I am very proud to present the 2018–19 Department of Communications and the Arts Annual Report. The report shows the outstanding work in the portfolio for Australian communities. Our purpose is to foster an environment in which all Australians can access and benefit from communications services, creative experiences and culture. This report highlights our significant achievements this year including our performance and financial results.

Developments for the department and portfolio in 2018–19

In May 2019, there were some key changes to the portfolio and department. We welcomed new ministers: the Hon Paul Fletcher MP, Minister for Communications, Cyber Safety and the Arts; and the Hon Mark Coulton MP, Minister for Regional Services, Decentralisation and Local Government.

At the same time we farewelled Senator the Hon Mitch Fifield, our Minister since September 2015; and Senator the Hon Bridget McKenzie, our Minister since December 2017.

The Museum of Australian Democracy at Old Parliament House also began preparations to move from our portfolio into the Prime Minister and Cabinet portfolio from 1 September 2019.

Overview of performance results

Connectivity

Across the globe, connectivity is rapidly transforming the way we live and work and is becoming increasingly critical to the economy and our wellbeing. Our performance results for communications connectivity are presented in detail in Part 2 of this report. This year’s results show Australians have never been better connected and have more communications options available to them than ever before. Our efforts — and, of course, the quality and skills of our Australian industry — are helping to ensure Australia’s communication networks effectively meet consumer demand, support communities and help build a strong economy for Australia.

Increased connectivity goes hand in hand with more online risk and the need to keep people safe. We have increased our efforts to improve cyber safety during 2018–19. In December 2018, the government announced a new Keeping our Children Safe Online package, which included an education and support program for those caring for young children and a new research program to inform future cyber safety initiatives. In May 2019, Minister Fletcher became Australia’s first federal government minister for cyber safety. This recognises the key need for public interest protection for our community in the online world.

In March 2019, the terror attacks in Christchurch resulted in government establishing the Taskforce to Combat Terrorist and Extreme Violent Material Online, a joint initiative with industry, charged with providing the government with advice on tangible and concrete measures to tackle the dissemination of this type of abhorrent content online. We co‑chaired the taskforce with the Department of the Prime Minister and Cabinet. The taskforce comprised representatives from industry including Google, Facebook, Twitter, Microsoft, Amazon, Optus, Telstra, TPG, Vodafone and Communications Alliance, along with relevant Australian Government agencies and departments.

The final consensus report of the taskforce was publicly released on 30 June 2019 and identified actions under five key pillars of prevention, transparency, deterrence, detection and removal, and capacity building. The report articulated actions to reduce online harms associated with terrorist and extreme violent content that build on the initiatives already taken by industry and government following the attacks. The work of the taskforce has supported Australia’s forward-leaning stance in international forums, in advocating with international counterparts for this issue to be at the forefront of multilateral discussions, and in pushing for firm commitments from industry for improvement. With these and other initiatives, the government is seeking to make our digital environment safer for the millions of Australians engaging online every day, and we will continue to play a lead role in delivering on this objective.

We also completed significant reviews of Australia’s digital online safety legislation and regulation, and are working to implement an updated eSafety regulatory regime.

The department continued its oversight of the Australia’s largest infrastructure project, the National Broadband Network (NBN), which is on track to deliver high-speed broadband to every home and business by June 2020. During 2018–19, the number of premises able to order a service increased by 2.9 million. This took the total number of premises ready to connect to the NBN to more than 9.9 million at 30 June 2019. To improve mobile phone coverage, 155 new mobile base stations came online in 2018–19, a direct result of our Mobile Black Spot Program. We’ve also kept the spotlight on supporting investment in the future of communications. For example, the imminent rollout of 5G represents a transformative step change from previous generations of mobile technology and takes us closer to global hyper connectivity than ever before. During the year, we took a number of steps to support industry to deliver 5G in a timely manner, including holding spectrum auctions in November and December 2018 and continuing our efforts to scale back outdated regulations that are no longer fit-for-purpose.

We released two major reports in December 2018, with the tabling of the Regional Telecommunications Independent Review Committee report and the release of the summary report on the development of the Universal Service Guarantee (USG). The 2018 Regional Telecommunications Independent Review Committee received 380 submissions from the public and we facilitated 22 face-to-face consultations across Australia, hearing first-hand how Australians living in regional, rural and remote locations use telecommunications services. The USG summary report was the culmination of 12 months’ work and concluded the USG is currently best delivered by relying primarily on the NBN for broadband and integrating the current Universal Service Obligation (USO) arrangements. We also selected a new provider for the National Relay Service (NRS) to ensure this important service can still be delivered to those who need it. Transition to the new service provider will take place in 2019–20.

One of the many indications that Australians are truly embracing a digital future is the decline in letter volumes, which has continued to fall since peak deliveries in 2007–08. Australia Post is instead managing record numbers of parcel deliveries as a result of online transactions — in December alone, Australia Post delivered a record 40.0 million parcels, up 12% on December 2017.

We have continued our active involvement in international forums. In September 2018, we led the Australian delegation to the Extraordinary Congress of the Universal Postal Union (UPU) in Addis Ababa, Ethiopia. We secured agreement to defer until 2022 proposed additional costs on net importing countries, like Australia. In October to November 2018, we led the Australian delegation to the International Telecommunication Union (ITU) Plenipotentiary Conference in Dubai, United Arab Emirates. We were successful in securing Australia’s re-election to the ITU Council, as well as ensuring that the conference outcomes aligned with Australia’s policy objectives on international telecommunications. Holding a position on the ITU Council allows us to influence the ITU’s strategic direction on international information and communications technology policies and ensures accountability and good governance of the funds that Australia contributes as part of our treaty obligations with the ITU.

