The previous section concluded that government could assist the "creative infrastructure" to grow by implementing a set of active policy measures. It is clear that the full opportunities in future content industries are unlikely to be realisable without direct government support in a number of areas. This section sets out the areas where Government action is required or would be a catalyst to accelerate the process of building up capability. There are things that can be done at both a Commonwealth and State level, but in both cases a "whole of government" approach will produce the best effect.
There are four general areas for policy attention.
This area for policy attention relates to the industry opportunity to promote a professional services platform for interactive multimedia that serves:
The timeframe for policy initiatives in this area is immediate, as programmes need to have an impact from 1995.
It is recommended that government:
(a) Build an "on-line IMM-literate" community, starting with K-12 schools by ensuring the supply of modem connectivity to all schools, possibly in partnership with the on-line service providers or the carriers.
(b) Expand professional training and sustain world class academic disciplines at AFRTS, universities and TAFEs by setting targets that recognise the need to substantially increase output at least tenfold to at least 3000 graduates per year, and facilitate access to university and TAFE facilities for "off peak" use by commercial content developers.
(c) Recognise creative work as a form of research (for purposes of DEET's research performance indicators, that affect ARC funding decisions).
(d) Focus on continuing on-the-job training and apprenticeships and substantially expand the scope in this arena of the Graduate-based Projects in the Indsutry Innovation Grants Scheme (formerly known as the National Teaching Company Scheme).
(e) Work with the States and Territories to seed new creative teams through promoting "creative precincts" and physical places where clusters of people with multidisciplinary skills can form and work, in each capital city. There is a particular need to widen the IMM industry base beyond Sydney.
(f) Consider seeding an IMM project financing fund on a broad portfolio financing model to contain risk. Such a fund should only be established on the basis of majority funding from the private sector, on a totally commercial basis (say $1 from government for every $2 committed from the private sector). It would be important to establish incentives to ensure net revenues (and dividends) are reinvested. The fund may need to be around $50 to 100 million to get a portfolio spread of risk, and it would need liquidity and exit mechanisms for individual investors
These measures would send important signals to the market in advance of direct results from the implementation of government initiatives.
The objective is to attract both local and global IMM publishers to locate activities in Australia, and to partner with local content creators. The objective is also to retain and grow the current levels of investment in the existing content industries during the period of their restructuring. In addition to measures to provide support for creative teams, government programs need to address the opening up of distribution channels and the creation of an operating environment that will attract investment.
The timing for action in this area needs to be immediate, should have impact on project financings by mid-1995:
It is recommended that government:
(a) Aim for Asia-Pacific RHQ sites for all major US. and European book publishers, record companies, specialist financiers of audiovisual projects, film studios and newspaper and magazine publishers (particularly those experimenting today with on-line content and services).
(b) Capture an Asia-Pacific franchise for a regular "MILIA + CeBit" market by aiming to put on a 1996 or 1997 showcase (in Melbourne, Sydney or SE Qld).
(c) Develop Partnership for Development and Fixed Term Agreement "enhanced credits" for content development activities, by the Australian centres of international and local publishing firms, where intellectual property is resident in Australia and royalty streams are under local management and available for local reinvestment.
(d) Deploy a revamped S73B 150% tax incentive for syndicated financing to provide scale to industry financing and, in tandem with (c) above, designed to lock in the repatriation and reinvestment of royalties from international sales.
This reform of the R&D tax incentive must recognise its core role in investment attraction by:
(e) Fix problems associated - or perceived - with withholding tax on royalties (like UK-US tax treaty zero rates royalties).
(f) Fix copyright law and set up the world's lowest cost, and fastest response intellectual property administration regime. Support early action with a major technical design and system trial.
(g) Encourage equitable alliances between international firms with distribution channels and local independent publishers of IMM product.
(h) Establish "free" and easy intelligent access to government information (State and Federal) with government only seeking to recoup distribution and transformation costs (LIS/GIS precedent).
The objective is to implement measures to bring forward the timing of the market development, in Australia, of on-line multimedia services. The rationale is the significant opportunity to import consumers, and to forestall the erosion of investment in existing content industries that is likely if the current operating environment is perpetuated.
