CHAIR—Welcome. Please keep your opening statement brief because we are running within tight time constraints. Please proceed.

Mr Harvie—Austereo endorses the government’s policies, and the policies address the reality that the media landscape has changed. It is an increasingly multimedia world. The current regulations impose artificial and unrealistic constraints, to the detriment of the development of one of the most important industries in Australia. It is in everyone’s interests for the media industry in Australia to operate as efficiently as possible, and I believe the government proposals will achieve that objective. As for some reported concerns that the proposed legislation could impact upon advertising rights, it is my belief that the media does not set the rates; the rates are set by the market. In conclusion, Austereo believes that reforms should come into place as soon as possible. They will introduce some new positive dynamics, to the benefit of the consumers and advertisers alike. It is time for a positive change and it would be a sad day if, for any reason, we missed the opportunity for that change.

CHAIR—Thank you very much, Mr Harvie. That was suitably concise.

Senator JOYCE—You are talking about radio licences. Can you, from previous experience of committees regarding the advent of media groups—I suppose I have one in mind, one from England—talk about how that has affected regional radio markets?

Mr Harvie—I appeared at a hearing in Melbourne in 2001 and at the time it was my opinion that it could create some difficulties in the reduction of live and local. Whether or not that has come to pass, you would be a better judge than I. I operate in capital cities only—in Canberra and Newcastle—so my knowledge does not go beyond that.

Senator JOYCE—I think you would be right. Regarding live and local, did you see Media Watch the other night?

Mr Harvie—I did.

Senator JOYCE—I think everybody else saw it because it was very topical. Do you think the views that were expressed in that program about the syndication and hubbing of regional media and how it works, possibly to the detriment of live and local, were a fair or an unfair analogy?

Mr Harvie—I would like to have seen some more substantial counterviews put. I think it is an issue of balance. We are primarily live and local around Australia, but from time to time and where there is merit we will network some programs. They are in the minority, I might add, but there can be benefit to audiences in doing that.

Senator JOYCE—Do you think the requirements set down in this legislation go far enough in securing regional live and local content?

Mr Harvie—Again, I do not have interests in the non-metropolitan markets; therefore, I do not think that really I am qualified to answer that question. I would say, however, that once systems have been put in place—and they have been put in place, as I understand it—it is very difficult and expensive to remake those systems.

Senator JOYCE—It is the unscrambling of the egg, which we have been talking about all the way through. Once it is scrambled it is very hard to unscramble.

Mr Harvie—Yes, I noted that.

Senator JOYCE—With regard to metropolitan markets, do you think the definition of metropolitan markets in this legislation—for instance, the number of so-called metropolitan markets in Queensland—is enough? Should it be determined that the Gold Coast is its own metropolitan market?

Mr Harvie—I think that for simplicity of approach it would be better to leave the markets as they stand at the present time.

Senator JOYCE—So you would prefer that the provisions as set out in this legislation was not enacted?
Mr Harvie—I am sorry, yes, that is correct.

Senator JOYCE—You want it enacted?

Mr Harvie—Yes.

Senator JOYCE—I was concerned there for a moment. I thought we had a major change. I know you are in radio, but do you have any views with regard to advertising revenue that could become, in metropolitan markets, centralised, especially if you have a major TV network which then becomes the owner of newspapers, as well as the owner of radio, as well as getting itself into the mobile TV market? Do you think that could impinge on the capacity of people in your industry to have effective access to that advertising market?

Mr Harvie—Advertising is a series of discrete markets. It constantly evolves, but a press advertiser is not necessarily a radio advertiser. A television advertiser is not necessarily a press advertiser or not in great volume. In the past—when I first commenced my advertising career before moving into the media—we saw issues where in certain cities the press, radio and television were owned by common owners. I experienced buying with those particular groups, and effectively they really did not cooperate because advertisers do not see them as a common object. I think a number of major media companies from time to time have attempted to put together programs that address, if you like, across-the-board selling. A magazine and television group tried it for a while. But it has not really been that effective.

Senator JOYCE—In other presentations today we have had people talking about their wish to provide local content because they have a belief in it and how that is greater than the desire of return to shareholder equity, which I am sceptical about. In the organisations that you are involved with, the predominant view would be to reduce your overheads to try to make sure that you can get as much output and as little overheads as you can, would it not? One of the biggest overheads, of course, is labour.

Mr Harvie—We are in business to make money, but, on the other hand, we have been in a massive battle, as you probably would know. Since 2001, there has been a 23 per cent increase in radio stations in our markets, and some of those stations have literally cloned ours. So we have had a very hard, tough and defensive battle since 2001.What that has meant is that we have had to invest in marketing to a degree that has probably quadrupled that of 2001. Equally, we have continued to invest heavily in major talent. I think it is fair to say that Austereo has probably got the best talent line-up of any radio group and most of them, as you would probably know, are being cherry picked by the television networks now as well. So we have not been noble in investing like this. We have been realistic. We have had to accept profits being driven down because we have had to fight our way out, and we have had to invest to fight our way out. In the ’06 year we started to see for the first time the beginning of the turnaround in the battle.

Senator JOYCE—How did that so-called turnaround become evident?

Mr Harvie—It also came about by cutting costs. Essentially the bulk of our cost savings were related to promotional activity on air.

Senator JOYCE—Thank you for that.

Senator RONALDSON—Mr Harvie, I take it from your submission that you think industry needs some time to adjust to the