I welcome the Minister and his officials to the meeting, the purpose of which is to follow up on our meeting of yesterday with the chief executive of the Broadcasting Authority of Ireland. The Minister has kindly agreed to talk to us this morning about the problems which were identified by members during the course of yesterday's meeting. I ask the Minister to make an opening comment, after which we will debate the matters arising.
Broadcasting Levy: Discussion with Minister for Communications, Energy and Natural Resources.
When these matters were raised on the Order of Business yesterday I was happy to suggest to the Taoiseach that the first thing we should do was come before the committee to talk about them. There is a common understanding that we have to be sensitive and careful about the regulation of our broadcasting industry as the industry is in a very difficult period. It is experiencing a significant downturn in advertising and is feeling the pressure that comes from a large number of companies operating in a small market. I understand the committee's view that, given that we regulate public service broadcasters, we should be sensitive about adding further financial pressure in what is already a difficult situation. We need to be as flexible as we can to help our broadcasters while, at the same time, enacting the legislation in the way we have set out in the past six to eight months. Creation of a single broadcasting regulator across the public and private sectors has been seven or eight years in preparation.
I understand that, at yesterday's meeting, the chief executive gave a commitment to a significant review of the budget Estimate for this year, in line with a commitment I gave in an answer to oral questions on Tuesday. He said he would come back to the committee in a short period and it is absolutely right and proper that he should do so.
It is a matter for the broadcasting authority to deal with but, given that we are facing many financial difficulties, we need to tighten rather than expand budgets. One of the reasons the budgets are being expanded is that we have given a great deal of additional responsibilities to the new regulator and one of the issues it may look at is how it can time its various commitments. We have put in place fairly tight legislative time lines around a range of different work the regulator needs to take on and we will need to be flexible about some of them in the same way as the authority will have to be flexible with broadcasters in this difficult transitional phase.
The Broadcasting Authority of Ireland has embarked on a budget review and the chief executive, Mr. Michael O'Keeffe, has committed himself to coming back before the committee once the authority has completed it. We do not have a direct role but I am committed to working with the authority and this committee to see in what other ways we can help get through this difficult period in the market. There are legacy issues such as the cost of running the authority in the last quarter of last year and we must see if we can avoid hitting broadcasters twice in the first quarter of this year with one levy for this period and one for the previous year. We need to find a way to ease the burden on broadcasters and I will look at a range of options to achieve this. This is the right and proper thing to do, and it should be done with the objective of reducing as much as possible a financial burden on broadcasters that are going through difficult times in this interim period.
The annulment of the order would not assist in that respect. It does not determine the budget and it would put the authority in a very difficult position as it is going through flexible and difficult work. It would impede its ability to borrow, which it will need to do while this levy and the budget are being arranged. It would not achieve our objective, which is to reduce the burden on broadcasters and get the right regulation that will ultimately benefit the broadcasters as well as the viewing and listening public.
I suggest we allow the BAI do the necessary work on its budget review and scaling things back. I imagine we will have to be flexible with some of the timelines that we gave the authority for the work that it needed to do. We will have to be flexible on payments from last year, so that we are not hitting broadcasters twice this year in the first quarter. Furthermore, we will have to find out if there are other ways to manage this so that we reduce the immediate burden on broadcasters in a difficult time. It will take us a week or two to do some of that work. It can come in at the same time as the BAI's budget review. I suggest this as a course of action rather than annulling the order, which will not have any real effect and would only put the authority into a very difficult financial position.
I thank the Minister and his officials for coming before the committee so quickly after yesterday's discussions, which have clearly laid down a marker that we are concerned about this issue. My understanding is that the Minister has had the detail of the BAI's budget for some time. He spoke about its €7.6 million budget in January and stated that it would be fully funded by the industry levy, as provided for in the Act. He stated that details of the budget had been submitted to the Department and that he would be considering whether additional information is required. He went on to say that "in accordance with section 37(7) of the Act, this 2010 estimate of income and expenditure will be published shortly by the BAI on its website, with my consent and with the consent of the Department of Finance."
