I thank the committee for inviting us here today. While we routinely attend meetings of the joint Oireachtas committee on communications, this is the first time RTÉ has been before the Committee of Public Accounts. As the Chairman mentioned, I am joined by my colleagues Mr. Jim Jennings, director of content, Ms Breda O'Keeffe, chief financial officer and Ms Eimear Cusack, director of human resources.
I hope that, between us, we will be able to answer any questions members may have. I also hope they have had the opportunity to read the briefing material we prepared and submitted earlier this week. As per the letter of invitation, the material covers in some detail how public funding in RTÉ is used and accounted for, and the extensive regulatory and oversight mechanisms that pertain to RTÉ and RTÉ's reporting. As clarified last week, it also specifically covers how RTÉ operates as an employer and sets out the context and issues in the recently published report on the future of RTÉ orchestras. I do not intend to go over the briefing material in my opening remarks, but we are happy to elaborate on any questions members may have.
I would like to outline the broader issues that are relevant to today’s discussion. I welcomed in the Chairman's letter of invitation the fact that the committee is supportive of the independence of RTÉ and that matters of programming are not intended for discussion. Editorial independence and impartiality is the bedrock of public service media in Ireland. It is central to understanding why RTÉ's journalism and programming remains highly trusted by the public, and still retains such large audiences on television, radio, online and on mobile devices, despite the growth of many alternatives. However, as the committee will surely acknowledge, what we can produce and commission, and the quality of all we do is inextricably linked to the resources we have. It may appear to some that the organisation has plenty of money but given the scope and breadth of our statutory obligations, the range of services we must provide and the nature and scale of the competition we face, RTÉ has inadequate resources. Over the past number of years that has been confirmed by numerous independent reports and reviews that have examined in detail everything RTÉ does, and is obliged to do. As the Department of Communications, Climate Action and Environment conveyed in its briefing material to the committee, the cost of RTÉ's public service activities is substantially in excess of the public funding it receives in the form of licence fee revenue. The balance comprises commercial revenue which, as members will note from the briefing material, has fallen by 36% or close to €90 million over the past ten years.
The greatest risk to public service broadcasting in Ireland and many other countries is restricted funding at a time of unprecedented competitive threats and fast-changing media consumption habits. It would be remiss of me as director general at a time of such turbulence in media, when so much of what we have relied upon for our news, information and culture is under such threat, not to impress on members the urgent and substantial financial challenges facing RTÉ and, by extension, the broader sector that relies on a healthy RTÉ. Since 2008, RTÉ's overall annual funding has fallen by in excess of €100 million or 23%, while, in parallel, our obligations to develop online and mobile services and to fund and deliver digital television have increased substantially. This is why we are not investing enough in television drama, children’s programming, arts and culture output, and Irish language television programming – programming that is essential if RTÉ is to support and sustain Irish culture and Ireland's most talented writers, animators, directors and actors. This is why RTÉ's investment in the independent production sector has halved from €79.5 million in 2007 to just under €40 million in 2016. This is why we are finding it harder to sustain audience share and compete for commercial revenue against highly resourced competitors such as Virgin Media, SKY, BBC, ITV, Netflix, Amazon and a host of opt-out channels that take advertising from Ireland but invest little or nothing in Irish programming or the Irish creative sector. This is why we do not have enough international-foreign correspondents at a time global and international affairs are affecting the lives of Irish people more than ever. This is why we are struggling to maintain, let alone grow, our investment in investigative reporting and programming, which is essential to our public purpose but which is high risk, difficult to produce and expensive. This is the context for the review we have just published on RTÉ's orchestras. This is why we have had to restrict capital investment to 50% of depreciation for almost ten years now, which is unsustainable for any industry but particularly for one that is changing so quickly.
There is much RTÉ can do and is doing to change the organisation to meet the challenges of the digital era. We are completely restructuring how we operate, moving away from traditional media-based structures and reorganising around key areas of output across our services such as drama and comedy, arts and culture, news and current affairs, factual, sport, Irish language, and young people's. We have sold a significant portion of land in Donnybrook, freeing up finance to invest in critical digital infrastructure and building fabric that has been in existence since the 1960s. Anyone who visits RTÉ today will see this change very much in evidence. We reduced our costs substantially - by €96 million or 22% - between 2008 and 2016 through a series of measures, including pay cuts and a large reduction in our workforce. We have much to do but we are well under way. This is a difficult process, particularly for staff, of whom much is being asked, but we are determined to ensure RTÉ continues to remain at the centre of Irish public and cultural life as so much changes around us.