Creativity and culture

Throughout the year, the department continued its efforts to support inclusiveness and growth in Australia's creative sector, and protect and promote Australian content and culture. Our performance results for creativity and culture are presented in Part 2 of this report.

As well as making a profound contribution to our national identity and improving social inclusion outcomes, our creative sector is proving itself to be a significant and growing contributor to Australia’s economy. In October 2018 we released a major report, Cultural and creative activity in Australia 2008–09 to 2016–17, which showed that cultural and creative activity contributed $111.713 billion to the economy in 2016–17.

This year is the International Year of Indigenous Languages (IY2019), which puts a spotlight on preserving and promoting Aboriginal and Torres Strait Islander languages. Our action plan for IY2019 includes supporting the revitalisation and maintenance of Indigenous Australian languages, improving access to education, information and knowledge in and about these languages, and promoting Aboriginal and Torres Strait Islander knowledge and values.

We also made it a priority to start the process of renewing the National Arts and Disability Strategy. To this end we held face-to-face meetings in a range of locations around Australia and sought feedback through a survey, which provided unique and important quantitative data about the experience of people with disability accessing and participating in the arts. In total, the consultation involved approximately 700 engagements with people with disability, carers and organisations.

During the year we continued to manage dozens of important arts investment and incentive programs including:

• the new Location Incentive grant program for international screen productions, which was announced in May 2018. Support for five productions was announced during the reporting period; these projects are expected to invest over $400 million in our economy, create more than 11,000 jobs and use the services of some 3900 businesses
• the Resale Royalty Scheme, which enables Australian artists to receive royalties from eligible resales of their work
• the Regional Arts Fund, which supports sustainable cultural development in regional, remote and rural communities in Australia

The diversity and reach of our arts and cultural programs is impressive and we are seeing the real impact they are having in creative settings right across Australia.

Copyright remained a key part of the government’s content framework, providing legal protection for people who express original ideas and information in certain forms. The results from our latest annual consumer survey on online copyright infringement, conducted in March 2019, found recent changes to the copyright framework are having a positive effect — lawful consumption of digital files is on the rise, while unlawful consumption is decreasing for television shows and movies.

The national broadcasters, ABC and SBS, continue to be important contributors to our media sector. During 2018–19, we completed an efficiency review of the broadcasters, and supported the Inquiry into the Competitive Neutrality of the National Broadcasters. The inquiry found the national broadcasters are meeting the ‘best endeavours’ approach to the Competitive Neutrality Policy in relation to their business activities (that is, where there is user charging). It also found there is room for improvement in transparency and internal procedures, and we look forward to working with the national broadcasters to implement these. More broadly, we also continued to implement the media sector reforms including administering the Regional and Small Publishers Cadetship Program, the Regional Journalism Scholarship Program and the Supporting Under-represented Sports program, which formed part of the 2017 Broadcasting and Content Reform Package.

Demonstrating departmental efficiency

In this year’s performance reporting, we’ve introduced information about departmental efficiency. Results against our efficiency measures demonstrate we are delivering more than 90% of our administered items on time and on budget.

Overview of financial results

The department’s net cost of services for 2018–19 was $113.0 million, with revenue from government of $107.8 million, resulting in an operating deficit of $5.2 million. The operating result excluding depreciation was a small surplus of $16,000.

Administered expenses decreased by $19.6 million reflecting a reduction in grants paid under the Mobile Black Spot Program due to delays in base station activations during the year. Administered income increased by $244.0 million primarily as a result of interest received from the government’s loan to NBN Co, which commenced in 2017–18.

Outlook

Our 2019–20 Corporate Plan provides information on our purposes, capability and operating environment for the period 2019–20 to 2022–23. It outlines what we will do to support the Australian Government’s policy, regulatory and program settings, which have a broad influence on enabling economic and social activity. Connectivity, creativity and culture are at the centre of our work plan.

Over the next four years, we will focus on:

• implementing the actions identified by the Taskforce to Combat Terrorist and Extreme Violent Material Online to enhance online safety, under the five key pillars of prevention, transparency, deterrence, detection and removal, and capacity building
• working with the international community, technology firms, social media platforms and other key bodies, to strengthen the online safety framework
• implementing Keeping our Children Safe Online measures, including the Early Years Online Safety Program and the Online Safety Research Program, and overhauling online safety legislation
• completing the NBN rollout and managing ongoing public investment in the NBN so that it is sustainable and delivers a high‑quality broadband experience
• facilitating the introduction of 5G mobile technology
• establishing the Regional Connectivity Program and continuing the Mobile Black Spot Program
• continuing to deliver and implement the Australian Government’s reform agenda, including for classification, media, copyright, spectrum and the USG
• ensuring the policy and regulatory settings in place reflect the contemporary environment; meet community expectations of consumer experience, public interest protections and public safety; and promote investment and support international competitiveness and the national interest
• encouraging sustainability, diversity and recognition of Australia’s creative and cultural sectors for productivity, growth and innovation, including supporting Indigenous arts and culture, Australian literature, the performing and visual arts, Australian screen production and the national collecting institutions
• implementing the Australian Music Industry Package, including the Live Music Australia initiative
• renewing the National Arts and Disability Strategy

During 2019–20, we will continue to build our organisational capability by rolling out a new learning and development strategy to empower our people to learn, develop and grow. We will also refresh our Diversity and Inclusion Strategy 2016–2019, to ensure continued relevance for an inclusive workplace.

In closing

I would like to acknowledge and thank the departmental team and our portfolio and industry partners for their vital contributions to connectivity, creativity and culture in 2018–19. I look forward to working with you again in the next reporting period.

Mike Mrdak AO
Secretary