Senator LUDLAM-Thanks. Welcome back. I just have a couple of questions about the 24/7 TV news channel that you announced a short while ago. Do you want to give the committee a general overview as to the scope of that announcement and then I might drill down to some specifics?

Mr Scott-Yes, sure. We were delighted to announce in late January that this year we will be launching Australia's first free-to-air 24-hour news channel. We think this is great news for the taxpayers; a great return on their investment in ABC news and public affairs. And it is great news for free television, that you will be able to access a 24-hour news channel without having to sign up on a contract to pay TV. In delivering the service we are taking advantage of the large investment taxpayers have already made in the Australian broadcaster, with eight state and territory newsrooms, six local radio newsrooms, regional newsrooms and 12 international bureaus, and the opportunities provided by new technology and digital technology to create the channel and deliver this content 24 hours a day, seven days a week. The content will allow us to cover
breaking news on a continuous basis, it will feature regular news updates, and also we will be able to showcase and highlight great ABC content that is happening on other platforms or that is being broadcast at other times. For example, a major interview by Fran Kelly on Radio National Breakfast will be able to be broadcast live on the news channel as well as parliamentary question time, the National Press Club and other events like that as well.

Senator LUDLAM-Presumably this fits already within the scope of your existing budget. It was not a budget night announcement, as the kids channel was.

Mr Scott-It absolutely fits within our charter.

Senator LUDLAM-No, I have no argument with that at all.

Mr Scott-There were some suggestions that it did not, but it absolutely fit within our charter to inform the Australian people and to use innovative broadcasting techniques. We have made, as we have discussed at this committee in recent years, some significant savings in our news operation and our television production model by taking advantage of new technology. We have been able to take resources from the back end of our television production and invest them in the new news channel. That is how we are funding it. It will not operate on the budget of some of the big worldwide news channels, but the major cost in delivering a news channel, of course, is having reporters on the ground, which we already have.

Senator LUDLAM-Which you have got.

Mr Scott-We have found the money for the content. As you would be aware if you looked at the announcement, we are using our high-definition spectrum to deliver this. Under the spectrum that is currently available to the ABC we can effectively deliver three standard definition channels and one HD channel, which we are required to provide. I am not sure that the HD spectrum is the ideal spectrum for a news channel in the long term, but we will have discussions with government around spectrum allocation, particularly with the switch off of analogue. So we are using our existing spectrum and content resources to get this channel up and underway. I think it is going to be very well received by the Australian public. I think it is going to be a boon in the take-up of digital television, which is clearly a priority as we move through to 2013. It has been very well received not just by the ABC audience but, as was commented in the paper today, by other free-to-air channels as well.

Senator LUDLAM-Just to be clear, I was really pleased to see that announcement. I was a bit surprised that it did not come at the time of the last budget, but it is great that it is happening. Can you give us an idea of your budget? I take it that it is not additional expenditure?

Mr Scott-We are still reading that through, and I am not in a position to brief you on that at this time. The reason we had to make the announcement in January was that we needed to do some recruitment for the channel. Advertisements that are running now for the new positions come on top of the advertisements we ran at the end of last year for our continuous news centre, which will form a core of the new news channel as well. We are still working through the final budget. I must say, we do not give out budgets, certainly not in our annual report, of different divisional or channel breakdown. We do not release the budget of 702 Sydney, or 774 or Classic FM, but we are making the investment that is necessary for this channel to go to air, and we are not taking resources away from anywhere else in the ABC to deliver that channel.

Senator LUDLAM-That seems a bit counterintuitive. In a sense, you have already said you have drawn resources down or you have made savings elsewhere.

Mr Scott-Yes, we have saved in our news production. It was the case that under old technology you needed significantly more people in control rooms or newsrooms putting the news to air than you need now with automated technology. Our automated technology has generated some comment. We moved forward a generation of technology that requires fewer people. So we are actually taking those staffing positions and will be reinvesting that in our content creators for the new channel. There was a report in the Courier Mail on Saturday that said that we were not recruiting for this channel. That is clearly untrue. We said on the day we announced it we were recruiting. The advertisements have been running in newspapers for the new channel, so we clearly are resourcing it. But we have identified the pool of funds that we are resourcing it from, and that is from the changes we have made to our production model in recent years.

