Image: Archi Banal
Image: Archi Banal

MediaApril 11, 2022

Is it time for the TV licence fee to make a comeback?

Image: Archi Banal
Image: Archi Banal

With New Zealand’s new public media organisation officially a go, heated conversations on how it should be funded are all but inevitable. Samson Samasoni looks at the options, and finds out how other countries fund their own public broadcasters.

During the 1990s, a TV commercial featuring the Christchurch Wizard urged people to pay their broadcasting licence fee and posed the question: “How do you put a price on homegrown television?”

That will be the challenge for the government’s new public media entity: working out the price and a plan for sustainability when it swallows up TVNZ and RNZ sometime in 2023.

Broadcasting and media minister Kris Faafoi was tall on ambition but short on detail when he recently announced the as-yet unnamed public media operation. He was confident the new setup will guarantee free access to trusted news and information, future-proof public media in New Zealand, and showcase our unique voices and stories. But the mechanics of how it will work is being left up to a soon-to-be-announced establishment committee.

Given the evolving media environment and highly competitive advertising market, will the new non-profit entity – which will have both commercial-free and advertising revenue elements – be properly funded by the government to achieve the minister’s bold goal?

The financial details associated with the new organisation were redacted from the cabinet paper released with the announcement, so it’s hard to know at this point.

Some though, like Te Herenga Waka — Victoria University of Wellington associate professor of media studies Peter Thompson, are concerned that the entity will rely too much on government funding.

“Crucially, balancing public service and commercial expectations requires the organisational structure and funding arrangements to be in sync. But this is unlikely to happen if one is determined by a committee and the other is left to the uncertainties of the Budget,” Thompson warns.

Myles Thomas, chair of the Better Public Media Trust, says how much the government spends and what precautions it puts in place will decide the fate of the new entity.

He’s concerned the funding will not be sustainable, the appointment of board members will be too political, and there’s no statutory watchdog to safeguard public media values.

The governance group tasked by Faafoi to come up with the business case for the new entity will undoubtedly have looked overseas for successful public media and funding models during their deliberations. RTE in Ireland, CBC in Canada and the BBC are often cited as excellent examples.

But RTE and the BBC still get much of their funding from a licence fee that’s collected directly from the TV set-owning public.

New Zealand scrapped its $110 licence fee (about $190 in today’s money) 23 years ago. Should the fee or something similar make a comeback to reduce the reliance on government funding and advertising? What happens elsewhere?

In Ireland, all television-owning households (even if your TV is broken) must pay an annual fee of €160 (NZD$254). Certain beneficiaries and those over 70 are exempt.

RTE gets roughly half of its budget from the licence fee and half from advertising. But like many public broadcasters, increased competition from digital platforms and private operators has impacted on its advertising income.

In 2019, the Irish government came up with the cunning plan of introducing a “device independent broadcasting charge” – if you had a TV, smartphone, laptop or tablet you’d have to pay because you’re “capable” of watching RTE, whether you did or not. But that idea was too hot to handle, so now a commission will soon recommend other possible reforms for the Irish TV licence scheme.

In Britain, 74% of the BBC’s £5.06 billion (NZ$9.66 billion) income is derived from a licence fee. The balance comes from commercials, grants, royalties and rental income.

For the British public, failure to pay the £157.50 (NZ$300) for a colour and £53 (NZ$101) for a black and white TV can result in a fine and, in some cases, a criminal conviction.

But controversially, earlier this year, even before the Conservative Party Christmas bunting had come down, the UK culture secretary Nadine Dorries tweeted that the licence fee would be abolished from 2027. Some of her colleagues weren’t impressed, as it hadn’t been fully discussed by the cabinet.

Whether or not Boris Johnson’s party is in power in 2027 to scrap the fee, the writing is firmly on the wall that the BBC will have to find new sources of revenue in the future. Various options are being mooted including a subscription service, part-privatisation, direct government funding or a hybrid model.

Certainly, New Zealand thought the licence fee model was imperfect, as it was axed in 1999 after a “three-year campaign of civil resistance” against what the anti-fee lobby called an immoral and unfair tax.

Investigative journalist Ian Wishart even wrote the book Beating Big Brother about the campaign, which he said was a tribute to the 100,000-plus who chose not to pay the tax and the 300 “freedom fighters” who went to court over it.

There’s no doubt that proposing a 1990s-style TV licence fee would be political suicide for any New Zealand party – potentially more unpopular than announcing there’ll be an announcement about another national Covid lockdown.

