Too Much Even for Turnbull

“Cut our budget, and the pig gets it!” A few months ago we were being told that any cut to the ABC’s budget would be the end of Peppa. Well that threat was always a joke — no government, no management would ever take on the three-year-olds of Australia (not to speak of their parents).

But now, rather more seriously it would seem, Peppa has been replaced by Tony Jones and Lateline, apparently the next victim of foreshadowed cuts to the ABC budget.

The Coalition inherited a massive debt and deficit from the Labor Party. The Government has been spending more than it is receiving in revenue and if we continue on the way we were going we will end up, within a decade, with close to $700 billion of debt. So we are duty bound to repair the Federal Budget and that means raising extra revenue and reducing expenditure.

The Australian taxpayer provides a combined total of nearly $1.4 billion each year to the ABC and SBS to deliver broadcasting and digital media services in line with their respective Charter obligations. The ABC’s budget allocation is more than $1 billion a year.

There are spending cuts across government and the public broadcasters cannot reasonably expect to be exempt. All government agencies have a duty to ensure that taxpayers’ money is used as efficiently as possible, and the ABC and SBS are no exception.

In early 2014, I established an efficiency study to assist the broadcasters to manage their businesses better by examining the “back of house” costs of operations and identifying savings through increased efficiencies and reduced expenses. Programming expenditure was not included in the terms of reference for the study nor in the recommendations it made.

The efficiency study was conducted by the Department of Communications with the assistance of Mr Peter Lewis (until recently Chief Financial Officer of Seven West Media Limited) and representatives from the ABC and SBS.

The ABC is not a commercial network so its revenues are not a function of its performance, but rather of its ability to persuade the government of the day to increase or maintain its budget. At one level that makes the ABC easier to run, you don’t have to worry about those pesky ratings and the advertisers that dwell on them. But in fact managing a government broadcaster is harder, because you don’t have the constant discipline of the bottom line. A commercial broadcaster called on to save money will always try to preserve its programme budget — cutting that will prejudice their ratings and thus their revenues. A public broadcaster, on the other hand, could if it wished save money in the easiest (and laziest) way by simply cutting programming and in particular cancelling new shows or new series.

The harder but better thing to do is to restructure, reform and modernise the business and that is exactly what the efficiency study makes clear to the management.

Take Seven West Media.  Faced with the rising cost of making Australian drama and increasing competition for the advertising dollar, Seven recently announced they had cut their television back office costs by $46 million.

Following the completion of the efficiency study the ABC board and management know that there is ample capacity to achieve substantial savings without cutting the resources available for programming.

However it is always going to be a matter for the ABC itself to determine whether programmes should be continued or not. Everyone will have an opinion, as many do on the apparently foreshadowed changes to Lateline. After all, as Bruce Gyngell told me many years ago, everybody thinks they’re a programmer.

All broadcasters will make changes to their schedule from time to time and the ABC is no different.

But it is wrong to attempt to draw a link between budget cuts, back-office savings and decisions made by management about programming.  Suggestions that popular programmes or services are at risk because of Budget savings are not credible. The savings sought from the ABC are not of a scale that will require reductions in programme expenditure. The ABC may choose to cut programming rather than tackle back office and administrative costs – but that’s the ABC’s call.

In 2013 the ABC was allocated $70 million over three years to expand the depth and quality of its news and current affairs for the digital era. ABC viewers and staff have the right to question management on where this investment has been made.

At the time ABC management said that among other news initiatives it was to looking to expand its delivery of state-based current affairs programs, and extend the length of broadcasting seasons for some current affairs programmes.

If the ABC want to make programming decisions to adjust to viewing and listening trends, respond to the changing media cycle, ensure it is not (in its view) over-servicing its audience in a particular genre, or shift its resources to target online and mobile content; that is its choice.

Those programming decisions will often be controversial, whether it is dropping or moving a news programme or not renewing (for example) Janet King.  But they are decisions for the management and board of the ABC, not the government.

Communications Minister Malcolm Turnbull, who isn’t Tony Abbott, has generally been treated with love and respect by the National Broadcaster. After this column, published first at the Minister’s parliamentary blog, that may be about to change