The Minister has had details of the budget since the middle of January, but it is only when we have said that we are willing to go as far as annulling the order to allow the BAI collect money, that he is saying that the €7.6 million is too much and that we should consider whether we can cut expenditure so that we minimise the burden on the industry. Why has the Department not been doing this since the middle of January? The Minister knows as well as we do that the broadcasting industry in Ireland is under significant financial pressure at the moment, yet if we had not raised the issue yesterday with Deputy McManus's motion of annulment, the Minister would have been perfectly happy with the €7.6 million budget. I am glad that we have moved beyond this and that the Minister concedes that we should try to cut our cloth in a way that is more suitable to a recession.
I have concerns about the procedure. Why has the BAI not published its budget? The Minister stated that it would be published, and while I understand that both the Minister and the BAI have different responsibilities, this is a collective responsibility. The Minister has a responsibility to ensure that the legislation he has enacted is put into place in a practical manner. I concede that the transition from the BCI model to the BAI model is difficult, and I want to be helpful with that. However, I will not write a blank cheque for the BAI to allow it raise as much money as it sees fit on the basis of a promise that we might have a discussion in here whereby we will do our best to make savings where we can find them. We will have handed over power to the BAI to raise the levy at that stage anyway, yet we will not have the power to reverse it. The Minister will then tell us that this is not his responsibility, but the responsibility of the BAI, and that it is up to the authority to determine its own budget and how it collects the levy and the procedures to be put in place by PWC.
We have an obligation to protect broadcasters who are out of the loop and who are being asked to pay an unfair amount of money. The budget was €6 million last year, but this year the proposed budget is €7.6 million. There is a 27% difference between those figures. The proposition being put to us today by the Minister is that we do not choose to annul the order because that would cause a financial crisis for the BAI, and we should put our trust in both the BAI and in the Department that we will all get together in a few weeks to try to reduce the burden on broadcasters from the levy they have to pay. That is a leap of faith that the Minister should not ask us to take.
We should annul the order and invite the BAI into this committee as soon as possible to go through its budget in detail, something that should have happened already. We could then come to an agreement with the BAI on a reasonable expenditure for the year. The BAI should then put an order before the Oireachtas which we would facilitate in the required 28-day sitting period. This will only delay the process by six weeks and no more. We would then have a real stick to hold over the BAI when we are discussing its obligation to pare back its budget so as not to impose an unfair burden on the industry.
We will facilitate that as quickly as possible. We have no interest in causing a financial crisis for the new regulatory model that has been set up to regulate broadcasting. However, we want to see the colour of its money and the detail of its budget. I want the opportunity to question the rationale of the levy proposal that has been put in place by PWC, as it puts a more significant funding burden on smaller broadcasters than it does on bigger broadcasters. We have not had a chance to do that in detail yet. We have an obligation to do this before we allow a levy order go through that will be in place for many years to come.
I would like to remind committee members that the Minister has an appointment and would like an opportunity to reply. I ask them to be as brief as possible.
I was not aware of that.
I will try to be as brief as I can. Any changes that the Minister can make to reduce the budget are very welcome. However, that does not get to the nub of the issue. I have no doubt that the BAI can continue for another month in the same way it has done for the last three months. If it was so difficult to live on borrowed money, the BAI would not have been set up on 1 October. I do not think we should be feeling that there is the big stick of a financial crisis over our heads, there is not. However, we do have to sort it out.
I want to concentrate on the levy scheme. No matter what diminution is made on the budget for this year, it is the levy scheme, more than anything, that creates the problem. I welcome any changes that the Minister can make on the budget but the levy scheme affects the small operator, the small local radio station, disproportionately. Perhaps Deputies from Dublin do not have the direct experience that somebody like myself or others representing a rural constituency have of local radio. Our local radio station is our lifeline. The snows in County Wicklow blocked people in their homes and the only form of communication they had on a daily basis was East Coast Radio. That lifeblood of local communities is replicated right across the country. I thought it was interesting that we got a letter, courtesy of the chairman making that point from the Irish Press plc, signed Eamon de Valera. It just seems appropriate to me that the case has been put in that context.