Just as there is, rightly, a responsibility on me, and on us, to modernise and change RTÉ, surely there is also an obligation on policymakers and Government to modernise the television licence system, which is fundamentally unfit for purpose and unreflective of how people consume and interact with public service media and content today. As we have detailed in our briefing note, television licence evasion currently stands at 15%, which results in a gross loss of approximately €37 million annually; "No television homes", due to outdated television licence exemptions result in a gross loss of €24 million annually; as a percentage of revenue received, An Post collection costs are at 5.5%; and evasion levels in Ireland are more than twice that of the UK while collection costs are more than double those of other European counterparts. This is not something for which RTÉ is responsible but it has a massive bearing on our capacity to plan for the future and invest in the type of programming that we know audiences want and have a right to expect from us. Why is it acceptable that the television licence fee collection system is so inefficient that more than €60 million goes uncollected every year? The State is failing to collect what it believes is an appropriate fee for having a television licence and for the service that funding underpins. That is not acceptable in any other area of the public finances and it should not be acceptable when it comes to public service broadcasting. RTÉ is not asking for additional money from households; we are simply asking that the fee the State believes is appropriate for television licensing be collected. Aside from the lost revenue to a sector that badly needs increased investment, more than anything, the current system is fundamentally unfair on those who pay.
An all-party committee similar to this has made a series of clear recommendations, including the need for responsibility for collection of the fee to be ascribed to the Revenue Commissioners. The Joint Committee on Communications, Climate Action and Environment published a comprehensive report following months of consultations and hearings that resulted in sensible and achievable recommendations. All RTÉ is asking for is that the recommendations in the report be implemented. The broader sector, including the Independent Broadcasters of Ireland, which represents commercial radio, Screen Producers Ireland, which represents the independent production sector, and the Screen Directors Guild of Ireland, which represent directors involved in the Irish and international audiovisual industry, shares this view.
If members believe the future of public media and quality Irish programming is important, we ask them to do what they can to support the implementation of the recommendations advanced by their colleagues.
Much is now at risk. If one talks to anybody in our sector, he or she will tell you the Irish media sector is in real trouble. All of us who invest in quality Irish journalism and original reporting, all of us who invest in quality home produced programming – newspapers, commercial broadcasters and public service broadcasters – are struggling to sustain what we do.
The only organisations that benefit from a severely diminished Irish media are international media groups, tech companies and international content providers, none of which invest in Irish journalism, culture or programming or in the Irish creative economy. In television in particular, without reforms, Ireland will quickly become just an extension of the UK and the US markets. Is that really the future we all want? If not, there are options and there are solutions if there is political will to act. I understand, for example, that the newspaper industry in Ireland is requesting that the VAT rate on newspapers, currently at 9%, be reduced to zero as it is elsewhere in Europe. As for RTÉ, one such solution is to ensure there is strong indigenous public media service at the heart of Irish life that has the resources, authority and trust to ask the tough questions and address as its priority the issues, challenges and questions facing this society. It should be one that is strong enough to help sustain a vibrant indigenous culture, to support local programme makers and local creative talent and to ensure distinctive Irish voices on our airwaves, as well as ensuring we continue to have moments of shared national experience, available to all free-to-air, where all the expressions and iterations of ourselves have a home.
For more than 90 years, although at times imperfectly, RTÉ has uniquely and consistently connected journalism, politics, culture and communities in Ireland while retaining the trust of the public. This role is as relevant and important today as it was when RTÉ was established. RTÉ has reported net operating deficits for 2015 and 2016 and will do so for 2017. If this continues it will have a devastating impact on both RTÉ’s dual funding model and on its schedules, its capacity to deliver on its remit and its relevance to Irish audiences. Notwithstanding all we are doing, will continue to do and have done over the past decade, we are now at a point of decision. It is simply not possible for RTÉ to stabilise its financial position, continue to fulfil its role or act as an engine for the broader creative sector without addressing the issue of its resources and the TV licence system.
This meeting will no doubt touch on many issues and we will do our best to answer members’ questions but I ask them to also bear in mind the broader challenges facing much of our national media today and the implications they have for much of what we in this country hold dear, including our culture and identity; our obsessive interest in news and current affairs; our creativity, our music and our stories. It is surely in the national interest that this issue is urgently addressed.