Another minister's mining tax moment

Eric Lobbecke

ARROGANCE is the curse of those long on power and short on wisdom. Little wonder, then, that Stephen Conroy has announced his media reforms as a take-it-or-leave-it proposition, giving parliament no time to consider, much less amend, legislation it has not yet seen and will not see until the last moment.

Although the independents have so far been circumspect about Conroy's announcement, its coincidence with the government's gift to them over coal seam gas exploitation reeks of a backroom deal. As for the Greens, they are incapable of believing that what they would do to others could ever be done to them; little chance, then, of their opposing additional media regulation.

Conroy may therefore have the numbers he needs. Yet, from the few details he has disclosed, his proposals seem unfounded on evidence, poorly designed in practice and deeply at odds with democratic principles.

Obviously, the greatest concerns revolve around the Orwellian Public Interest Media Advocate, who will have a role in overseeing the Press Council's handling of complaints and will implement a "public interest" test for media acquisitions.

Not much is known about how the advocate's powers will work; but it is difficult to see how the sweeping powers Conroy outlined could be justified.

There is, to begin with, simply no evidence current press standards are unsatisfactory. The Finkelstein report was fertile in assertions but failed to substantiate its claims, much less make out their materiality; as for the Convergence Review, it scarcely touched on the issue.

Moreover, even were there issues, there is a striking lack of proportionality between those issues and what is proposed. Disingenuously, Conroy claims his approach would remain self-regulatory, as the advocate, though appointed by government, would not be paid by it. But the advocate's powers would be statutory and the financing would, in practice, amount to a compulsory levy. If there is a sliver of self-regulation left in the scheme, it is heavily disguised.

Nor has a convincing case been put for imposing a public interest test on media acquisitions. Here too, there is no evidence of a problem: indeed, both the Finkelstein report and the Convergence Review emphasised that competitive pressures are becoming ever more intense. As for protecting that competition from possible mergers and acquisitions, there is no reason to believe that is not adequately achieved by the merger provisions of the competition laws. And even were there gaps in those provisions, they would best be dealt with directly, as the Productivity Commission's broadcasting inquiry suggested in 2000, rather than by creating a completely new public interest regime.

As for that regime, it seems designed to be maximally offensive. The test the PC recommended applied only to mergers between competitors: it was a narrowly focused, media-specific supplement to the economy-wide mergers test. In contrast, the government's test would apparently apply to any media transaction, including ones that have no effect on competition or market structure.

Such a test would, for instance, apply to an acquisition of Fairfax by Gina Rinehart, even if she did not have a controlling stake in any other media company. Faced with such an acquisition, the advocate would consider whether it was generally in the public interest for Rinehart to own Fairfax (or, presumably, any substantial media assets).

That is even more dangerous than a "fit and proper person" test, as it would almost inevitably go not merely to Rinehart's character but to her actual or presumed ideas. And to aggravate matters, the proposal seems to lack any checks and balances on that assessment. It is impossible to see how that could be acceptable in a free society.

As well as being inherently objectionable, such a test would have perverse consequences. By creating added regulatory uncertainty about investors' ability to sell media assets, it would slash those assets' value, impairing the media's access to funding. Far from being promoted, media diversity would therefore decline.

Nor are the other elements in Conroy's package any better. For instance, while claiming that the prices previously charged to mobile operators for spectrum are much too low, Conroy proposes to hand free-to-air broadcasters a large, permanent reduction in spectrum fees, taking those fees to a fraction of that spectrum's market value. No relationship whatsoever has yet been shown between the extent of that largesse and the benefit Conroy claims consumers will obtain from requirements for increased local content.

Overall, in displaying almost complete contempt for the government's own guidelines for developing, evaluating and presenting regulations, Conroy's proposals seem set to reach a new low in terms of regulatory "reform". But it may be that he has hit his mining tax moment.

What is certain is that he has stirred a hornet's nest. And in a government that to date has shown an unerring instinct for its own jugular, not even wearing those red underpants on his head could assure him the protection he will need.