Let us take the example of Tipp FM. It is very clear that the small operator is carrying a disproportionate amount of the levy. In this case, they extrapolate that an operator the size of RTE would end up paying 1.25% of net income, while an independent radio station would end up paying 2.75% of its income. I do not want this to be an RTE bashing exercise, but there is an issue about the formula. It would be fairer if there was a straight percentage system, because at least the stations would be paying according to their size and capacity. I can see how this has happened. The BAI sought a formula to suit its needs, and I do not criticise it for that. However, what the BAI is saying is that it has to do a certain number of tasks and ask how the burden of paying for those tasks can be divided in a way that is proportionate to the tasks. It should be looking at the ability of the stations to pay. Is it fair for RTE to pay only 50% of the full levy when it has approximately 80% of the revenue, much of which is very safe because it comes from the television licence revenue, whereas the small broadcaster, whether it is Tipp FM or anybody else, is dependent on advertising revenue and carrying a disproportionate amount of the levy. That is why the levy scheme has to be reformed.
I can appreciate that it is difficult for any Minister to have to take a step backwards, but even if he did his very best, as I am sure he will, as regards the budget, that only solves the immediate problem. The long-term problem is that the levy scheme is flawed. This is our opportunity as legislators, as Oireachtas Members and public representatives, representing small communities that depend on small radio stations, to have an input in ensuring that they are not discriminated against.
I feel very strongly that we have a requirement, whether to accept or have this order annulled, not to assist the BAI in bringing in a levy scheme without knowing where the money is going to be spent. That is the essence of good management. We have all sorts of terrible examples in our background, as recently as the experience in FÁS, where the systems and management were not right. I believe in the BAI, I am sure it will do a good job and I am sure its budget could be pared back, but at the end of the day, we cannot leave it to personal trust. It must be on record what this levy is for. I know the Minister gave an undertaking, which I am sure he did in good faith, that he expected the information to be on the website. That was in January, but at the end of the day, we are being asked to buy a pig in a poke. I hope this experience means that we get a better levy scheme that is fair, realistic and appreciates the conditions that people in local radio stations are working in and does not lead to job losses and community loss.
This scheme will not provide those safeguards. I urge the Minister to accept that we annul the order and then proceed as rapidly as we can. I do not think it is insurmountable by any means, but I think the perspective must change. The BAI constructed a formula to reflect what it was doing, it does not reflect the ability of those on the ground to pay it and that is where the shift has to occur.
I welcome the Minister and I wish to apologise in advance that I must rush to the Seanad where the Energy Bill is being debated. There is obviously somebody else taking that Bill instead of the Minister.
There are two issues which are related but very definitely separate. First is the cost and effectiveness of the BAI. For a long time I have been critical of the failure of the State, Government and management within the public service to control costs and wages. I am alarmed at the level of wages, not only across the public service but in some of the regulatory authorities. We did a small exercise last year which identified the average level of pay and the pay of senior people in all the organisations that are answerable to this committee. In certain instances I would have no difficulty with the level of salaries because people have very responsible positions but in other bodies, including this one, at chief executive level, the job is really no more than an administrative position with responsibilities. The cost controls and cost effectiveness in those areas leave a lot to be desired. That needs to be tackled and corrected.
In the current climate, instead of the BAI deciding what its budget should be, we should be determining its budget. I suggest that its budget should be somewhere in the order of €4 million to €5 million and it should design its team around that. In the private sector significant job losses have occurred in organisations and staff are working to 9 p.m. and 10 p.m with no overtime payment. They are on reasonably good mid-range salaries but they are working these hours. We need to change the whole culture of the system, from adding up costs and then passing them on to the private sector without any critical controls on those costs. That is a significant issue for productivity and related issues. If we continue with the present model, ultimately we will bring this country to its knees. We are not far from it at present. I am a big critic of that system. We need strong influential management. People are paid good salaries and a big part of that responsibility is to make their cost base efficient and effective. That is not happening anywhere in the public service.
The second issue is the impact of the levy on the industry. I agree with much of what Deputy McManus has said. It is a very severe imposition on small business. If we fail to address it, we will have rising unemployment in the industry. From what I have been told, and the BAI should know this, the levy will impact on smaller operations in the broadcasting sector much more negatively than on the larger ones, even though they are all going through a very difficult time. This is a litmus test of our commitment to encouraging the development of small business and protecting the potential and existing employment levels in the sector.
The current model is wrong. It should be looked at from the point of view of exempting perhaps an element of turnover, perhaps the first €1 million, and then applying the percentage rate above that figure. I feel that 3% of turnover is far too great a levy for a regulatory system.