Even French president Emmanuel Macron is partly pinning his hopes of re-election on a new policy to remove that country’s €138 (NZ$218) broadcasting fee.

Left-leaning French politicians are concerned about leaving public broadcasting at the whim of government budget decisions, with one Socialist senator saying the implications would be “serious” for the independence of public media and amounted to “dangerous demagoguery”.

Canadians don’t appear to have the same concerns as the French senator. In fact, efforts by public broadcaster CBC to introduce more sponsored content have been so controversial that the Liberal government is now tossing in another $400 million (NZ$456 million) over four years to make the CBC less reliant on advertising.

The CBC gets about 70% of its funding directly from government and 30% is self-generated through advertising, subscriber fees, rentals and other financial arrangements.

If a broadcasting licence fee is out of the question for New Zealand, what are other ways of generating revenue?

Telecommunications Development Levy

Better Public Media Trust says revenue for the new organisation should come from industries that benefit from public media or the digital disruption that has driven the TVNZ-RNZ merger, and it should come via a repurposed TDL. Currently the TDL is paid by companies earning more than $10 million per year from operating a component of a public telecommunications network (fixed or wireless). The government uses the annual levy to pay for telecommunications infrastructure including the relay service for the deaf and hearing-impaired, broadband for rural areas, and improvements to the 111 emergency service.

Device levy

The Irish didn’t quite get there with a device levy, but Turkey employs a system that imposes different levels of levies on importers and suppliers of TVs/devices (including computers and cars), as well as a levy that retail customers pay. While the Turkish model seems a trifle complex, the principle of a levy collected by the private sector that contributes to the greater public good is already well established in New Zealand. For example, the National Disaster Fund run by the Earthquake Commission gets revenue from a levy placed on home insurance policies, collected by insurance companies.

Taxing the streamers

Many developed countries have already introduced or have well advanced plans to tax international streamers like Netflix and Disney+. In France, Netflix has committed to invest 20% of its annual revenue in on French content, both series and movies. Denmark will soon be charging international streamers 5% of their annual turnover to fund local film and television productions.

While there’s apparently some backroom work being done by public servants in Wellington on the matter, our government’s view on this is not yet clear. Many in the New Zealand screen production industry believe international streamers are getting a free ride by launching their services here with no commitment to New Zealand storytelling. Ideally the tax or levy on streamers would support the local screen production industry by going to New Zealand on Air for the contestable funding of local productions commissioned by subsidiaries of the public media entity.

Internet levy

How this differs from the TDL is that the levy would be a percentage of your internet/broadband bill whether you have a smartphone or home connection. The internet provider would pass the levy on to the public media entity or New Zealand on Air. Some argue that New Zealand internet connections are already more expensive than many other countries – mostly due to our smaller population – and that an extra charge would be unreasonable, especially on low-income earners. But there’s something elegant in a system that requires the digitally capable to support the digitally deprived, who rely on free-to-air TV and radio.

Electricity bill add-on

In Italy the €90 (NZ$142) licence fee is added to people’s electricity bills as 10 equal instalments paid from January to October. If you don’t own a TV, are over 75 years of age or on a low income, you can apply for an exemption. Their fee is lower than most other countries’ partly because they don’t have the exorbitant collection costs and high evasion rates they used to experience. South Korea also bundles its TV licence fee with electricity bills. South Korea’s national public broadcaster KBS gets about 45% of its income from the  licence fee, 25% from advertising and the balance from government and other sources.

Public broadcasting tax

In Finland the tax is automatically included in taxpayers’ withholding calculations. Those who earn more than €14,000 (NZ$22,119) pay 2.5% of their income up to a maximum of €163 (NZ$257).

Household levy

While it harkens back to bad ol’ days in New Zealand, every German household has to pay €55 (NZ$87) every three months. South Africa’s broadcasting corporation is advocating a similar approach, as currently it’s based on having a TV. But SABC believes a device-neutral household levy, based on the “possibility of access to SABC services” would be more appropriate.

Clearly, New Zealand is not going to return to the days when we could expect a heavy knock on the front door from someone chasing us up for our TV licence fee. But we will need to think more creatively about how to achieve sustainable funding if this is truly going to be a new golden era for public media and broadcasting.

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Mad Chapman, Editor
Aotearoa continues to adapt to a new reality and The Spinoff is right there, sorting fact from fiction to bring you the latest updates and biggest stories. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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