Our national public broadcaster is both efficient and much appreciated

Broadcasting is a key sector in our society, not only economically but culturally, socially and politically. The sector is undergoing massive technological and regulatory change, which forces a reconsideration of the place of public broadcasting in the mix. The Australian Broadcasting Corporation (ABC) has always played a central role in the evolution of Australian broadcasting. The changes in relevant technology and the broadcasting environment point to a future role that is at least as important.

There is value to be derived from maintaining within the Australian broadcasting system a national sector that is publicly owned and funded, politically independent and fully accountable. Public ownership brings a distinct difference to the broadcasting system, with national broadcasters required and able to provide comprehensive, innovative programs not influenced by commercial imperatives.

No matter how much programming nor how many new delivery systems new technology facilitates in the broadcasting sector, private provision is profit-derived and driven. New technologies can be harnessed to provide more programs and services but more outlets and activities in themselves will not necessarily provide sufficient diversity, innovation, credibility, regional impact or Australian content for the public interest to be met. This is because commercial broadcast services will still be driven by profit incentives. The pervasive and persuasive nature of broadcasting makes a major national public broadcasting presence even more essential in an increasingly globalised broadcasting world in which audiences are likely to be more fragmented.

For national public broadcasting to fulfil its role effectively in these circumstances there will need to be appropriate access to the full range of production and delivery technologies. This will enable national broadcasters to achieve sufficient scale and scope to be able to participate alongside commercial broadcasters and datacasters in both traditional and new media. It will also be essential that there be provision of statutory status to allow political independence, combined with accountability to Parliament, and on specific matters, to the Auditor-General, the Ombudsman [in relation to administrative matters], Administrative Appeals Tribunal, the ABA [in relation to complaints covered by the Code of Practice] and under FOI and other relevant legislation.

There must be a guarantee of funding sufficient to ensure the national public broadcaster is able provide an innovative and comprehensive package of services, including traditional and new services, to citizens from its free-to-air radio and television networks and its online service. This will ensure that the public broadcaster is free to innovate, and also, importantly, will ensure that pricing mechanisms different from the commercial system continue.

Efficiency: Costs Of Provision

When assessing efficiency, prejudice can sometimes play as great a role as fact. Indeed, there is a not-uncommon view that public providers by definition must be more inefficient, more bureaucratic and less innovative than private firms. Yet this is manifestly wrong in the case of Australian national public broadcasting.

Over a period of four decades, ABC radio cost has declined consistently relative to the commercial radio sector. It is not surprising that the ABC should have some economies not available to commercial radio, eg not needing to maintain marketing advertising departments. But the downward trend in relative ABC cost, not just its lower level, is an important observation.

If attention is switched to television, the ratio of ABC expenditure per average television broadcast hour compared to equivalent commercial expenditure averaged across the three networks shows a downward trend in relation to costs.

An alternative benchmark is cost per station. If this calculation is done for the television networks, the comparative results for the ABC vs the commercial networks are as follows for 1998: ABC: $26.18m per station; Ten: $46.39m per station; Seven: $83.21m per station; Nine: $88.59m per station.

Other measures available for television similarly confirm this cheaper provision by the national public broadcaster. One further such alternative measure is total expenditure per employee. In 1997 this was $149k per employee for the ABC and $313.3k for commercial broadcasters.

There is an overall consistency across the range of all of these indicators discussed, despite individual problems with any one such performance indicator.

While the ABC's efficient performance relative to commercial broadcasters is in part explained by the absence of advertising transaction costs and by the requirement to respond to a reduced parliamentary appropriation, it can also be explained by the Corporation's own strategies. For example, the "One ABC" policy begun in 1996/97 was directed at, among other things, better control of costs of corporate management. Similarly, substantial new "contestability" initiatives were introduced into the ABC in the later 1980s to enhance production costs comparison.

From 1996 there was a clear decrease in operating expenses and employee numbers. There is also a capacity for an organisation such as the ABC to benefit from the distinctive sense of purpose of its employees - which manifests in a willingness to work for less than commercial rates in many cases.

A further output measure relative to cost is ratings (audience) per dollar expended. The ABC is required by its Charter to be comprehensive, providing a balance between broadcasting programs of wide appeal and specialised broadcasting programs. Commercial broadcasters have no similar constraint upon their imperative to pursue mass audiences. It is notable that despite this, the ABC is highly efficient in achieving ratings.

For 1997-98, on a full-service expense measure, ABC and Ten Network costs per rating point are quite similar and both are well below the Seven and Nine Network costs per rating point. Even if fees and commissions that apply only to commercial stations are excluded, the ABC is quite comparable in cost to the Seven and Nine networks, though it becomes higher in rating cost than Network Ten.

ABC television cost per rating point has not always been on par with that of commercial networks. The relative expenditure position has been stable since the mid 1980s, with the commercial networks remaining on the higher expenditure trajectory established in the early 1980s and with ABC outlays constrained at a lower level.