I come from a business background where one tries to ensure that overheads range between 15% to 20% of turnover. This 3% levy is too large a proportion of turnover. We need to redefine the scheme and put a business perspective into it. We could also agree on a lower percentage of turnover. The percentage should be less; it should not be more than 1.5% of turnover. There should be an additional qualification stating that the financial obligation should not exceed a certain element of the net profit before tax, PBT. That figure should be in the range 5% to 10% of profits. Otherwise these companies will be denuded of investment potential for the future which would create jobs and add to the quality of the service they are providing.
This is an opportunity for us, at this embryonic stage of the Broadcasting Authority of Ireland, BAI, under the current scheme. If we get this model right - and we should allow the time to get it right - we can use it as a template to apply to other bodies where cost-effectiveness is a significant issue. I hope we can reach a consensus on this.
I welcome the Minister and his officials and thank them for coming. I apologise for not being here yesterday when this important issue was discussed.
I concur with what was said. We did a great deal of work in appointing some members of this board and made efforts to work on regulation, which is needed. However, the situation has now gone off the rails a bit. The wheels have fallen off the wagon. We wanted a single regulator, which we got. We wanted additional responsibilities to apply. However, the figure which is to be levied on independent broadcasters is taboo. I agree with Senator Walsh that this is typical of the thinking in the public service. Those concerned seem to think there is a cash cow that can be milked and milked again and it will keep providing. That is not happening.
I cannot say enough about my local radio stations of which there are two, Tipp FM and Tipp Mid-West, a community station, regarding the way they work, the professional way they go about their business and the social capital we gain thereby in County Tipperary and beyond. The recent snow and floods were mentioned. Whatever the news may be in the community the radio stations are there to provide it. Are we to shackle them with this burden? In the first place, the money is not there. The broadcasters are not earning that kind of money and would not survive. We should forget that myth. The kind of people who came up with this grandiose scheme while sitting in an office should be out there in the real world.
I have said this elsewhere. We appointed members to the authority. They should visit the relevant places and spend a week looking at their work practices. Then they will see how hard it is to earn a buck and to get revenue. Revenue has fallen off completely. I am very critical of this proposal. I understand that only part of the board membership made this decision and did so without waiting for the full board to be in place. Considering the eminent people we appointed, this makes a total farce of the committee's role. We must return to this issue, plead with the Minister to give back control to us and see some sense. It is simply not acceptable.
RTE has 80% of the revenue but is getting away with having to pay only a small amount of tax. I have been rightly critical of RTE in the past. Senator Walsh referred to the wages paid in broadcasting to people who may be dressed up as sub-contractors, or whatever. The situation is untenable and cannot continue. It must be nipped in the bud. We must go back to the drawing board and protect these service providers who are very badly needed. In the first place they give employment but they also provide a vital service to the public in our communities and we must protect them. We must take charge of this issue and ensure we get it right because it can be used as a template.
This is daft. It is not acceptable and I give full support to whatever the committee decides in an attempt to amend this crazy piece of work. It is a typical example of people not thinking, not understanding the roles and not appreciating the economic conditions that pertain at present. We must go back to the drawing board. It is a timely lesson and perhaps we may all learn from it, even in our own area.
I also must leave shortly to protect the bio-ethanol industry from some of the excesses of the Minister's Bill. I thank the Minister for coming to meet us today at such short notice.
Deputy Coveney has just pointed out to me that the Minister said in the Dáil in January that under section 37(7) of the Act the 2010 Estimate of income and expenditure will be published shortly. That is the key to this issue and Deputy Coveney has expressed it. Some hard things need to be said. I concede there is no easy way out of this problem. Committee members have a responsible job to do and when it is necessary to bite the bullet we must do so. There is no easy way to do it. Although I agree with Deputy McGrath's conclusions let us remind ourselves that most of the board come from the private sector not from the comfort of the public sector. I wonder how they came to their conclusions.
As I have remarked about almost every semi-State body, the problem is that there is no relevant finance board sub-committee and there should be one. I need to see the costings in question. I want to examine the level of regulation. I want to be convinced that we require the same level of regulation from small broadcasters as from large broadcasters. I want to look at the finance committee's report to the board. I chair a finance committee in a semi-State body and have served on many others. One has to go to the board and say, "Here is what I think we have to do. This is the budget for the year." Then one must take questions from everybody and reach a conclusion. That is the point that was raised by all speakers so far. We need to know and to be convinced, first, regarding the amount of money that must be spent and second, how it will be spent. We need to have a plausible and convincing argument made to us before we can take hard decisions.