The timeframe for impact on industry outcomes requires early moves, including early signals to the private sector to underpin investment attraction. Issues associated with the telecommunications carriers and distribution bottlenecks need to be resolved, in the context of the 1997 telecommunications policy review, during 1994/5.
It is recommended that government:
(a) Use the Telecommunications Policy Review that is about to get underway to negotiate appropriate carrier infrastructure investment and tariffing policies.
(b) Advocate shift of Telstra/Optus optic fibre capacity investment towards very large capacity connections to North American, Asian and European consumer markets, that will permit competitive pricing of Australian-based interactive on-line services to those consumers (recognising the trade-off that there could be less capital available for domestic fibre/coaxial distributive services rollout).
(c) Encourage or permit other carriers to build or operate links to Australia if Telstra and Optus investment is too low or too late.
(d) Encourage carriers to commit to the provision of an Australian consumer ISDN service, to enable 128 kbps on-line IMM services to be widely and cheaply available by early 1996.
(e) Require, under current price determination arrangements, the marketing of appropriate and user-oriented international backbone network services(T-1, T-3, and higher information rates) and effect government to government agreements covering carriers and regulators in target markets such as ASEAN, China, Japan, and the US.
(f) Charge the Trade Practices Commission to monitor the developing on-line industry structures to ensure unforseen distribution bottlenecks do not arise and to ensure maximum competitive pressure and contestability is maintained at a carrier level, the gateway level, and at the database or packaging level.
(g) Attract international on-line service providers to locate at least their Asia-Pacific regional operations in Australia through such mechanisms as:
(h) Give both local and international on-line service providers access to government sponsored special R&D projects, such as working with the States in developing their IMM investment attraction strategies, building upon current culture and content industry proposals including:
(i) Build business opportunities for local IMM service providers via gateways and intelligent interfaces to government information based on zero charging by government for information content.
Governments, both Commonwealth and State, are in a prime position to gain leverage for accelerated industry development off their own creation, ownership and usage of cultural and content materials with extensive scale and variety. In terms of scale, government initiatives would represent the biggest single catalyst for accelerated indsutry development.
The timing for such initiatives should be as early as possible. To maintain the pressure for action the Government should send clear signals of its commitment through any available mechanisms whilst detailed implementation strategies are being developed.
It is recommended that government:
(a) Provide easy access to culturally significant data in digital form to IMM content developers and users, by early digitisation of national collections and archives.
(b) Promote and show leadership in providing easy and comprehensive access to nationally significant data, through data searching and retrieval techniques and through integrated indexing and cataloguing approaches based on content and context.
(c) Promote standards for document and image digitalisation and archiving through early government projects.
(d) Support the implementation of the world's best regime for intellectual property administration by a major technical design and system trial which could be mounted or coordinated by a leading government agency such as the CSIRO, the National Library, the National Film and Sound Archive, the Victorian State Film Centre, the NSW State Library, or Film Australia. Private sector participation in and adoption of the outcomes of such a project could be facilitated by extension agencies such as Aus Industry and NIES, Standards Australia, and Austrade.
(e) Build government business opportunities for local IMM content developers and publishers, by outsourcing departmental demand. For example, the adoption of student-centred training programs by government (local, state, federal) could build demand from $20m per annum to more than $200m in three or four years. Other key areas could be contracts to digitise, store and catalogue government information, particularly nationally significant and heritage collections.
(f) Initiate government-backed R&D and trialing of software tools and utilities for intelligent human : system interfaces and intelligent search, access and retrieval to assist consumers to find government information and services that they want, and that will support cooperative content generation. Consideration might be given to an early project for on-line access to nationally significant information, in IMM formats, led by competent agencies such as the. NFSA, the Victorian SFC, CSIRO, or Film Australia. Such trials in digitisation, content retrieval and context retrieval could involve the proposed Australian Centre for the Moving Image trialing on-line access to national data sets.
(g) Give local IMM service providers access to government business by outsourcing on-line service demand in areas such as:
A whole of government approach is required to gain general recognition that the external economic benefits from the accelerated development of local interactive multimedia producers are likely to be substantial, and worthy of government attention. In particular areas individual Departments might be charged with the task of pulling together appropriate responses across government: