 Each year, as part of the media award presentation, we hear from an influential figure in the media industry. This year, I'm speaking with Peter Costello. Peter was, of course, a long-serving and distinguished Treasurer of Australia. He's now the Chairman of both Nine Entertainment Corporation and the Future Fund. Nine is one of Australia's leading media companies, the assets of which include the Nine television network, radio stations, online properties and, of course, major mastheads, the Sydney Morning Herald, The Age and the Australian Financial Review. Peter Costello and I sat down earlier for a conversation about the state of the Australian media, China, COVID and the economy. Peter Costello, thank you for speaking with me today. Good to be with you. Let me begin by asking you about journalism and the media industry in general. Obviously, foreign correspondents have to be paid out of the general revenues of media companies. So, tell us a bit to begin about the economics of the media industry in Australia at the moment. Well, the media industry is under intense competition. You've seen a situation where big international tech companies in particular have come into the market. They've been very successful at getting online advertising. That has affected the advertising that commercial operators can earn. And you've also seen a situation where people are now able to consume news on the Internet for free. So, this has put enormous pressure on commercial operators. Of course, I'll leave the ABC out of this because it has guaranteed funding. Enormous pressure on commercial operators. And over the last year, we've seen many jobs disappear. I estimate probably about 2000 in the last year. Many of them in regional Australia, but not all. Many of them in television. Fortunately, in our operations at nine, very few people because we've been able to hold our revenues by diversification. But the end result is there are fewer jobs now for journalists probably than they've ever been in the commercial sector. And that affects not just regional and local news, but of course it affects the ability to get international correspondence. Now, it looks like the government is minded to introduce a mandatory code requiring the platforms to compensate news media for their use of the product that you produce. In May, I think you said that Google and Facebook should pay 10% of their Australian revenues to traditional media companies to compensate for the free news that they are using to generate advertising and that would represent about $600 million. Where do you think that issue will land? Well, the government referred this matter to the ACCC and the ACCC has come up with the idea of a mandatory code, which we support. It's a code which would say if Facebook and Google are able to come to agreement with media companies well and good, but if they can't, that there would be an arbitration. The arbitration at the end of the day would be an arbitration of the value that Google and Facebook get from taking product from media companies and putting it up on their platforms. There's a very important point here that Google and Facebook don't employ a single Australian journalist. They just don't. What they do do, however, is they do put up on their platform news which has been prepared, authored by Australian journalists and that attracts eyeballs and those eyeballs attract advertising. Now, at the end of the day, if they were to take all of the advertising then the people that employ those journalists wouldn't be able to have them in the field. There would be no product. And so the ACCC did an investigation. It said it's fair that Google and Facebook share some of the revenue they get by putting this news up on their platform. We think that's only right. They should share some of the benefit that they get and what's more, it's in the interests of Australian news because if we can't get advertising, we can't employ those journalists. So those figures are $600 million. They're the figures that come from the ACCC, but there's quite a way to go. It'll either be done by agreement or hopefully if the parliament agrees and I think it will, arbitration in the final analysis. All right, let me come Peter to the question of foreign coverage. As chairman of NINE, you preside over a network of foreign correspondence based all over the world including in Washington and Jakarta and until recently in Beijing. How important is foreign coverage as a component of NINE's journalism? How important is it for you to provide an Australian angle on these international stories rather than taking the news from the wires or from the BBC or the New York Times? Well, I think this is the point about international coverage. If all you're doing is relaying facts, people can get those from the internet. They can read the foreign press. You can read the New York Times. You can read whoever you want to. So what is the purpose of having an Australian correspondent in a foreign country? Well, the purpose is to give surely an Australian perspective. It's not just to say CNN reported the following or the New York Times reported the following or the China People's Daily reported the following. If people want that, they can go direct and interested readers do go direct. So the purpose is to say, what does this mean for Australia? How will this affect Australia? Why is it an Australian view in relation to these things? And I think in places like China, I think it's a very distinctive Australian view. Unfortunately, we don't have journalists in China at the moment. We had to remove our last one quite recently. I think in the US presidential election, for example, they're not just there to relay the latest in the Biden v. Trump debate. I'll be more interested in some analysis. What does Biden mean for Australia? What does Trump mean for Australia? How would it affect our relations, our trade? How would it affect Australia's interests in the world? That's what's distinctive and that's what you're looking for in a foreign correspondent. But having foreign correspondents is expensive. So how do you balance the need for that Australian angle against some of the revenue issues you mentioned earlier? Well, it is expensive and that's why we don't have as many as we'd like to have. We have people in Los Angeles, we have people in London, we have up until recently people in Shanghai, Jakarta, places that are important to Australia. And it's quite an investment to do that, frankly, quite an investment. And it has to pay for itself in a commercial opera. We're not the ABC. We don't get taxpayers funds in a commercial operation. It has to pay for itself. And I think it does. I think in television news it's very valuable and in print it adds to the product. But it's always under pressure. As I said, the advertising model is being pressured all the time and being pressured by new entrants. Once upon a time, we at 9, we thought our competitors were 7 and 10. These days we have competitors like Facebook, Google. We have competitors like Netflix. Even in our publications, you can get the New York Times here in Australia. So we're competing on a global scale now and that's tougher and it's harder. And you've got to work harder to keep your readers and you've got to work harder to keep your advertisers. What about the other competing imperative and that is protecting your foreign correspondence? I mean, as you mentioned, you had to withdraw one of your correspondents recently as did the ABC from China. How do you, obviously that's got to be, I guess, your number one priority in relation to those