In all honesty, nobody around the table currently has that argumentation. None of us could stand up now and defend what we are being asked to defend in regard to this levy. It may be that at the end of this process we will have to say there is no choice. However, I certainly feel I have a choice at present which is to annul, suspend or put back this levy until we have gone through the issues mentioned, namely, those of budget, costs, levels and fairness and how these should be applied.
There was reference to something called "net income". There is no agreement on net income in any of the global accounting standards. I do not know what net income means or how it relates to royalties, for example, or which costs can be put above the line before we arrive at net income. Perhaps organisational profit might be a better way to look at it. I would like to know why we decided on net income and what it means as opposed to organisational profit or some other mechanism. I want to be convinced that we should have a straight levy across all parties which seems like a fair way to do it. On the other hand, it might be fairer if there were certain thresholds, certain minima and maxima. I cannot answer the questions and if I cannot do that it means there is a dearth of information available to us. We did not get enough yesterday to find ourselves in a position to take a decision on this.
I do not say this in a personally critical way but it would be unfair of the Minister, even with the best will in the world, to ask us to act irresponsibly, namely, to take a decision without having the knowledge base we require to come to a conclusion.
At this stage I am conscious of the time and that the Minister must leave so I shall return to him and then we can hear the other contributors.
I shall try to come back on all details, as best I can. Deputy Coveney suggested I might say this but we must remember we have appointed an authority, the Broadcasting Authority of Ireland. I mean by "we" that both the Oireachtas committee and I appointed members. We must allow the body to do its work and show its authority. I understand that the first full meeting of the authority occurred late last month, in the presence of the additional members. There will be another meeting on 22 March.
I was not at the committee meeting yesterday but Mr. Michael O'Keeffe, the chief executive officer, spoke. I imagine he also would like to go back to the authority to present some of the budget amendments and other proposals being examined. In terms of our timing I imagine such an action will follow. Then the decision will come about as a result of the authority having fulfilled its role in assessing the nature of the budget. That is appropriate and important. If we give people a job we should let them do it.
I will go further, however, and not only as an exercise. I am talking about trying to get the budget for this year as tight as possible as a short interim measure. I signal that I agree with the members of the committee in that I recognise they are saying our broadcasters are in real difficulty and that we should work with the authority to see if there are any other ways to work this more easily at a difficult time. At the same time, we will be holding on to the principles I believe in, of independent regulatory authorities which are funded by the industry. I find that ultimately that works better for the industry than for anyone else. If the industry is constantly wondering about the view of the Minister for Finance on how to control or regulate them, it would not work as well in the long run.
Deputy Coveney asked when we got the details of the budget. It was at the end of December after the authority had seen it. From the very start, our view was that the budget should be revised. During oral questions on Tuesday, before the chief executive came in, I said I felt there needed to be a review of that spending increase because it seemed to me that, given the times we are in, it will be difficult to justify that. We were aware of the proposed budget but, from the very start, there was a clear sense within my Department that it was something that had to be reviewed because it seemed difficult to us. Even if it was done on the basis of the legislative tasks we had set them and recognising that was something we had done in the legislative process, it still seems to be difficult, given the particular circumstances at present. That was our initial response and continued as such to this week.
Publication is a matter for the authority but I sense it has not been published because the budget has not been finalised. If a budget has not been agreed or signed off by the authority, it is not publishable because it has not yet been approved. The authority can make its own call and if it wants to publish the interim budget for analysis and discussion, that is a matter for it. I would not oppose it but it is a matter for the authority. First and foremost, however, it is more important that we should get a more realistic budget.
Was an estimate not given to the Minister at the end of December? Whether he wants to call it an estimate, work plan or budget, I want to see the BAI's expenditure plans for the next 12 months. I do not think that is unreasonable. My understanding is that the authority is required by legislation to publish that on its website, which it has not done.
As I said, it may well decide to take that course, but first and foremost I want to see the budget it is going to use. It can vary and budgets can always be amended as the year goes on. It is a quarter by quarter approach in terms of payments. There may be areas where there is underpayment and therefore the budget position changes. The budget has to be done and published every quarter.
