Broadcaster and SBS face 1% funding cuts which Malcolm Turnbull says can be achieved without dropping programs

This article is more than 6 years old

This article is more than 6 years old

The government is to pay $10.6m to the ABC for breaking its contract to produce the Australia Network.

The contract’s cancellation will save the government $196.8m. But the 10-year contract with the ABC was worth $223m, so the $10.6m to be paid to the ABC in 2014-15 is about half the full cost of running the network.

The Australia Network, which is funded by the Department of Foreign Affairs and Trade, is a television channel designed to promote a positive view of Australia in the Asia-Pacific. The closure of the network had all but been confirmed last week.

Whether another TV station or digital service will take over its functions is unclear, but legislation brought in by the previous Labor government means that no commercial broadcaster could run the network without a change in the law.

Before losing the last election, the Labor government tried to create the conditions under which it would be difficult for the Abbott government to hand the regional broadcasting service to the pay TV broadcaster Sky News.

Labor figures, including the then communications minister, Stephen Conroy, were opposed to giving the contract to a company connected to Rupert Murdoch’s News Corp.

Sky contested the Australian Network contract but lost out to the ABC in a botched process that became tangled in the leadership tensions between Kevin Rudd and Julia Gillard.

The main ABC and SBS face 1% budget cuts. The national broadcaster won’t like the cut in funding – but it will be far too modest for the ABC’s critics in the commercial media.

The government says $43.5m in savings over four years can be achieved without the public broadcasters cutting programs or compromising editorial independence.

The savings will be achieved through back-office cuts, improving work practices and operating more efficiently, according to a statement issued by minister for communications, Malcolm Turnbull.

He made clear that the $43.5m cuts are a one-off – “they do not constitute an on-going efficiency dividend” – and that the detail of the savings will be decided by the broadcasters’ senior management.

The cuts would be achieved “without cutting their diverse range of programs and services or affecting their editorial independence”, Turnbull said.

The ABC shares some resources with the Australia Network, such as correspondents in Asia, so the loss of the network will have an impact on the broadcaster. Last month the network agreed a groundbreaking deal to show Australian programs in China – making Australia only the third western country to achieve this.