Senator LUDLAM-Can you give us an idea of the additional staffing that the unit will require?

Mr Scott-We advertised for 10 positions at the end of last year. We have eight new positions that we have advertised now, and that is the first instalment on the channel. There will be more positions to come after that and, finally, that will depend on the final programming mix we come down with.

Senator LUDLAM-Presumably you are recruiting people from within the ABC or within existing units to staff it as well?

Mr Scott-No, that is external. That is a net increase in our staffing level. We are delighted to be a major news organisation that is recruiting at the moment.

Senator LUDLAM-There is not a lot of that going on.

Senator Conroy-I saw a quote this morning saying you are planning world domination. Are you planning world domination, Mr Scott? Who said that? Was that you, Senator Cash?

Mr Scott-We certainly were not going to leave the office, unless there has been a change of plans. I think it is significant that in this changing media landscape we are focusing on delivering in those areas that we believe we invest in best because of our resourcing at the moment, our history, our capacity and capability, and our audience expectation. I think a news channel absolutely meets that. We have been in the news business now for 75-plus years. We have an outstanding reputation. We have the ability to deliver this service, and that is what we will do. We think it will be successful, and it has been very well received.

Senator LUDLAM-You have mentioned before: just as far as the spectrum goes, is it going to be a highdefinition only broadcast? Will people with standard definition TV sets be able to receive it?

Mr Scott-No, at this point. You will need an HD set to receive it. We had a few different options. One was to take a service that we were currently delivering. We have to deliver a certain amount of content on HD. Another option was to take a service that we are currently delivering like ABC2 and move that to HD, which would have meant that some people getting ABC2 today would not have been able to see it. We have been quite clear and upfront that you will need an HD set to receive this. Not everyone has an HD set.

Senator Conroy-Or a set-top box.

Mr Scott-Or an HD set-top box. But the reality is that the overwhelming majority of sets and set-top boxes now on the market are HD. The standard Freeview specification is for HD.

Senator LUDLAM-That is in terms of what is in the shops now, but what about the installed base in the country?

Mr Scott-We think that about 80 per cent of those who have digital capacity can receive HD now, and that that percentage will increase every day with the further rollout of digital television.

Senator LUDLAM-Sorry, 80 per cent of those with digital capacity will have HD?

Mr Scott-Have HD now.

Senator LUDLAM-So what is the total proportion of Australian households?

Mr Scott-I think at this point it is getting close to 50 per cent of the public who will be able to see the hannel now. I anticipate that that will grow to 90 per cent-plus by the time of analog switch-off. Then our question will be whether, in fact, the HD channel is the best channel for the news channel and whether there are other spectrum opportunities available. We will also be streaming this channel online, so people with highspeed broadband will be able to watch it, and I expect there will be other delivery mechanisms for it as well, possibly including mobile phones.

Senator LUDLAM-At the point where the viewer has no choice at all you are expecting about 90 per cent?

Mr Scott-I would have thought 90 per cent-plus, Senator. If we are at 80 per cent at halfway there, and the new people migrating to digital television are effectively all migrating to HD. We think it will be a very high penetration. But, finally, we would like it to be 100 per cent, and we will just have to work through. I think one of the debates that we will have here, and one of the things that we are all watching closely-I know the commercial free-to-air channels are watching it closely-is whether HD does become the standard and whether by the time we get to 2014 or 2015 the HD channel is the main channel. We do not know the answer to that yet, but we will have a good sense of it as we closely monitor the numbers in coming years.

Senator LUDLAM-Without stepping on the minister's toes, what can you tell us about the state of negotiations over spectrum allocation?

