Budget 2018: Turnbull government hits ABC with $84m funding freeze

More than $80 million will be cut from the ABC in coming years in the biggest hit to the national broadcaster since Tony Abbott swung the axe in 2014.

The Turnbull government has booked $83.7 million in savings by freezing the ABC's funding until 2022, a move that will upset the broadcaster but please its critics inside and outside Parliament.

A "very disappointed" ABC managing director Michelle Guthrie immediately told staff the decision undermined the ABC at a "watershed moment" and raised the spectre of cuts to content and jobs.

Despite the budget forecast to return to balance next year, the budget papers say it is necessary to pause indexation of the ABC budget "to ensure the ABC continues to find back-office efficiencies".

ABC managing director Michelle Guthrie has attacked the indexation freeze.Credit: Alex Ellinghausen

Treasurer Scott Morrison told reporters inside the budget lock-up: "We've all got to live within our means, including the ABC."

Taxpayers will still contribute just more than $1 billion a year for the ABC, which will maintain its exemption from the efficiency dividend applied to other government agencies.

The funding freeze will not apply to SBS, which will receive an extra $14.6 million to replace revenue it was expecting to generate from increased advertising flexibility.

But both broadcasters will undergo another efficiency review, announced by Communications Minister Mitch Fifield on Tuesday night.

The ABC cuts amount to $15 million in 2019-20, $28 million in 2020-21 and more than $41 million by 2021-22. It follows the $254 million cut in 2014 by then communications minister Malcolm Turnbull, and the expiration of a further $43 million in "quality news" funding.

In a frank email to staff on Tuesday night - seen by Fairfax Media - Ms Guthrie said she was "very disappointed and concerned" at "what amounts to a further substantial budget cut".

She also raised the prospect of job losses and content reductions, arguing the budget cuts could not be met with efficiencies alone.

"This decision will make it very difficult for the ABC to meet its charter requirements and audience expectations," Ms Guthrie said. She told staff the decision "comes at a critical time for us" and "will have an impact on our audiences".

The ABC recently revealed it would shed about 20 newsroom jobs and has endured a number of controversies this year, including high-profile errors in its 'Cabinet Files' scoop and chief economics correspondent Emma Alberici's articles on corporate tax avoidance.

Despite budget cuts – and to the chagrin of commercial news outlets, including News Corp and Fairfax Media – the ABC has aggressively expanded into the online news space, including the recent announcement of a forthcoming youth-oriented section.

The government's $83.7 million in savings will be redirected to budget repair and other priorities within the communications and arts portfolio, such as $50 million over the next four years to commemorate the 250th anniversary of Captain Cook's landing.

Other expenditure in the arts portfolio announced on Tuesday night included $140 million to "attract international investment" in the film industry, which adds to existing tax incentives for foreign producers to film in Australia.

Pauline Hanson's One Nation previously called for cuts to the ABC of up to $600 million, threatening to block government bills in the Senate if the broadcaster's budget was not slashed.

Last year the government agreed to review the ABC's competitive position against its commercial rivals, as well as force the network to reveal its highest-paid stars, in exchange for One Nation's support for media ownership reforms.