Call to monitor how ABC uses network funds

THE ABC faces a campaign within cabinet to ensure the broadcaster doesn't just absorb the $223m earmarked for the Australia Network.

111207 Australia Network

THE ABC is facing a campaign within cabinet to ensure the national broadcaster doesn't just absorb the $223 million earmarked for the Australia Network into other programs and services.

After the Gillard government dumped the tender process to run the international television network and handed the job permanently to the ABC on Monday, ministers are trying to ensure the quality and funding of the global network.

Julia Gillard strongly defended the decision to dump the commercial tender because media leaks had "profoundly compromised" the 14-month process, which twice recommended the 10-year contract go to Sky News.

"There were several leaks that compromised the process, and having seen that happen it was appropriate to bring the process to an end," the Prime Minister said.

"The government determined that in order to give certainty and to deal with this matter, having seen that problem with the tender round, that the appropriate thing to do was to have these services provided by the ABC.

"This is an important arm of soft diplomacy for Australia."

Asked why the ABC was chosen after twice being considered the "second-best option", Ms Gillard said: "We've made that decision and we've taken public policy choice that this function should be with the ABC."

Her cabinet colleague Resources Minister Martin Ferguson said: "This is not about an independent ABC running its own race, this is about an ABC carrying out on a contractual basis a service as a service provider for the Australian government."

The Australian Federal Police and the Commonwealth Auditor-General's office are investigating the tender process that was begun a year ago by Foreign Minister Kevin Rudd.

After the first public service panel selected Sky over the ABC, cabinet in June stripped the Foreign Minister of responsibility and handed it to Communications Minister Stephen Conroy, as well as changing the terms of the tender on the grounds of the Arab Spring.

The details of this were revealed by The Australian. When The Australian reported that the second tender recommendation was also in favour of Sky the government terminated the second process last month and extended a short-term contract to the ABC to allow the service to continue into the next year.

ABC managing director Mark Scott told ABC staff yesterday Monday's cabinet decision would allow parts of Radio Australia to be merged with the overseas television service.

But senior ministers discussed in cabinet on Monday night the need to ensure the funding was kept separate from general ABC funds, with Senator Conroy arguing the case for separation.

Yesterday Mr Ferguson, who complained to cabinet during the tender of an "inappropriate" approach from Mr Scott, said the process had "gone astray".

"In the end it had to be resolved and (the government) has decided to make an offer to the ABC to carry out, on a contractual basis in accordance with the objectives intent of government policy, how we are best represented through the Australia Network," he said in Sydney.

"This is not about the ABC exercising its ABC charter in terms of what is going to be delivered through the Australia Network.

"This is a government contract that the ABC will have to enter into on the basis of objectives and expectations, established by government, not the ABC.

"The Australian government would expect that our commitment to the Australia Network is fully accountable . . . (and) very important to the Department of Foreign Affairs and Trade and our economic interests in the areas covered by the Australia Network."

Sky News Australia -- part-owned by BSkyB, which is 39 per cent owned by News Corporation, owner of The Australian -- is seeking compensation for the bungled tender process.

Ms Gillard said yesterday any compensation claim would be "properly considered".