The impression given to us yesterday by Mr. O'Keeffe was that they would be willing to undertake a review of the budget, and if they could make savings then that money could be given back to the sector at the end of the year or could be carried forward - as envisaged in the legislation - to be part of next year's levy. That situation is totally unsatisfactory because a levy is being imposed on the industry which will most probably result in job losses. It will cost somewhere between €50,000 and €100,000 for an average radio station on the back of giving them something back at the end of the year. One cannot ask private broadcasters to plan on that basis.
We are talking about very different issues.
I find I am getting somewhat irritated at this stage. If this were the private sector, we would not spend this long discussing the issue. It is clear that this will cripple many independent radio stations. This matter must be resolved quickly. If we were in the private sector we would be solving this today. I am not being personal, but we should add up the bill to see how much it is costing to have everyone sitting here in this room today. We know that the €7.6 million, which is a 46% increase on last year, is over the top. This should be sorted out fast.
Please allow the Minister to conclude.
I do not share Deputy Coveney's understanding. It is not just a budget review on the basis that if we make savings during the year we will come back at year's end and look at a rebate system. I understand that the authority has asked for, and the management is doing, a more fundamental review of the budget this year from a starting point. That will be brought to the board of the authority for its 22 March meeting where it will be set out.
I wish to make one point which picks up on what Senator Mary White and Deputy Mattie McGrath said earlier. We have to be slightly careful because, from my own experience of working in the public service, there is a culture of having to make really tight savings at the moment. Budget cutbacks have occurred in my own Department and elsewhere, so people have to do more with less. We should be slightly careful about the "private sector good, public sector bad" notion. In instances where we have to, the public sector has the ability to tighten things up and get more things done for less. We will have to make that happen, but it already happens in instances in the public service. We should be careful therefore not always to depict the public service as not operating tight budgets. There are a lot of areas in Irish life where it is currently doing so.
I know, but the point that was made is important, that it cost €100,000 for PricewaterhouseCoopers to come up with a proposal for the size of that organisation. Yesterday, somebody said there must be loads of people employed in the public sector already. I am not against the public sector but consultants like PricewaterhouseCoopers and legal people added to the serious loss of our competitiveness. It cost €100,000 to come up with a report.
That brings me to Deputy McManus's point, which is fundamentally about the levy. The reason PricewaterhouseCoopers was used was absolutely proper - to have an outside, independent analysis, not carried out within the authority itself-----
It cost too much.
-----but in the interest of the structure of the levy. Extensive consultation took place, which is complicated and difficult. This is not an easy balancing act. If we are to take more from certain elements in the sector, one might say that TV3 or RTE should have to pay more. Whatever assessment is put in place should be absolutely legally correct. It should be fair.
May I ask a quick question?
I will come back to the Deputy in a second.
I believe the consultation process, involving outside analysis by PricewaterhouseCoopers, was appropriate.
That is what got us into trouble.
It may be expensive to have it done-----
May I ask the Minister a question?
-----but at that point it was right for outside expertise to be used to get the order in place, which was fair, effective and proper. I believe it was carried out in a proper fashion and was properly approved by the authority. That is why I do not think it would be useful or beneficial to start the whole exercise again.
Even though it is wrong?
I do not believe it is wrong. There is other work we can do. I want to go further in seeking how, within the structure we have put in place, we can ensure the burden on broadcasters in difficulty is diminished. That is the work people ought to concentrate on.
Does the Minister not appreciate that the people who are making the case against the levy scheme have done their homework? Small, local radio stations are not doing this because they do not want to pay their bills. They are making the case because they know it will lead to job losses. They also know that the scheme that has been devised - and I do not care if it is independent or in-house because that is not relevant - is flawed and militates against the small operator.
I fully recognise the importance and value of our small, local radio stations in particular. They have done a huge service for communities throughout the country. That is why I am saying we need to examine the matter in whatever flexible ways we can - and I am willing to be as innovative and flexible as possible - to see if we can support those companies at this particular time.
We cannot do it because if this is passed, it will be law.
Up to 2001, such stations were subject to a 3% levy. We have had this as a standard operating procedure for many years. While the independent broadcasters recognise they are in a difficult situation, many of them have told me that when we started the process in 1988 of setting up small, independent, local broadcasters, in the end they benefited from it and were thankful for the fact that there was a regulatory system, even if they had to contribute to it. Raising standards on local content and providing for local news services and participants-----
Nobody is arguing that a levy should not be imposed. With respect, this is a red herring.
