background briefing 3-1 ...............3

Quarterly Newsletter:Winter 2001, Vol.3 No.2

The ABC and the federal budget - a curate's egg

There were a couple of positives in the federal budget for the ABC. After bullying and badmouthing the ABC for so long, the Coalition felt compelled to increase the ABC budget. The penny had finally dropped with the government - the ABC is an election issue.

The $17.8 million a year, for four years, is well short of the $40 million a year ongoing that the ABC asked for. It is nowhere near the $66 million the Coalition took out of the ABC funding base after the 1996 election. Despite that, it's better to have $17.8 million than nothing.

On the negative side this is stop/go economics. With one hand the Government takes away $66 million, and with the other hand it gives back $17.8 million, but only for four years. The ABC can implement some new program initiatives, but it will have to cut them off again in four year's time, or else abandon some other activity.

This was the very reason that triennial funding was introduced. It is very hard for the ABC to plan effectively if it can't predict its income from one year to another. This kind of see-saw funding does not assist the efficient use of taxpayers' money. After all the turmoil of the last year or so the ABC needs stability, not another ride on the big dipper.

There's another problem that comes with chronic underfunding. It has been suggested that this money is a tied grant. Strictly speaking it isn't. The ABC Board can legally spend the money for any legitimate ABC purpose it chooses. But having told the Government that the money was being sought primarily for regional initiatives, the ABC would

be foolish to spend it on something completely different. If they did so, their chances of more funding in the future would be slim.

Chronic underfunding exposes the ABC to temptation in a number of ways. It's pretty obvious that if you just say 'give us more money', without saying what for, that you're not going to get very far. It must be tempting for an ABC Board, in an election year, to seek more funds for an area where the government feels vulnerable - like in rural and regional Australia. (Given the Government's concern to win the votes of the retirees, it's surprising that the ABC hasn't come up with a plan for an old people's version of Triple J - they could call it Grey Radio or maybe the Nostalgia Network.)

Similar temptations can happen with ABC enterprises. Do we have yet another cooking program because research indicates this is what viewers want, or do we have yet another cooking program because ABC Shop takings suggest that we'll sell a lot of cookbooks? Do we program Bananas in Pyjamas because the kid love them, or do we program the Bananas because we'll sell of lot of merchandise?

Without adequate and stable funding temptations such as this will continue to eat away at the margins of the ABC's fragile independence.

The ABC staff should not be under this kind of pressure. Triennial funding should be maintained. The $66 million (indexed for inflation) should be restored to the ABC's funding base, and there should be additional funds for the ABC's magnificent web site, and other forms of new media.

DARCE CASSIDY

Investigation into the ABC by the Australian National Audit Office

Operation of the board and management under review

The ABC's managing director, Jonathan Shier, is under attack on many sides. Among his detractors are the usual suspects, including the Community and Public Sector Union and the Friends of the ABC. A less likely antagonist is the Screen Producers Association of Australia, which is critical of the ABC's commercial dealings with the independent film-making sector.

But Shier's nemesis (if he is to have one) may well come in the form of that innocuous and little known organisation - the Australian National Audit Office. The ANAO is investigating the ABC. A team of four audit staff is wading through documents and interviews with ABC managers. The broadcaster might have reason to worry because the inquiry is being done by the Performance Audit Service Group of the ANAO. It's not about the financial books, it's about corporate governance. It's about how the board sets direction; how management produces programs; how the management reports back and how the board reports to Parliament.

One objective is to determine if the ABC adequately reflects its charter. But it will not just restrict itself to management systems, it will also look into issues such as programming and scheduling.

The chains of command at the ABC have never been renowned for their tautness and the turmoil in the organisation is largely about a program commissioning system that has not properly got off the ground in 10 months.

Word from inside the ANAO is that a lot of new systems at the ABC have made the audit job more difficult, hardly an auspicious sign.

The Parliamentary Joint Committee of Public Accounts and Audits ordered the inquiry. Unlike some inquiries, it was not triggered by an automatic performance review process but deliberately chosen for investigation. The ABC will get a chance to respond to a draft report before it goes to the committee. Depending on the findings, the committee may order a public hearing.

ROBERT BOLTON
Australian Financial Review 3/5/01