Mr Scott-I think he has had more negotiations with the commercial free-to-airs and others than us. That is clearly a matter for government policy. There is a digital dividend there. The government has announced some intentions. If there is more spectrum available, I am sure we can put it to good use.

Senator LUDLAM-Presumably you would be making a strong submission in that light. Has that submission been made or are you in negotiations?

Mr Scott-There are ongoing discussions and there are opportunities for written submissions to be made as well, but they are not complete at this point.

Senator LUDLAM-All right. Lastly, I wanted to finish up with a couple of questions about ABC International. Again, you made an announcement a couple of months ago about additional resources to those services that you provide. Can you just give us a quick rundown of the scope of that announcement?

Mr Scott-It was not an announcement, Senator; it was a speech that I gave that simply pointed out that other G20 countries are spending significant amounts of money on increasing their capacity as international broadcasters as an arm of their soft diplomacy. I just pointed out that in our own backyard, in the Asia-Pacific region, we have seen a significant expansion of the role of public broadcasters from France, Germany and Japan. Even last week the BBC announced an expansion of its Asia-Pacific service and that Australia-and this is an historical fact-has not traditionally spent as much at all. In fact, our current expenditure of $35 million really has us at the low end of the G20. What we were saying was that even a doubling of the current investment in international broadcasting would allow us to create an integrated radio and television
brand, well marketed with good distribution and upgraded content, and that as part of the suite of diplomatic offerings that are available to the government, investment in public broadcasting and international broadcasting should be considered, as has been considered by G20 governments around the world.

Senator LUDLAM-Is the $35-million figure for radio and television currently?

Mr Scott-That is right.

Senator LUDLAM-So you are proposing a doubling as a round number for?

Mr Scott-I just gave that as an example. The BBC is spending $900 million. We are not proposing that. We have never suggested that. The Japanese public broadcaster is spending $200 million. What we just put on the table is an example of how we could significantly expand the reach of, say, Australia Network by having increasing funding available. Let me give you an example. Australia Network currently has something like 600 different contractual relationships with distributors. If, for example, we are going to significantly expand our coverage to India, we will have to purchase that distribution by contractual deals with direct-to-home satellite providers. That is where additional money will go: to purchase the distribution you need to get into the homes you want, to be able to upgrade your content and then to be able to market it properly. One of the things we have said is that globally the strongest brands in international broadcasting are integrated brands like the BBC and CNN and that we need to consider whether we need to bring the Radio Australia brand and the Australia Network brand closer together and be able to deliver content, just as the ABC does domestically on radio, on television, online and on mobile as part of a seamless brand.

Senator LUDLAM-My final question on ABC International is around the broadcasting agreement, which I understand is negotiated via DFAT?

Mr Scott-Yes, we deliver it for DFAT on a five-year contractual basis.

Senator LUDLAM-My understanding is that that contract lapses mid-2011 and there is an option to roll it over for a further five years?

Mr Scott-Yes.

Senator LUDLAM-Are you able to give us any update? I will ask the officers from DFAT later this week.

Mr Scott-I think it is really a question for DFAT. We are still waiting for some of those processes to formally commence. The first process is a review of how the ABC has performed under its existing contract. I have said publicly a couple of things. Being an international broadcaster reflecting Australia to the world is part of the ABC charter. We have been in this business for 70 years with Radio Australia, and we have delivered television services in recent years, including taking up the television service when a commercial network could not viably deliver it. So it is absolutely part of what we do. There are good ways of being accountable to the taxpayers and to the parliament that do not necessarily include going out to tender. The BBC does not go out to tender to deliver its international service or its domestic service. There are some disadvantages in arguing long-term sporting rights, satellite rights and the 600 contracts where we have to deal with distributors when instability can come up around a tender basis. But, of course, if we are asked to go to tender we will put in a robust bid based on the success of our network and the capacity to be underpinned by the infrastructure of the ABC here in Australia.

Senator LUDLAM-Thanks for that. I just have a couple more questions. Did the ABC hold an event in China last year in relation to its involvement in Australia Network?