personnel. Sure. We've come back to China in a moment and we had to withdraw our last correspondent from Shanghai. We had television reporters covering the Black Lives Matter demonstrations in the United States that were caught up in those demonstrations. It was very difficult. And you send reporters to cover riots. Sometimes they can get caught up in them. You do feel a special responsibility to make sure that your employees are safe but they want to get the story. It's always been thus, war correspondence. It's always been thus. You want them to get the story but obviously you've got to make sure that they're safe. So we do, from an employer's perspective, put a lot more time and effort into making sure that they are safe. You've got to have security assessments and all sorts of things and make sure you're prepared for all of these situations. And then sometimes you get caught up in geopolitics, which is what I would describe the China situation as. And you've got to make sure that your people have a means to get to the airport and to take it out at any particular moment. So let's come to China. There's no country probably in the world that's more important to Australia's future. There's no country that's changing our external circumstances faster than China. And yet we've lost our eyes on China, haven't we? How much of a problem is it for us that at the moment I think there are no Australian journalists working for Australian media organisations in China as of today? Yeah, no Australian journalists in China. I think this is the first time in as long as I can remember 30, 40 years or something. And the first thing that tells us is what relations between China and Australia are like, which is not good. That's why we've got no journalists in China at the moment. The second thing is it makes it harder for the public, I think, to understand what's happening because we don't have anybody on the ground that can report an Australian perspective. And I think there is a unique perspective that Australia has on China. We don't have the perspective of the United States on China. The perspective of the United States on China is superpower rivalry. Two superpowers who are rivals. The US perspective on China, that's China's perspective on the US. Australia's perspective is different. We're not a superpower rival to either of those countries. We don't aspire to be. We don't see ourselves in a race for hegemony in any particular part of the world. We're a medium power. We want to maintain an open trading system. We want to trade with both of those countries. We understand that our values and our security interests and our alliance lies with the United States. But we don't want to contain or rival China. So we do have a different perspective. And we can't just take our news from American sources. Obviously wouldn't want to take our news from Chinese sources, which are barely critical of the regime. And so it is a disappointment that we don't have Australian journalists now that can give you that kind of view on what's actually happening. Peter, you and I are speaking remotely because of the coronavirus pandemic and the lockdown and the travel restrictions. So let me ask you about COVID and the economic implications, in particular as a former Treasurer and as Chairman of the Future Fund. What do you think is the outlook for the Australian economy? Obviously the federal government has thrown the kitchen sink at the problem in the budget. It looks like the recovery has been underway for some months. What's your view on the medium term for the Australian economy? How confident are you? Well, you see, what is unusual about this COVID is there's the virus and then there's the government's government's principally state government's response to the virus and then there's the economic impact. It's the response to the virus that has closed down the economy. We have not been in a situation before where governments have deliberately closed the Australian economy. I didn't even do this during the Spanish flu. There was a deliberate closure of the Australian economy. Now, whether you think that was necessary or justified is not really to the point now. The point now is to open it up again. Fortunately, a lot of Australia is opening up. Unfortunately, some states are lagging. The sooner you open it up, the sooner you open up the borders, the sooner life resumes as per normal, the sooner the economy recovers. And I think if the state governments open up, properly open up, then we can recover. We can recover quite properly because this was a government-ordered close down and it will respond to a government-ordered opening up. Now, in the meantime, yes, we'll have a terrible budget deficit. Yes, we'll have to borrow a whole lot of money, but the extent of the recovery will be determined by the extent of the opening up. And hopefully by Christmas Australia will be back at work. If not, then this will have more permanent damage to the economy and to people's lives and people's livelihoods. In the states, worst affected and Victoria, obviously, is the worst affected. This is affecting businesses. Many businesses are not going to come back from this. But the sooner they open up, the more businesses can come back from this. It sounds like you think the state governments got the balance wrong between the health imperative and the economic side. Do you think that the state governments in Victoria in particular closed too soon? It was too harsh and they've held it for too long? Well, some states have done far better than others, obviously. And I'd say New South Wales and Queensland have done much better than Victoria. I think that's obvious. I don't think anybody could dispute that. I think it's important to allow the virus to escape from the quarantine hotels. And as a result, to have to go into this very severe lockdown has affected, well, I think Victoria has three quarters of the cases and 90% of the deaths. And that speaks for itself. Three quarters of the cases and 90% of the death and still in lockdown. Now, hopefully that's going to end in a week or two. And as it ends, hopefully the economy recovers. Final question, Peter. What about the international economy? Obviously, the outlook depends on the virus as it does for the Australian economy. When we get a vaccine, how quickly other governments open up. But how do you feel about the international economy in the medium term? Well, interestingly, it looks like the Chinese economy is growing again. Not as fast as it was. But if we can believe all the statistics out of China, and we'll just park that assumption for a moment, they seem to have more or less got rid of coronavirus and reopen their economy and growing again. The US economy is bouncing back. There's no doubt about it. The US did not lock down. It's had many more cases than say Australia, but its economy is bouncing back as a result of that. So I would think absent a big new wave of corona and fatalities in their wake. I think you'd see the global economy starting to edge back next year. But of course, all of this is going to be contingent on what happens with corona. I don't think we're going to have a vaccine anytime soon. But if we can learn to live with it, so-called COVID normal, and keep businesses open, we should start to see the international economy coming back. And of course, Australian foreign correspondents will be telling the story, the international story of COVID as they do, as they cover all those international stories so well. Thank you, Peter Costello, for speaking with me today. Great to be with you. Thanks, Michael.