2.31 In any set of recommendations for a new National Classification Scheme, there needs to be not only a consideration of the changing external environment and the underlying principles that inform proposed recommendations, but also an evaluation of both the nature of the problems that policy makers are seeking to address, and the ways in which existing policy instruments are working – or failing to work – in approaching those problems.
2.32 In the Australian Public Service Commission’s paper, Smarter Policy: Choosing Policy Instruments and Working with Others to Influence Behaviour, these questions are addressed in the following way:
(1) A rigorous analysis requires an assessment that the policy intervention will achieve net benefits for the community after taking account of its impacts. The identification of a social, economic or environmental problem does not justify government intervention in itself. Policy makers need to demonstrate that the benefits of intervening outweigh the costs.
(2) Policy makers do not start with a clean slate. The choice of policy instruments is invariably constrained, to some extent, by the existing array of government interventions. Thus an audit of current policy instruments already operating in the policy space is a prerequisite for a good policy design process. This audit would ideally include interventions by all levels of government and the full range of policy instruments—both regulatory and non-regulatory.
2.33 The Terms of Reference require the ALRC to inquire into whether the existing National Classification Scheme continues to provide an effective framework for the classification of media content in Australia. Some of the perceived positive and negative aspects of the current scheme are discussed below.
Positive aspects of the current scheme
2.34 Through its consultations and submissions, the ALRC found that positive aspects of the current classification scheme included:
- well understood classification categories and markings;
- high levels of public awareness and familiarity with the classification scheme;
- statutory independence of the Classification Board and the Classification Review Board; and
- promptness of the Classification Board in classifying media content.
2.35 The ALRC also found strong support for the co-regulatory arrangements that had operated in broadcast and subscription television under the Broadcasting Services Act.
2.36 Prior to the establishment of the cooperative scheme in 1995, the complex network of Commonwealth, state and territory laws could sometimes result in the classification of a single film involving 13 pieces of legislation across various jurisdictions.
2.37 John Dickie, the last Chief Censor and the first Director of the Office of Film and Literature Classification, observed that the 1995 reforms had considerable merit. He proposed that because of ‘the investment by Government and industry over many years to inform media consumers’, the latest ALRC Inquiry
should try to improve the system rather than start all over again. It took many years for the viewing public to synthesise the classification categories for film and DVDs with those for television when they were altered in the early 1990s.
2.38 Under the current system, the Classification Board typically makes over 7,000 decisions within prescribed time limits every year, and few of these decisions attract controversy. Commentators have noted that distributors generally have realistic expectations about eventual classifications, particularly for films and DVDs.
2.39 The public generally knows and understands the current classification system. In a 2005 survey undertaken by the Office of Film and Literature Classification, virtually all who responded were familiar with the classification system for film and DVDs, and the vast majority believed that classification symbols were useful.
2.40 The Classification Board and the Classification Review Board are independent statutory bodies, operating apart from government, industry, and each other. This formal independence has been viewed as one of the Australian classification system’s very important and highly valued features.
2.41 A co-regulatory framework has now operated in broadcast and subscription television since the 1990s, and it has strong support from the industries involved. In its submission in response to the ALRC’s Issues Paper, Free TV Australia observed that the level of complaints received about commercial television program classification and content were very low relative to the amount of material broadcast and the audience size, and that very few complaints led to subsequent investigations by the ACMA or evidence of breaches of the classification guidelines.
There is a very low level of complaint about programming content (including advertisements), even though commercial free-to-air broadcasters are transmitting content twenty-four hours a day, three hundred and sixty five days a year across nine channels—an annual total of 78,840 broadcast hours. In 2010 Free TV’s average daily reach was 13.8 million people. Yet only 834 classification complaints were received for the whole year, with only six upheld by broadcasters. In 2009–2010, the ACMA conducted 85 investigations into commercial television broadcasters, of which only 30 related to classification matters, with only 11 of those resulting in a breach finding.
2.42 ASTRA was also highly supportive of co-regulatory arrangements for subscription television:
ASTRA supports an approach where general principles and a national framework for content classification are determined by the Government through Parliament, but where content providers are primarily responsible for ensuring compliance with classification and content regulations that may apply. Working within a framework that reflects prevailing community attitudes and standards, content providers are best placed to respond appropriately and in a timely manner to consumer concerns relating to content classification. The current co-regulatory model for subscription television is an example of industry-based content classification regulation that works well both for consumers and broadcasters.
2.43 The ACMA has noted that co-regulatory mechanisms as applied through industry codes can be an important part of any future regulatory framework, as they can, subject to a number of conditions, provide the basis for more efficient and effective ways of achieving policy goals by influencing the behaviour of relevant industry stakeholders.
