20 April 2020

Doorstop interview, Parliament House, Canberra

Note

Subjects: Digital Platforms; ACCC Mandatory Code of Conduct; RBA; labour force figures; Economic response to coronavirus;

JOSH FRYDENBERG:

Well, good morning. It’s a real pleasure to be here with my friend and colleague, the Minister for Communications, Paul Fletcher. It’s time the tech titans were held to account and we had genuine competition, we have a level playing field, we have more transparency and we get payment for original journalistic content. The rise of the digital platforms, and in particular Google and Facebook have delivered real and significant benefits to consumers. But it’s has also been a period of great disruption. And it’s called into question the adequacy of our existing regulatory frameworks and the viability of traditional media outlets. This is why Scott Morrison, when he was Treasurer,= tasked the ACCC to undertake a ground-breaking report, a report that took them 18 months to put together, into the digital platforms. The ACCC led by Rod Sims, produced an outstanding report which made a number of recommendations. Recommendations that the Government has accepted. One of those key areas of focus for the ACCC was to develop a voluntary code between the traditional media businesses and the digital platforms to govern their relationships. Last year, the Government announced that it hoped a voluntary code would be reached by November of this year. Well those negotiations were held and no meaningful progress was made on the most significant component of which the code was to deal with, namely payment for content. And in the words of the ACCC, they did not believe that progress would be made and a deal would be done with a voluntary code. So the Government's taken a decision to move to a mandatory code, with a draft mandatory code to be released by the end of July and to be put together by the ACCC. We hope it will be legislated soon thereafter. We’re very conscious of the challenges we face and that we are dealing with some of the most valuable and powerful companies in the world. In France and in Spain and in other countries where they have tried to bring these tech titans to the table to pay for content they haven't been successful. But we believe this is a battle worth fighting. We believe this is critical for the future viability of our media sector and it's all about competition and creating a level playing field. So together with Minister Fletcher and our colleagues led by the Prime Minister, we will move with the ACCC to put together this mandatory code in the weeks ahead and hopefully it will deliver lasting reform for the sector and importantly, ensure that we have a level playing field into the future. Paul.

PAUL FLETCHER:

Well thank you, Treasurer. Journalism matters. Journalism is vital in a democracy, but journalism costs money to produce, and it's our Australian media companies, which employ journalists and produce the stories, produce the analysis, produce the content that Australians want to see, and the value of that journalism is critical. Listing content is one thing, and the platforms do that very effectively. But you've got to produce the content first. And so, a key underpinning of what we're doing here is about the value of journalism, the value of media in a liberal democracy, and around the world it's acknowledged that the digital platforms are a challenge to the media and we need to do something about it. Now this is a competition issue. We've taken our advice here from our competition regulator the ACCC, and they pointed out that we have a market in which Australian businesses like News Corp, Seven West, Nine Entertainment Limited and others are competing with Google and with Facebook and other digital platforms for eyeballs and for advertising revenue. Competition’s fine, we welcome competition. Competition delivers the best outcomes for consumers. But when you have one set of businesses acquiring content from another without the opportunity for a fair discussion about what they pay for it, then that's why we believe the ACCC needs to get involved. A regulator with long experience of these kinds of issues across a range of sectors, long experience of developing codes. We have made this announcement at the same time or just a few days after we've announced a $41 million in spectrum tax relief for our broadcasters, $50 million in the Public Interest News Gathering program, giving a- for regional newspapers and broadcasters, giving effect to another recommendation from the ACCC's Digital Platforms Inquiry. This is about supporting the, this is about ensuring that we have a competitive media sector where all of the players broadcast, print media, internet based media and internet based content delivery businesses are competing on a fair and level playing field. This is about fair competition. That's what the ACCC is about, that's its mandate. And that's why they've been given the task of coming up with this mandatory code.

QUESTION:

So how much will they be paying for this content and how do you make them pay?