The same cost per ratings unit is not available for radio but it would be likely to show an even stronger outcome, as ABC radio audience share has increased substantially to higher levels over the past decade.

The ABC also reportedly is quite successful in relation to the comprehensive "reach" that can lie behind these ratings in turn. An AC Nielsen survey conducted at the end of 1998 is reported as finding that 70 per cent of the population use the ABC television service each week, 24 per cent use an ABC radio network each week and 2.4 per cent use the ABC website each week.

The ABC also reportedly is quite successful in relation to the comprehensive "reach" that can lie behind these ratings in turn. An AC Nielsen survey conducted at the end of 1998 is reported as finding that 70 per cent of the population use the ABC television service each week, 24 per cent use an ABC radio network each week and 2.4 per cent use the ABC website each week.

Both national public and commercial sectors have restrained television cost growth substantially since the late1980s. For the ABC, once the basic national public broadcasting infrastructure for comprehensive service was in place, this allowed annual marginal cost of maintaining and extending its services to fall from $92 million in the early 1980s to $9 million in the early 1990s. In recent years the real marginal cost of providing ABC programs, services and outlets has become negative.

If this ABC pattern is compared with the commercial sector a downward trend in marginal cost is also observed there, though with continuing cost efficiency advantage evident for the ABC.

For the ABC a reduced marginal cost has been consistent with growing radio and television audiences, 24-hour broadcasting in both radio and television, expansion of regional studios, substantial expansion of Triple J radio across Australia, Open Learning programs, and establishment of both Newsradio and ABC Online. A past capacity to extend service at low cost, building on basic core capability, has therefore been demonstrated - though it is not necessarily inexhaustible, as declining ability to maintain Australian content and deliver local services demonstrates.

Finally, in terms of efficiency, it is useful to avoid the problem of comparing "apples and pears" that bedevils commercial vs public broadcasting comparisons, and to move instead directly to comparing like with like. A useful application of this approach is to compare the ABC with public broadcasters in countries such as Britain and Canada. A range of measures can be chosen. But all point in a similar direction - that the ABC has a lower overall public expenditure share and expenditure per capita per day than the CBC and BBC.

Public Valuation

Efficiency measures are partial indicators of good use of national resources in public broadcasting. But in the end it is the users of ABC services and the tax payers who fund these services, who are the appropriate arbiters. And, in this context, standard qualitative survey techniques have found widespread and consistent support for the ABC contribution.

For example, a major Newspoll survey in December 1998 found that 88 per cent of those surveyed rated the ABC and its services as valuable to the Australian community, and that for all answering respondents 86 per cent rated ABC television programming as good, compared to only 44 per cent for commercial television. It was also established that 81 per cent felt the ABC did a good job at providing television programs they personally liked to watch - as opposed to 50 per cent for commercial television- and that 89 per cent rated ABC radio programming as good quality compared to 66 per cent for commercial radio. Finally, 85 per cent thought ABC radio did a good job in providing the amount of programs they liked to listen to as opposed to 66 per cent for commercial radio.

In a separate survey by AMR Quantum Harris in 1999, respondents were asked how satisfied they were with various public services - 82 per cent per cent said that they were satisfied with the ABC. Respondents were also asked whether the quality of services was improving, getting worse or the same compared with a year ago and, based on net results, the ABC's quality of service was considered to have improved.

A growing gap between taxpayer preferences and ABC budget has been shown in recent quantitative research. March 2000 data in the National Social Science Survey indicate a mean willingness to pay for the ABC itself of $48 per head versus an actual outlay in 1994 of $37 per head.

It is also instructive to contrast support for the ABC with related areas of endeavour of comparable expenditure magnitude. A very limited constituency exists for cuts to the ABC and a sizeable group want increases, in contrast to the case of arts or sport. The strong public valuation of ABC services therefore is very evident in these findings.

Indeed, if the mean preferred percentage change for each major area of government outlay is examined the ABC comes in as having the largest preferred increase in public expenditure. It is likely that areas with a large absolute base of spending may attract a small percentage increase only but the ABC outcome is still a significant one in affirming public support.

Looking Forward

The picture emerging from this review of salient data on the issue of public benefit from ABC public broadcasting is that the ABC is a highly efficient broadcaster by both domestic commercial and global public standards.The public is demonstrably satisfied that its tax support for public broadcasting is warranted and, indeed, there is rigorous evidence of support for priority expansion of funding in this area. Moreover, there are dangers now that efficiency for the ABC is coming at a growing cost in terms of some indicators of public benefit such as Australian content.

There are also dangers for the future as broadcasting technology changes, if a comprehensive public broadcasting presence across existing and new media is not maintained. Substantial ongoing public benefit from public broadcasting via the national broadcaster will be delivered if there is appropriate funding support, respect for political independence combined with parliamentary accountability, and full access to the new delivery platforms created by the use of the new digital spectrum and other distribution mechanisms.