The ABC’s budget will be cut by US$120 million over the next four years as a result of decisions made by the Federal Government.

Operational funding cuts of close to US$40 million over four years will come on top of the termination of the US$220 million contract to deliver the international broadcasting service, Australia Network.

The 2014-15 budget also foreshadows further significant funding cuts in the wake of the Lewis review into the operations of the ABC and SBS.

“The funding cuts will be disappointing for audiences. The government gave repeated commitments before and after the election that funding for the Corporation would be maintained,” the ABC’s Managing Director, Mark Scott said.

Scott said while the ABC would look to make its operations more efficient, the funding cuts would regrettably and inevitably result in redundancies and a reduction in services. The ABC Board and Executive would need time to work out the full impact and to review strategies and internal budgets.

Scott said the decision to cut the funding for Australia Network was very disappointing, given the ABC was only one year into a 10-year contract with the Department of Foreign Affairs and Trade.

“Countries around the world are expanding their international broadcasting services as key instruments of public diplomacy. The ABC had negotiated a detailed strategy with DFAT to develop relationships with major broadcasters in the region and to target locals likely to trade, study in or travel to Australia. This partnership had resulted in expanded audiences in key markets and was on track to deliver all agreed targets.

“This decision runs counter to the approach adopted by the vast majority of G-20 countries who are putting media at the centre of public diplomacy strategies to engage citizens in other countries.

“It sends a strange message to the region that the government does not want to use the most powerful communication tools available to it to talk to our regional neighbours about Australia.

“The agreed strategy with DFAT based on broadcasting, online partnerships and social media was proving successful. This decision cannot be justified in terms of performance against agreed priorities.”

Scott said the ABC Board would now have to examine how the ABC delivers its international Charter obligation, which requires it to broadcast programmes that, among other things, “encourage awareness of Australia and an international understanding of Australian attitudes on world affairs”.

In addition to the funding cuts, the ABC will also have to manage the cessation of funding for the online disability website, ABC Ramp Up at the end of this financial year.

Scott said the ABC was aware of the tight fiscal environment and constantly reviewed its strategy and performance to find better work practices and greater efficiencies.

“The ABC is very tightly geared. We have been diligent in reducing backroom costs over recent years to ensure the ABC can deliver better and more varied content to our audiences. That strategy has enabled the ABC to self-fund important new initiatives like iview, ABC News24, triple j Unearthed online and a range of other new digital services.”

Scott said the budget made it clear the Lewis efficiency exercise would impose additional demands on ABC budgets over the next few years. The Department of Communications has been conducting a study into ABC and SBS efficiency with the assistance of ex-Channel 7 CFO and recently appointed CFO of Southern Cross Austereo, Peter Lewis.

“The task ahead will be extremely challenging for ABC management and staff,” Scott said.

“We will need to make funding cuts, while trying to also save money to invest in new priorities to ensure the ABC remains a compelling feature of the Australian media landscape – a public broadcaster in the digital era.”