JOSH FRYDENBERG:

Well Mark the ACCC is going to be looking at the method by which the payment for content would occur. There are a number of different options. You can do it on a value option or you can do it on a cost option, meaning that the tech titans would end up paying a fraction of what the cost was for producing that original content every time that they use it. The other alternative is in terms of the value to that particular digital platform that they get from getting eyeballs onto their sites by using that content. So this is to be worked out by the ACCC over the next three months. This is a very significant reform. It’s about holding these tech titans to account. It’s about ensuring genuine competition. It’s about delivering a level playing field. It’s about keeping jobs in journalism, and it’s about ensuring a fair outcome for all.

QUESTION:

Can you give us an idea though about what sort of quantum of money you’re talking about here?

JOSH FRYDENBERG:

Again, hard to specific about it because right now we know that this is very lucrative for the tech titans to use the original content on their website. But in terms of the actual numbers, it’s going to be in the millions but it’s hard to be explicit about the exact number.

QUESTION:

With a platform like Facebook, one of the issues and challenges I imagine will be the fact that certain journalism is often just cut and pasted, lifted and posted. How would this mandatory code effect the activities of the users of that platform?

JOSH FRYDENBERG:

Well again, these are very profitable platforms so this may eat into their profitability, to the Facebook’s and to the Google’s. But it’s only understandable that they would be paying for that content that they use to get traffic through their websites. You see the way Google and Facebook operate is that they don’t necessarily charge a fee for their service but they attract eyeballs onto their sites and then sell the advertising that goes with it. So this is about ensuring that they are genuinely rewarding and compensating the content that they use.

QUESTION:

What was the level of intransigence from the big tech companies? Were they not turning up to meetings? Were they just outright saying they were not going to participate in giving publishers money?

JOSH FRYDENBERG:

I’ll let Paul add to this but what was clear from the ACCC is that on the key issue of payment for content, there wasn’t a hope that there would be a deal reached between the parties. And the fact that we could not see a light at the end of that tunnel meant that we would move from a voluntary code which was the original intention, to a mandatory code which would be legislated through the Parliament.

PAUL FLETCHER:

And just to add to that, we were very clear in the Government's response to the Digital Platforms Inquiry in December last year, that if progress on the code was not satisfactory, we absolutely reserve the right to proceed to a mandatory code. We checked in with the ACCC, we asked him to give us a progress report, and we brought that forward by just a couple of weeks from what it originally been proposed because of the importance of this issue. And yes meetings have been held, discussions have occurred, but the ACCC gave us clear advice, they did not consider it was likely that a voluntary code was going to deal with this central issue of the value that would be exchanged for the content that is used by the digital platforms from the Australian media businesses, and that's why we've taken the decision that we have.

QUESTION:

You’ve mentioned France and Spain, why weren't they successful at getting money out of the tech giants and how are we going to be any better at achieving this?

PAUL FLETCHER: 

Well, I might just make one comment. One of the key aspects of the approach that was used in Europe has tended to be reliance on copyright law. We’re instead using looking to competition law and the powers of our competition regulator here. But the other thing I'd say is the ACCC itself has highlighted the way these issues have played out in other countries. Indeed they explained it at some length in their in the final report of their inquiry last year. So they're very alive to the issue. This is the backdrop against which they will develop a mandatory code. And those are the issues that they'll be working through they've got a very clear mandate from us to do that.

JOSH FRYDENBERG:

The other thing is as I say, is that we won’t bow to their threats. You see in France, the digital platforms said they wouldn’t show domestic media unless it was for free. And the domestic media companies all said that this was a misuse of market power for which now the French regulator is investigating. But we understand the challenge that we face. This is a big mountain to climb. These are big companies that we are dealing with but there’s also so much at stake so we’re prepared for this fight.

QUESTION:

If the big giants say, well we’re not going to show News Corp or Nine Entertainment sites, we just won’t promote them, can the government really force them to do that?

