ABC and SBS Efficiency Study - release of report
1 December 2014
The Government commissioned the ABC and SBS Efficiency Study to identify potential savings from the many "back of house" functions of the public broadcasters' operations. This included administration, use of equipment, property and technologies.
The Study was undertaken by the Department of Communications with the assistance of former CFO of Seven West Media, Mr Peter Lewis, and senior executives from the ABC and SBS.
The financial information contained in the ABC and SBS Efficiency Study was provided by the two broadcasters strictly on the basis that it would remain confidential. The government has now sought permission from both broadcasters to release the report. They have agreed to the release of a redacted version. All of the redactions are at the request of the broadcasters.
One "back of house" element in the public broadcasters' overhead, that costs approximately $290 million a year, is radio and television transmission and distribution. It was not included in the Efficiency Study because a separate analysis was already under way which has resulted in a new funding model and contract process, with negotiations currently underway, which is expected to deliver material transmission savings that will in turn make a very substantial contribution to the savings required by the Government.
These transmission savings added to efficiency measures identified by the Study are well in excess of the Budget savings required. There is no need for the ABC to reduce the amount of money it spends on "front of house" or programming.
Now this is not to say that there should not be cost savings in programme production. If, for example, new technology or more efficient work practices enable a particular type of programme to be produced at less cost without diminishing its quality, then changes should be made and the resources saved put to other programming purposes. But, important though they are, efficiencies of this kind were not the focus of the Study.
It is important to remember too that the Study was not designed to be the last word, but an important part of an iterative process that would see both public broadcasters explore the potential for operating more efficiently. So it is entirely to be expected that both ABC and SBS have found that some of the Study's recommendations were less compelling than other cost savings measures of a similar kind not canvassed in the Study.
The Government's position throughout this process was not that the ABC or SBS should be immune to savings, but that those savings they should be effected in an informed manner.
In total, including the 1 per cent down payment announced in the May Budget, the full savings the ABC and the SBS will return to the Budget amounts to $308 million over 5 years.
For the ABC this means it will receive $5.22 billion over 5 years rather than $5.47 billion, a saving of $254 million or 4.6 per cent.
For the SBS this means its operating budget will be reduced by $25.2 million or 1.7 per cent over the five year period. A legislative change to allow SBS to generate further revenue by changing its advertising arrangements will bring the total savings returned to the budget to $53.7 million or 3.7 per cent.
These efficiencies represent a modest saving in comparison to the Government's continued investment in national broadcasting of more than $6.61 billion over the same five year period.
A redacted version of the ABC and SBS Efficiency Study Report is available.