.
[39]. M
Mason, ‘Budget
2016: free-to-air and pay TV clash over licence fee cut’, The Sydney Morning Herald, (online edition), 3
May 2016.
[40]. Ibid.
[41]. Mason
and White, ‘Free and pay TV row over licence fees’, op. cit.
[42]. Explanatory Memorandum, Broadcasting
Legislation Amendment (Television and Radio Licence Fees) Bill 2016, op. cit.,
p. 3.
[43]. Australian Government, Budget measures: budget paper no. 2: 2016–17,
op. cit., p. 8.
[44]. The
Statement of Compatibility with Human Rights can be found at page 4 of the
Explanatory Memorandum to the Bill.
[45]. Parliamentary
Joint Committee on Human Rights, Fourth
report of 2013, 20 March 2013, p. 26.
[46]. Radio Licence Fees
Act 1964.
[47]. Television Licence
Fees Act 1964.
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