The ABC’s Tonightly with Tom Ballard did not breach ABC standards for harm and offence by broadcasting a segment which used the word “cunt” when highlighting the racist past of the grazier John Batman, the broadcasting watchdog has ruled.

In a skit aired in March, a candidate for Cory Bernardi’s Australian Conservatives party, Kevin Bailey, was lampooned about the name of the electorate of Batman.

The comedians mocked up an election poster for Bailey which said “Kevin Bailey is a cunt”.

The communications minister, Mitch Fifield, asked the ABC to investigate and lodged a complaint with the Australian Communications and Media Authority. Bernardi also wrote to the ABC’s managing director, Michelle Guthrie.

But an Acma investigation found that although the candidate was singled out and it was likely to have offended some viewers, most viewers would have understood the remarks to be “comedic” rather than a genuine attack. It was screened on a dedicated comedy channel after 9pm, Acma said.

The complaint alleged the language and segment was highly offensive, in particular by referring to Bailey as “a cunt”. A further complaint said Bailey was treated unfairly and the segment lacked impartiality.

But in an investigation published on Friday, Acma found that the skit did not breach standards because it was within the bounds of satire and the ABC has a mandate to present challenging content to an adult audience.

“The segment appeared in a comedy program, directed at a mature audience, which clearly signposted its irreverent style,” it said. “The program contained content which may have challenged some viewers, reflecting the particular comedic style of its host, and included material that was intended to be satirical.

“Satire is often used to critique the shortcomings of a society and, if framed appropriately, can be a legitimate part of a robust environment for political debate.

“Further, satire is a provocative and often sophisticated genre with a long history of presenting social taboos in exaggerated form, often as a central conceit, to make social or political points.

“Under the terms of the ABC code, the ABC has significant latitude to broadcast challenging material of this nature.

“The Acma considers the segment contained two separate forms of offensive content. The repeated use of the word ‘cunt’ and the singling out of Mr Bailey. The repeated use of the word ‘cunt’, and, in particular, its use to refer to a named individual, has the intrinsic capacity to cause offence.”

The ABC told the authority that the word was generally considered to be stronger coarse language, but the degree to which individuals were likely to find it offensive differed and had changed over time. Acma agreed.

After complaints from Fifield and Bernardi in March the ABC said the program complied with the ABC’s editorial standards.

“In addition to these responses, director of entertainment, David Anderson, has contacted Mr Kevin Bailey, explained the context and apologised for any personal offence caused by the sketch. Any formal complaints about breaches of editorial policy or classification standards will be investigated through the normal processes.”

Fifield had accused the ABC of crossing a line: “Vitriolic abuse of this kind has no place on the national broadcaster and I will be asking the ABC to investigate. The ABC should also immediately offer an unreserved apology to Mr Bailey.”

Bernardi said Bailey was an upstanding member of society and a former SAS soldier who should not be subjected to vitriol.

“This attack goes far beyond satire, is completely unacceptable and warrants not only an apology from Mr Ballard and [comedian Greg] Larsen but also from the ABC for allowing it to go to air,” he said.

Both Bernardi and the Coalition frontbencher Simon Birmingham called for someone at the ABC to lose their job over the skit.

