The ABC should share the burden of spending cuts

This year, pre‑budget speculative fear and loathing is gripping the public sector more intensely than usual, as the Abbott government floats various options for tightening its budgetary belt.

One option being tested in the public domain is that an "efficiency dividend" of reduced government funding, at least in the short term, ought to apply to the ABC.

There are some estimates indicating that a 2.25 per cent efficiency dividend, in its first year of application, would reduce the ABC's $1.03billion budget by about $22.5million, with additional savings in each year the dividend is enforced.

The political dimensions of the proposal are intriguing, and reveals much about the prevailing expenditure policy in Australia.

The pre‑election economic statement of the former Rudd government exempted the ABC from an increase in the public service efficiency dividend to 2.25 per cent, which, in turn, was anticipated to yield budgetary savings of about $1.8billion over the three years to 2016‑17.

There was little doubt the intention of this policy was to smoke out then opposition leader Tony Abbott regarding his spending policy intentions towards the national broadcaster.


The Labor strategy came to nought as the highly disciplined Abbott stuck to his "small target" rhetorical approach, even maintaining on election night that there would be "no cuts to the ABC or SBS".

How times change when an incoming government knows it has a "budget emergency" on its hands, but can only get access to the budget books, in all of their shambolic state, once the outgoing government vacates the ministries.

If reading between the lines on the pre‑budget rhetoric coming from the Abbott government is any guide, it would seem it will want to convey the perception, at the very least, that the pain of fiscal consolidation is being fairly evenly spread across the Australian population.

This was the strategy adopted by the former Howard government in its first budget, covering the 1996‑97 financial year, and efficiency dividends were part of the mixture of significant spending cuts announced at the time.

Interestingly, it was through the first Howard budget that an efficiency dividend last applied to the ABC, a one‑off dividend of 2  per cent which clawed back about $11million in savings to the budget.

With the state of the budget arguably in far worse shape today than it was in the first year of Howard's long reign, it is entirely appropriate for the ABC to share in some of the pain of reduced expenditure that the rest of us also face.

It has been reported that the ABC has already made spending reductions to its children's, comedy and drama programming in recent months, and an efficiency dividend might encourage ABC management to discover new ways of doing more with less.

By the same token, nobody should kid themselves into thinking a belated efficiency dividend for the ABC poses as the beginning and the end of reforms the national broadcaster desperately needs.

Putting aside concern the ABC harbours a left‑wing bias on economic and social issues, the proposed dividend would do nothing to address the more pressing concerns about the distorting effect of a government‑owned broadcaster in an increasingly competitive media market.

Through its ABC2 and ABC3 channels, the broadcaster provides saturation coverage of children's programming deterring the commercial free‑to‑air networks from doing more in this space, whilst ABC News 24 competes against free‑to‑air nightly news bulletins and SkyNews.

The incentive for the commercial free‑to‑air television stations to provide more quality current affairs programming is not assisted, either, by the taxpayer‑funded Lateline and Q&A programs.

The independent fact‑checking outlet PolitiFact Australia effectively closed down after the ABC received $10million in government funding, early last year, partly to run its own fact checker. There is also a growing level of consternation about the perceived conflict of interest between the role of the ABC as a news-service provider, and its soft Asian diplomacy conducted through the Australian Network.

These important matters lend weight to the argument that the ABC should be privatised, rather than kept under government ownership and subjected to the vagaries of efficiency dividends.

Indeed, privatisation would be a far superior option for long-term cost control than politically‑determined efficiency dividends, as ABC management would be accorded far greater discretion to balance cost-control concerns against quality programming objectives.

The ABC should certainly play its part in getting the budget back into the black, but efficiency dividends are not the silver-bullet answer for reforming the national broadcaster.

Dr Julie Novak is a senior fellow with the Institute of Public Affairs, based in Melbourne.