-----was actually the best direction they could have taken. It was a support for them. No one is seeking to impose a financial burden on companies that we realise are in difficult times. We shall look at the budget and see what we can do in terms of legacy payments. We will see if there are other measures we can take to reduce the cost to stations.
In essence, all the Minister is doing is defending the levy scheme. That is what the Minister is protecting.
In fairness, the Minister has stated that he can look at other measures to alleviate the problem.
That is great.
We will have to take him at his word on that.
The Minister made the point that there was an extensive consultation process with the industry. From what I have been told, there was no consultation process. A statement was made that this is the way it is happening and the industry has to get on with it. That is what I have been told by people in the industry. They were met with arrogance from the people who were supposed to be participating in that process. There is too much of that happening within public agencies. We saw it with the HSE yesterday.
The Minister made the point about the additional responsibilities of the BAI when compared with the BCI. The additional responsibilities perhaps should only equate to the work plan. A budgetary process was presented to us yesterday and we were expected to rubber-stamp the amount money for a work plan we had never seen. There must be some respect shown to us as public representatives. To put it in front of us represented the height of arrogance from the BAI and from the Minister. It should not have come to us until the work plan was published and explained fully to the committee.
Perhaps there are grounds for additional responsibilities on some occasions, but in this economic climate when income is down for every industry, seeking additional responsibilities that will cost significantly more money is the height of craziness. We are here today battling on two issues, namely, the amount and the levy scheme. Both issues are intertwined and there can be no attempt made to drive one through without the other.
I welcome the Minister and I compliment the Chairman on getting the Minister to come in at such short notice. The debate is all about fairness and we will not get a more fair person than the Chairman of this committee. The Minister has proved to be open-minded and he is prepared to listen. The solution is for everybody to work together because the BAI, the committee and the Minister are all in this together. If we had less criticism and more positive action to keep local radio alive, then that would be good for everybody.
Local radio has the full support of all politicians, but it also has the full support of the people through listener figures. We want to see a proposed budget with exact figures. We want to see the exact levy, because different figures are being touted. One group is claiming it is €50,000 to €100,000 while another group is claiming it is €40,000 to €60,000. Can we see the exact levies that will be put on these different local radio stations and the exact budget for the BAI? We talk about common sense all the time but we seem to lack a lot of it. The BAI should be given more time to scale down its budget and come up with a solution to this problem. The bottom line is to keep local radio alive and in business and keep jobs in local radio.
I thank the Chairman for giving me the opportunity to address the Minister today. The managing director of Highland Radio, Mr. Charlie Collins, contacted me, and I am sure committee members have had correspondence with local radio stations in their areas. As it has been the leading local radio station for many years, I have some concerns. I am heartened by the fact that the Minister intends to take this issue forward and do something about it. However, I cannot understand why the BAI is increasing its budget by almost 30% this year when everything else is going in the other direction. I am glad to hear that the Minister will look into the issue and see if he can find a resolution to it.
The broad sense of the work plan was set out in the legislation. We have given significant responsibilities and, for the first time, there is proper regulation of public service broadcasting and questioning of the use of the licence fee. A fundamental analysis of that needs to be done. The private broadcasters, including local radio stations and others, would recognise the importance of this. There may be a point in the future where we have to be careful because companies are having a difficult time in the advertising market and we may have to time the work differently from what we expected in the legislation a few months ago.
I do not want to hear this public and private sector row. It does not get this country moving. However, there is a real need for scrutiny. Under sections 37 and 38 of the Act, we provided for auditing and reporting to the Minister. We can ask the authority to provide us with some kind of analysis of budgets to ensure they are appropriate. We can make this information public which will provide a certain public confidence in what is being done.
A question was asked as to how the authority has been able to pay its way to date. It built up a cash position and this covered the day-to-day operations. That cash position is to come to an end in the next two weeks and we will then be going into a borrowing situation, something that would be very difficult in the absence of an order.
I am curious about this. How did it generate cash?
It had cash in reserve going back to revenues that were brought in during the IRTC days, and it also had cash from the Exchequer held over from last year.
It was under budget so it had some money left over.
It also had cash reserves. It has used those cash reserves and is now going into a borrowing position-----
So why is the Minister levying the industry for the last three months?
