RADIO AND TELEVISION LICENCE FEES (Reasons for increase)

Mr Koo Tsai Kee asked the Minister for Information and the Arts if he will explain the reasons for the increase in the radio and television licence fees.

The Minister for Information and the Arts (BG George Yong-Boon Yeo): Sir, Radio and TV licence fees were last raised in 1990. Since then, SBC has increased its programme output by 25% for television and 3% for radio. Improvements to programming have helped to draw larger audiences. SBC's daily TV viewership went up by 27% to more than two million and daily radio listenership by 49% to 1.5 million.

As part of its continuing improvement to programmes, SBC is stepping up its output of public service broadcasts (PSBs). PSBs are programmes which contribute towards national and social objectives. They include education and information programmes, cultural, sports and children's programmes, Malay and Tamil broadcasts as well as locally produced Mandarin and English dramas.

In addition, SBC will be offering more locally-produced entertainment programmes in English and Chinese on Channels 5 and 8. There will also be more day time television fare, including breakfast television.

The cost of providing more and better programmes has been growing steadily. The upgraded SBC programmes will cost $250 million in financial year 1993, compared to $200 million in financial year 1990, an increase of 25%.

A significant amount of the expenditure is for the provision of PSBs. Whilst PSBs account for 71% of SBC's production budget, they do not attract sufficient advertising revenue to pay their costs. It is therefore necessary to raise licence fees to help underwrite them.

SBC does not use the surpluses it has built up to fund these programmes, as this would affect its future effectiveness. These surpluses are not large compared to its investment needs. SBC will spend them on upgrading and expansion. It needs more studios and production facilities. SBC must also prepare for digital audio broadcasts, and later on, high definition television. SBC's long term challenge is to upgrade its channels to enable them to compete and retain viewers when new channels proliferate as a result of satellite and cable television.

Mr Heng Chiang Meng (Cheng San GRC): Sir, may I ask the Minister to confirm whether it is true that 100% of the fees collected by the Ministry goes to SBC?

BG George Yong-Boon Yeo: All licence fees go to SBC.

Mr Heng Chiang Meng: In that case, may I ask whether NTUC Radio Heart is also required to provide a certain amount of public service broadcast? If so, should they not also be given a portion of those fees?

BG George Yong-Boon Yeo: NTUC Radio Heart has to observe certain minimal regulatory conditions. They are much less than those observed by SBC television and radio stations. When SBC is corporatised, a separate regulatory board called Singapore Broadcasting Authority will be set up. All licence fees and all additional Government grants will then go to this statutory board. It will then be for this statutory board to decide how to allocate the fund it has for public broadcasting purposes and they can be allocated to SBC channels, the successor channels, they can be allocated to Radio Heart, or whatever other television channels we may then have.

Mr Heng Chiang Meng: In view of the Minister's answer, it therefore shows that the concept of paying a certain amount of funds for public service broadcasts is not wrong. Since already NTUC Radio Heart, I believe, is already providing some PSBs, I see no reason why they should not be provided with a certain amount of funds right now. I am not asking for a 50:50 basis, Sir. But would the Minister consider providing at least an amount in proportion to their public service broadcasts as compared to SBC's?

BG George Yong-Boon Yeo: If NTUC Radio Heart were to put up a case as to how it can improve its public broadcasts if it receives grants, then I think this proposal can be put to the broadcasting authority when it is formed.

Mr Heng Chiang Meng: Why not now, Sir? Why wait until it is formed?

BG George Yong-Boon Yeo: Because, today, SBC is the regulatory authority. It regulates itself. In a sense, it is an invidious position given the fact that we do have other channels operating now and this is why there is a need to clean up and separate the regulatory authority from the broadcasting stations.

Dr Toh Keng Kiat: Sir, I am asking this question in my capacity as a member of the Central Committee of CASE. As we have received complaints from members of the public on our hotline, is it necessary for SBC to increase the licensing fees when there is an accumulated surplus of more than $400 million, as given in the Annual Report, and for last year's operating income it was more than $270 million. Also, a lot of the programmes in this expansion activity of SBC is due to re-runs.

BG George Yong-Boon Yeo: In the accounting of SBC operations, we separate the budget for public service programmes from its commercial operations. The surpluses are accumulated in the commercial operations. They receive part of the licence fees and a certain amount of additional Government grants. I think it is important to have the accounts separate because otherwise this removes the incentive from SBC to operate efficiently. The question arises as to whether we should use the surpluses from the commercial side to subvent or to subsidise the operations on the PSB side. Here, I do not think it is wise because we are looking ahead to a television environment that will become very competitive. SBC has massive investment needs in the future to keep up with the competition and the technology. So I do not think it is wise now to tax SBC commercial operations in order to subsidise the public service broadcasts. In addition to licence fees, the public service broadcasting side of SBC also receives Government grants.

Dr Ong Chit Chung (Bukit Batok): Would the Minister state whether the SBC licence fees would attract GST?

BG George Yong-Boon Yeo: No, it will not.

Mr Low Thia Khiang: Sir, does the public service broadcasts carry commercial advertisements?

BG George Yong-Boon Yeo: Yes, it does.

Mr Low Thia Khiang: If it does, then why can you not use whatever is collected commercially to subsidise?

BG George Yong-Boon Yeo: It is not enough. Whatever is collected commercially is ploughed back. In other words, if we have a purely commercial basis ---

An hon. Member: There will be no Malay programmes!

BG George Yong-Boon Yeo: Precisely, there will be very few Malay programmes. There will probably be no Tamil programmes. There will be very few documentaries.

Mr Chiam See Tong: The Minister has just said that the income from commercials on public service broadcasts is insufficient to pay for those broadcasts and you need to increase the licence fees. So my question is this: In addition to the commercial income, are these licence fees enough to pay for PSBs?

BG George Yong-Boon Yeo: No, it is not enough. In fact, recently MITA has worked out an arrangement with the Finance Ministry for an additional grant to SBC based upon 15% of licence fees collected. In other words, whatever we collect from licence fees, the Finance Ministry will throw in an additional 15% for the public service broadcasting side of SBC. It is not enough.