Under communications and media legislation, self- and co-regulatory arrangements require industry participants to assume responsibility for regulatory detail within their own sectors, and this is underpinned by clear legislative obligations, with the regulator retaining reserve powers. These arrangements provide flexibility for the ACMA, as the regulator, to exercise a variety of roles dependent on the nature of the concern, such as whether the issue is a policy matter or market issue. This includes the flexibility to not intervene to allow market-based solutions to develop, provide advice to government on policy issues, or encourage industry-based solutions.
Negative aspects of the current scheme
2.44 Stakeholders have identified aspects of the current classification and content regulation framework that have become dysfunctional, are failing to meet intended goals, and create confusion for industry and the wider community.
2.45 Inconsistencies exist in relation to content permitted across different media platforms and content that must be classified under different regulatory frameworks. An often cited anomaly has been the treatment of computer games, as compared to films and publications, with the absence of an R 18+ classification for computer games. This arose out of concerns that existed in 1994 about the possible effects of interactivity, and the underlying assumption that the primary consumers of computer games are children.
2.46 Another problem of the current scheme is the pervasive ‘double handling’ of media content. Feature films classified for cinematic release need to be classified again when released on DVD, because the content has been ‘modified’ by adding ‘extras’—even if the final classification is often the same. Films are also classified again before they are broadcast on television, and classified twice if they are released in both 2D and 3D versions. Television programs that are classified when initially broadcast have to be reclassified by the Classification Board when released on DVD. This ‘double-handling’ is costly to media content industries, time consuming for the Classification Board, and diverts resources from other areas of potentially greater public concern.
2.47 The Classification Act provides that Commonwealth, state and territory ministers must unanimously agree to amendments to the National Classification Code and classification guidelines. The Intergovernmental Agreement is premised upon the understanding that ‘in relation to the Code and the classification guidelines, the Commonwealth, and the Participating States are equal partners and that the policy on these matters is derived from agreement between all jurisdictions’. Critics argue that this process is time consuming and poorly designed to deal with significant changes in technology and community expectations. For example, agreement among the Commonwealth, states and territories over the introduction of an R 18+ classification for computer games took over a decade.
2.48 While the classification cooperative scheme addressed some of the previous anomalies between different states and territories in Australia, significant differences remain. The sale and distribution of X 18+ material is permitted in the ACT and the Northern Territory, but not in the states and not online. The states also have different regulations relating to restricted publications and the sale and the display of R 18+ films. The ‘grey market’ in adult publications and DVDs is estimated to be worth about $20–30 million a year. The significance of this market becomes even greater as adult content migrates to the internet, and is distributed on an international basis.
2.49 There are also significant differences in enforcement and penalty provisions between states and territories. Some states and territories approach enforcement of classification laws as a criminal matter dealt with by the police, while others, such as the ACT and Queensland, deal with it through trade and commerce related agencies.
2.50 The relevance of jurisdictional differences between states and territories diminishes significantly in the context of media convergence and the blurring of boundaries between physical ‘hard copy’ and online media, as well as the shift of entertainment media online. The Victorian Government observed that:
Treating identical entertainment media differently based on the media platform on which it is viewed or played (ie creating different regulatory obligations for a film that is rented from the local video shop compared to a film that is downloaded and viewed on a mobile tablet device) creates confusion, inconsistencies and inefficiencies … Because the National Classification Scheme (NCS) primarily aims to regulate media content in a commercial context, most industry bodies captured by the NCS distribute, sell or exhibit material nationally. Jurisdictional differences have the effect of creating significant compliance burdens on such industry groups that are then required to comply with eight different regulatory frameworks. Unnecessary complexity inevitably leads to higher rates of non-compliance and increases costs to business.
2.51 There is evidence of considerable, and growing, non-compliance with laws concerning the distribution of incorrectly marked adult content, unclassified adult content and X 18+ classified content. In particular, there is concern about the refusal on the part of distributors to submit such content to the Board for classification or to comply with call in notices. It has also been noted that current resources have been insufficient to effectively investigate and prosecute breaches.
2.52 The scope of the current RC category has been identified as a problem with the current scheme. Problems have been identified with the disparate range of material that may be RC and the extent to which current prohibitions align with community standards.
2.53 As it currently stands, RC incorporates material that is illegal under criminal law to produce, distribute or possess—for example, child abuse material—and material that is illegal to distribute, but not necessarily illegal to possess—for example, ‘gratuitous, exploitative or offensive depictions of sexual activity accompanied by fetishes or practices which are offensive or abhorrent’. A number of submissions to this Inquiry argued that these are distinct categories of material, and should be treated differently.
