ABC management say budget cuts have made the organisation ‘unsustainable’

ABC board members Justin Milne, Peter Lewis and Kirstin Ferguson with ousted MD Michelle Guthrie (second from left).

ABC board members Justin Milne, Peter Lewis and Kirstin Ferguson with ousted MD Michelle Guthrie (second from left). Photo: AAP

The ABC’s recent management implosion has sparked debate over the future of the embattled public broadcaster, and now existing staff are once again warning the corporation’s budget is “unsustainable” and needs “remedial action”.

The 86-year-old state-funded organisation has seen a steady decline in its financial support in the past five years, and comments from ABC management staff seen by The New Daily caution that changes need to be made to the corporation’s funding arrangements.

ABC management sources told The New Daily the broadcaster was at risk of not having sufficient resources to maintain their charter obligations and provide audiences with the services they expect in a hyper-competitive digital environment.

A brief history of cuts

The ABC has faced a steady stream of revenue reductions since the 2014 federal budget unveiled plans to reduce government funding by $254 million over three years.

This came despite a promise not to cut funding to the ABC or SBS made by then-opposition leader Tony Abbott in the days before the election that made him prime minister.

A graph highlighting the gap between ABC's actual funding and how CPI inflation would have driven it.

The reduction in ABC’s funding since 2014 widens when considering how much the broadcaster would receive if funding grew in line with inflation.

Since then, the government has cancelled the Department of Foreign Affairs and Trade’s $197 million Australia Network contract, and reduced the Enhanced News Gathering Program revenue from $60 million to $41.4 million, and some suspect this program could be axed entirely in the future.

The most recent budget brought yet more bad news for the broadcaster, announcing an indexation pause that will see funding reduced by a further $84 million over the next three years.

That’s a significant volume of cash, and equates to roughly one-10th of the national broadcaster’s annual operational revenue (which doesn’t include transmission costs) of $865 million, according to the ABC’s latest annual report.

When that first round of cuts was announced in 2014, the ABC was allocated $1113.2 million from the government, but that figure had shrunk to $1043.7 million by the 2017-18 financial year.

What those numbers don’t show, however, is the impact of inflation.

If the ABC’s funding in 2014 had grown in line with inflation, based off CPI figures, then it should have reached $1167.5 million by the 2017-18 financial year, but it instead fell against its previous levels.

What’s more is this funding also has to cover the ABC’s transmission costs, which former managing director Michelle Guthrie noted are both fixed and expensive during an impassioned defence of the organisation’s state ownership model.

During that same time, the amount of funding the ABC has secured from other revenue sources has also decreased steadily.

Revenue from these sources, including the broadcaster’s content marketing and distribution arm ABC Commercial, has fallen by more than half since 2014, dropping from $155.4 million to $65.1 million in the 2017-18 financial year.

These revenue sources have also decreased as a percentage of the broadcaster’s overall funding.

A visual representation of the split between government and 'other' funding supply.

The volume of the ABC’s other revenue sources has shrunk as a percentage of the broadcaster’s already decreasing funding.

Cuts taking their toll

Since then-treasurer Joe Hockey announced the decreases in his 2014 budget, the ABC has cut 939 jobs.

The ABC’s output has also suffered over that time, with programs like Lateline, state-based 7.30 Report editions and various radio shows all getting the axe.

Former ABC staff-elected director and public broadcasting advocate Quentin Dempster, who also contributes to The New Daily, said regional news programs could also be killed off, along with the retrenchment of 400 staff, if Liberal senator Mitch Fifield ends the $41.4 million Enhanced News Gathering Program.

“After all the downsizing and program cuts since the 2014 budget, if the Morrison government does not release its current stranglehold on the ABC’s throat, there will have to be yet another restructure,” Mr Dempster said.

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