This is what I said at the start. We need to see if we can manage-----
Does the Minister mean to say that he was going to levy the industry €1.25 million for the three months from August to December 2009 when the authority actually had money?
We all agreed the legislative basis on which things would be done, including that provision.
This is the first time we have heard the authority had a fund with money in the bank.
I am not talking about the fund. I am talking about the cash situation that it was able to use to cover its position. The BAI also has to maintain a reserve to protect its position should it not be able to get cash.
We are being asked to make decisions in the absence of any of this information. The Minister has all the information, yet he was perfectly happy to move ahead with a budget for €7.6 million.
I never said that.
I quoted the Minister earlier. He said that the €7.6 million had the approval of his Department and the Minister for Finance.
It did not have the approval of this Department or the Department of Finance.
If nothing else, we have now learned that the industry will not pay for those three months.
I said we will have to examine ways in which we can help the industry as much as possible, including whether we can find a means of covering the last three months of last year in a way where we are not hitting the industry. I said that at the very start of my presentation.
Why did the Minister think he could hit the industry in the first place?
There is no instinct here to hit an industry. There is just as much interest in protecting and supporting our local radio so that it thrives and survives. That is what we are all setting out to do. We want things well regulated because this is in the interest of the industry as well as the viewing and listening public.
I want to set the record straight because we have been misled. On 26 January the Minister said: "In accordance with section 37(7) of the Act, this 2010 estimate of income and expenditure will be published shortly by the BAI on its website, with my consent and that of the Minister for Finance." I am not allowing the Minister to mislead this committee by suggesting he was always looking for a review of the budget because he was uncomfortable with the figure of €7.6 million. That is not the case and the estimate has not been published, as required by law.
The only tool we have to enable us to ask hard questions is to threaten an annulment of the order. By threatening an annulment we are now getting information we did not previously get. For the Minister to ask us to back off on the basis that this committee and the board of the BAI will hold a review of the latter's budget at some stage in the future is very unreasonable. This is not an exercise in scoring political points. I concede that there are extra obligations on the Broadcasting Authority of Ireland as a result of the legislation passed by all of us but that is not the issue. The issue is whether or not we are getting value for money and whether or not we are putting undue burden on the industry. We want answers to those questions before we allow the order to go through. If we get answers to the questions we will facilitate a fast-tracking of the order if that is required.
If the order is fair.
On 4 March the Minister said that he welcomed a review of the budget and a tightening of the budget.
We are over time.
Is there light at the end of the tunnel? Some of the independent stations have to pay €2,000 per week. Can we solve this problem now? There will be a loss of jobs in radio stations.
Allow the Minister to respond.
Independent radio stations are important to us, as are all broadcasters, and they are in a difficult situation because of the very sharp downturn in advertising in the economy. We want to tighten up and make sure there is a minimal levy payment so that they are not further burdened. We and the Broadcasting Authority of Ireland will come back to the committee with a review of the budget, including the legacy issue involving payments from last year, and with suggestions of other measures we can take to help broadcasters at this time. I do not believe annulling the order would help in any way as it would put the broadcasting authority into crisis and that would not benefit anybody. The other issues can be dealt with to help the companies involved.
I never consented to anything being published before the Broadcasting Authority of Ireland concluded its work on the budget review and, as Deputy Kelly said, I indicated so on a number of occasions. I look forward to seeing the results of that review on 22 March. This committee has done good work and should continue to do so by disputing the issues as it sees fit but we should wait for the revised budget and see what other measures may be possible, rather than having an annulment which serves nobody's immediate interests.
I have tabled a motion on the Order Paper seeking the annulment of SI 7/10. I look forward to this matter being debated in the House as what the Minister has proposed is not acceptable in terms of transparency or fairness. It is essential that we hold such a debate. We are being asked to accept an order but no Member of the Oireachtas who has taken part in this debate has confidence in the scheme or the context in which it is being presented. A debate in the House is an essential part of the democratic process in which we have been engaged.
On behalf of members I thank the Minister and his officials for coming in at short notice. The Minister has given a commitment to work with the BAI and this committee in order to work through the difficult issues. He has also said he will look at other measures which may assist the industry so I look forward to that.
The joint committee adjourned at 12.15 p.m. until 9.45 a.m. on Wednesday, 24 March 2010.