2.54 The RC category also covers material that ‘promotes, incites or instructs in matters of crime or violence’. This means that material relating to drug use, shoplifting, graffiti or euthanasia could potentially be classified RC. While almost all submissions accepted the need for some forms of content to be banned outright (eg, material advocating murder, rape or terrorist acts), many considered the current RC category to be overly broad, too ambiguous in its application, and problematic in its application in the online environment.
2.55 It has also been argued that more content may be prohibited online than in other media formats. Under the Broadcasting Services Act, certain online publications are prohibited if they have been classified Category 1 Restricted or Category 2 Restricted. Dr Gregor Urbas and Mr Tristan Kelly observed that,
With the introduction of iPads and the rise in popularity of digital books, more existing publications are likely to become available over the Internet, and this inconsistent standard will become more problematic.
2.56 The relationship between classification laws and the separate regulation of online content under the Broadcasting Services Act is problematic. For example, providing online content, without breaching the Broadcasting Services Act, may nevertheless breach classification enforcement legislation that, for example, prohibits the distribution of unclassified films and computer games. These enforcement provisions may apply to online content because the definitions of ‘film’ and ‘computer game’ in the Classification Act are broad, and not confined to content on specific media, such as DVDs or other data storage devices.
2.57 The Broadcasting Services Act provisions regulating online content have been described as ‘highly complex and confusing legislation that is almost incomprehensible’ and legally uncertain. Telstra pointed out that, where content is assessed under sch 7, the legislation may involve a costly ‘double classification’ obligation, which disadvantages Australian online content providers.
This superfluous ‘double classification’ obligation for online content creates unnecessary uncertainty for industry participants implementing these arrangements and raises the spectre of prohibitive compliance costs should online content provided by Australian content providers need to be formally classified by the Classification Board … Australian online content providers subject to this requirement would be put at a major competitive disadvantage to overseas based content providers who would not be subject to these obligations.
2.58 Lack of clarity in responsibilities relating to the regulation of online and offline media content also manifests itself in an uncertain relationship between the ACMA as a regulator of media content online and the Classification Board as a classification decision-making body. A complaints-based approach to content online, and separate statutory requirements to classify other media content offline, generates inconsistencies of treatment across media platforms.
 Australian Public Service Commission, Smarter Policy: Choosing Policy Instruments and Working with Others to Influence Behaviour (2009).
 Australian Law Reform Commission, Censorship Procedure, ALRC Report 55 (1991), [1.11].
 J Dickie, Submission CI 582.
From 1 July 2009 to 30 June 2010, the Classification Board received 7,302 applications, including applications to classify 4,820 films, 1,101 computer games, 291 publications (228 single issue and 63 serial publications), 258 online content referrals from the ACMA, and 88 referrals from enforcement agencies. These figures are generally consistent with the number of applications the Classification Board has received over the previous two years: D McDonald, Correspondence, 6 May 2011.
 See, eg, J McGowan, ‘Classified Material’ (2007) Law Society Journal 22.
 Office of Film and Literature Classification, Classification Study (2005), 6, 17, 32.
 Free TV Australia, Submission CI 1214.
 ASTRA Subscription Television Australia, Submission CI 1223.
 Australian Communications and Media Authority, Optimal Conditions for Effective Self- and Co-regulatory Arrangements (2010), 1.
 During the course of this Inquiry, the Australian Government, state and territory censorship ministers agreed to introduce an R 18+ classification for computer games. A bill to amend the Classification Act to establish an R 18+ classification category for computer games was introduced by the Minister for Home Affairs and Justice, Jason Clare MP, in February 2012.
Agreement Between the Commonwealth of Australia, the States and Territories Relating to a Revised Co-operative Legislative Scheme for Censorship in Australia (1995), recital C.
 Eros Association, Submission CI 1856.
 Victorian Government, Submission CI 2526.
 See Australian Government Attorney-General’s Department, Submission to Senate Legal and Constitutional Affairs References Committee Inquiry into the Australian Film and Literature Classification Scheme, 4 March 2011; Senate Legal and Constitutional Affairs Legislation Committee—Parliament of Australia, Estimates: Transcript of Public Hearing 18 October 2010, 11, 14 (D McDonald).
Guidelines for the Classification of Films and Computer Games (Cth).
National Classification Code 2005 (Cth) cls 1–4.
Broadcasting Services Act 1992 (Cth) sch 7, cl 20(2).
 G Urbas and T Kelly, Submission CI 1151.
Classification (Publications, Films and Computer Games) Act 1995 (Cth) ss 5, 5A.
 I Graham, Submission CI 1244.
 Telstra, Submission CI 1184.