Mr Scott-Yes, we did. We celebrated the fact that the ABC had run a continuous bureau in China for 35 years. We believe that it is the longest serving bureau of any Western country. The ABC was in China early. We have had continuous coverage. Some of our most distinguished foreign correspondents have reported there. I went up to China with the chairman, and we commemorated those years of continuous service.

Senator LUDLAM-When was that meeting held?

Mr Scott-I would have to check the precise date of it, Senator.

Senator LUDLAM-Roughly, just the time of year.

Mr Scott-September, I am told.

Senator LUDLAM-Did any senior Chinese government officials or representatives attend that?

Mr Scott-They did, but really our main reason for the visit was for us to continue our meetings with senior officials of the Chinese government. I have now made a number of visits to China, and senior Chinese officials have visited Australia. We are attempting to negotiate landing rights for Australia Network into China, which would give us far greater access into that country. The Chinese government restricts landing rights for Western broadcasters. Last time there was a request for interest for the opportunity to be a broadcaster more than 30 Western broadcasters provided. The advice that I have received from my counterpart who is head of the Korean Broadcasting Service, who gained access, was the need continually to hold meetings and to discuss the nature of our service with Chinese officials, and we have taken advantage of every opportunity we could to do so. That was a significant reason for the chairman's and my visit to China last September, and I expect that some time this year we will visit China again to further our case.

Senator LUDLAM-Were there any issues raised in those discussions relating to the kind of content that the Chinese would like to see broadcast on Australia Network or on the ABC?

Mr Scott-Let me talk generally. A lot of those discussions were about whether there are joint venture company productions that we can do. I think there were some discussions around some children's animation programming, travel programming and maybe some food programming as well, so we are looking at that. I must say in my meetings with Chinese officials that they are not reluctant to provide a critique, I suppose, of programming that they are aware of. Often, can I say, it is cast more generally, not specifically about ABC programming but concerns they have about coverage in the West. I always reinforce to them the independence and integrity of the ABC as a public
broadcaster, that we operate under our charter, that at times we may be criticised for our coverage, but our policy states that all principal relevant viewpoints need to be heard. I imagine those senators present who have been involved in diplomatic discussions are well aware of this kind of process-a frank and cordial exchange of views-and that is what has happened.

Senator LUDLAM-So they keep it general? But occasionally there must be specific examples of kinds of content that they do not want to see broadcast on Australia Network?

Mr Scott-No.

Senator LUDLAM-Can you recall any-

Mr Scott-No, that is not correct, Senator. What they express is their concern that all the viewpoints are put to air, and that is not that dissimilar to conversations we have had here. The principal relevant viewpoints around contentious issues are aired. But they certainly do not go through critiquing Australia Network programming. They are speaking more generally about Western coverage of issues like Tibet rather than a specific critique of the ABC.

Senator LUDLAM-Last week the Australian's Rowan Callick ran a story about China's foreign relations in which he asserted that the ABC was running essentially pro-Chinese military propaganda in the form of historical documentaries that were produced by a company founded by a senior Chinese official. I am just wondering how the ABC came to purchase those documentaries.

Mr Scott-I would have to take that on notice, Senator. I am not aware of that.

Senator LUDLAM-Are you aware of the article that ran?

Mr Scott-Now you mention it, I am, but I will have to read that article and come back to you on notice.

Senator LUDLAM-I would greatly appreciate that. Has the ABC run anything by way of drama or documentaries that have been critical of China since that Australia Network event in China?

Mr Scott-Senator, the main focus of our discussion has been around news coverage, and I imagine we have continued to run news coverage, all of which would not have been to the favour of the Chinese government. That is not our criterion in exercising news value, Senator.

Senator LUDLAM-What about documentary or current affairs type programming?

Mr Scott-I would have to take that on notice, Senator.

Senator LUDLAM-So there are two there on notice.

Mr Scott-Yes.

Senator LUDLAM-I might just throw to Senator Brown because I know time is reasonably short.