If not for Bill Clinton we could have taxed the internet, says Peter Costello

Governments around the world missed a golden opportunity to raise "unbelievable amounts of money" by putting a tax on access to the internet when it was in its infancy, according to former Treasurer Peter Costello.

Speaking to Fairfax Media in his new role as chairman of free-to-air broadcaster Nine Entertainment Co, Mr Costello recalled sitting in his Parliamentary office in the 1990s in the early days of the web, and pondering the vast future revenue such a levy could generate.

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"I was Treasurer at the time. It would have been the easiest thing in the world, by the way, for governments around the world to have put a charge on the internet. It wouldn't have had to be very big but it would have raised a motza," said Mr Costello.

"Governments would all have to agree together to do it, and the OECD was looking it at the time. It would have been hard to police but once (former US President) BIll Clinton came out and said the internet would be free that was it. Once the Americans said the internet was going to be free, the rest of the world was going to follow suit."

Mr Costello, Australia's longest-serving treasurer, who went on to introduce the goods and services tax with then-prime minister John Howard, said an internet access tax "could have been a fraction of a cent a year and it would have raised governments' unbelievable amounts of money".

At the WTO Ministerial Conference of 1999 in Washington, which was hampered by protests that came to be called "the battle in Seattle", the Clinton administration spelled out an "aggressive agenda to ensure that the Internet continues to be an engine of economic prosperity in the US and around the world". That included extending the 1998 US-led moratorium on customs duties on electronic transmissions and ensuring that WTO members took no action to inhibit the growth of e-commerce.

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The Australian free-to-air industry has been lobbying the Turnbull government hard to scrap its $153 million-a-year licence fees that it argues are outdated, especially as they give an an unfair advantage to larger overseas rivals such as Google and Facebook, which invest far less in Australian content.

"The biggest corporations in the world have access to a medium - the internet - where they are completely untaxed," said Mr Costello. "Nobody is running outside saying its unfair that Mr Google and Mr Apple and Mr iTunes are all delivering product through an untaxed medium and yet what they to tax the medium through which free-to-air television is delivered."

Peter Costello argues the Future Fund has exceeded its growth targets.
Peter Costello argues the Future Fund has exceeded its growth targets. Photo: Paul Jeffers

"When there was limited spectrum and media had to be delivered by spectrum I think there was a case for licensing that media but now you can deliver product online and it is free I can't see why you would charge fees for the spectrum for one part of media which competes against other areas where you don't charge."

Free-to-air networks such as Nine point out to advertisers and investors that their biggest shows and sporting events are still the best places reach mass audiences at one time.

But Mr Costello questioned whether TV gets bigger mass audiences than Google and Facebook in one day. "The NRL final (one Channel Nine) would but on a day-to-day basis am I looking at (the TV) all the time? I tell you what, I am looking at Google all day, and I know my kids are looking at Facebook all day."

As revealed by Fairfax Media Communications Minister Mitch Fifield received advice from government officials in January recommending that the free-to-air TV industry be given relief from its annual licence fees.

The news boosted the networks hopes of an election year dividend although the Minister, who has made clear he is sympathetic to the networks on the issue, has yet to make a submission to the May budget and will need approval from the current Treasurer Scott Morrison.