JOSH FRYDENBERG:

Well again this is going to be legislated, the mandatory code. To Paul’s earlier points, the ACCC has been world leading in the preparation of this report. Many other countries and indeed the European Union and others have looked closely at the work that has been undertaken by the ACCC and I’m confident that given our world leading role to date in this debate, that we can prepare a code that is effective.

OUESTION:

On your Budget repair strategy, the Prime Minister last week outlined a business investment plan, you’ve already jumped on any increase of the GST to fund any reform option. Can you be as emphatic about other measures, like franking credits, negative gearing? Do you have to have a look at all those again, given the Prime Minister said you have to look at the pre-election policy framework and superannuation taxes as well?

JOSH FRYDENBERG:

Well, we’ve always been the Party of lower taxes and nowhere was that clearer Phil than at the time of the last election, when the Australian people made it clear through the ballot box as to what they wanted for their future. The Australian people also trust us to keep the economy strong and to meet the challenges that we face. We’re very conscious there’s going to be a debt burden that’s required to be paid back in the years to come, but the way to do that is to grow the Australian economy. The Australian economy today is 16 per cent greater than it was when we came to Government. And as you know, we went into this crisis from a position of economic strength. We delivered the first balanced budget in 11 years, welfare dependency was down to its lowest level in 30 years and we created more than 1.5 million new jobs. So we’re going to have to climb that mountain again on the other side of the coronavirus but we're prepared to do it.

OUESTION:

Treasurer on JobKeeper, which businesses could finally register today. What do you say to the mums and dads who are partners and who are running a graphic design business or who are running a photographic business, or are running a cafe, where they have to make a decision between someone going onto JobKeeper and someone going onto JobSeeker, why didn't the Government consider that in many cases partnerships are going to face some Solomon-like decisions on their futures?
 
JOSH FRYDENBERG:

Again, there are complexities in trusts and partnerships and all of these types of arrangements. So we will took the advice and that is what we decided to do.

QUESTION:

The RBA spent $50 billion in the last fortnight alone buying your governments bonds. What are you doing to make sure that the independence for central banks is maintained, instead of just using this as a situation where you can get the RBA to buy your debt?

JOSH FRYDENBERG:

The independence of the central bank has never been in question. They continue to do an outstanding job and are appreciated both here at home but also further afield for their work. The fact that they decided to come into the market in such a significant way at the height of this crisis indicated how seriously they took the economic impact of the coronavirus. Now as you know, their goal is to target a yield on bonds of a quarter of a percent and it is now at that point, that’s the three year bond. When you talk about ten year bonds, they’ve seen the yields come down by about seventy basis points. So, they’ve been successful in the market place. They’ve also brought more stability to the credit and to the debt markets with their interventions. So, their independence is guaranteed and their capacity and professionalism is there for all to see.

QUESTION:

Just on the Grattan Institute, they’ve said the number of unemployed in Australia could be actually much higher than 10 per cent. What do you make of those figures and do you feel the pressure to relax some of those social distancing measures in order to get the economy ticking over again?

JOSH FRYDENBERG:

When it comes to social distancing, quarantine, isolation measures, we’ll continue to take the medical advice and that has served Australia well. Just a few weeks ago, we were seeing an increase in the number of coronavirus cases here in Australia of more than 20 per cent per day and that has been brought down to well below 2 per cent. Again, that is a reflection of the seriousness by which Australians have taken these requirements around social distancing and the like. When it comes to unemployment, there is no doubt we’re going to see higher unemployment here as a result of the economic impact of the coronavirus. The ABS released its March numbers and they saw only a minor uptick from 5.1 to 5.2 per cent in unemployment. Again, that was a reflection of the timing of when the ABS took that data. We expect that number, according to Treasury, to reach up to 10 per cent at its peak. But it would have been 15 per cent but for the JobKeeper package. So we’re doing everything we can to keep that formal connection between employer and employee. The JobKeeper package does that but we’re also conscious that unemployment is on the rise and that’s a function of the economic climate we find ourselves in.