The Australia Network tender saga has as much to do with China and the ABC’s independence as it does with News Ltd, and perhaps more.

The ongoing leaking of details about the process to a foreign policy specialist, Daniel Flitton, is a clear signal that a tension inherent in the Australia Network contract since it commenced has finally come out into the open.

This service had its genesis in Alexander Downer’s resentment over losing the fight to prevent savage cuts to Radio Australia and the ABC’s Australia Television Network in the 1996-97 budget process, and his annoyance that the cheap-as-chips replacement TV service – it was sold to the Seven Network – was busy showing programs like Hey Dad in prime time in capitals across the region.

In 2000 he took the opportunity presented by growing regional instability and Seven’s closure of the service to strike back, securing more funding to revive Radio Australia – then existing on scraps within the ABC – and set up a new TV service.

The Radio Australia funding was administered by the Department of Communications, but the TV network tender was run by DFAT, with input from Communications bureaucrats, a strange split given they should have been co-located either in Communications or DFAT, but not both.

The novelty about the TV tender process was that neither the agency inviting tenders, nor the successful tenderer, wanted it. DFAT regarded the TV service as a folly of Downer’s, and thought the money involved – at that stage it was $20m a year – could have been spent much more effectively in other areas to promote Australia’s image in the region. And the successful tenderer, the ABC, had to be dragged into the tender process. Then MD Jonathan Shier thought the tender a distraction from the core business of getting the ABC to function on a budget slashed by the Howard Government, and of trying to get that budget increased again. Eventually, he relented and the ABC put in a bid.

There was another reason for the ABC’s reluctance.  Even though tensions between the Howard Government and the ABC had yet to reach the heights they did over the broadcaster’s coverage of the Iraq invasion, the ABC was constantly under assault from Coalition ministers and MPs, and the broadcaster believed there was a very real possibility a TV service intended to present Australia’s image to the region on a contractual basis would be subject to political interference, or become a tool to bash the ABC with. One of the conditions on which it bid was that it retained full editorial independence in relation to the service.

DFAT never liked the ABC’s insistence on its independence for the service, regarding it as a potential hindrance to making the service work properly.

Now that insistence on editorial independence appears to have had its sequel in relation to China. The network has – like most other western broadcasters including News Corp – always struggled to get access to mainland China. Initially the Chinese – apparently not understanding how Australian broadcasting worked – demanded a quid pro quo that Australia grant reciprocal broadcast rights to its international CCTV service. That it could already get access to Australia simply by negotiating a commercial arrangement with a subscription TV provider like Foxtel to add CCTV to the service’s foreign language offerings was either not good enough or not understood by officials used to strict government control over media. The Chinese wanted some form of mandated access to Australia broadcasters. This plainly wasn’t in the control of the ABC anyway, and was refused.

And while the 2005 bid for the network contract by Sky News (one-third controlled by News Ltd, via BSkyB) was regarded poorly, last year it signed a major deal with CCTV, including to swap English language news programming. This significantly strengthened its capacity to make serious inroads in China.

The ABC hasn’t been idle on that issue either. The ABC signed its own partnership with Shanghai Media Group in July last year. And bear in mind Australia Network’s CEO for the last 4 years has been Bruce Dover, formerly News Corp’s China Vice President and author of an exposé on Rupert Murdoch’s Chinese adventures.

Judging by the DFAT (or higher) leak, the ABC’s chances of expanding in China have been cruelled by its determination to safeguard its editorial independence, whereas Sky appears to have fewer qualms about establishing a separate service tailored to meet the requirements of one of the world’s most vicious dictatorships. DFAT – which, on China, prefers to look the other way rather than worry about little things like systematic brutalization of entire populations – plainly liked what it saw from Sky. Throwing in a sop to the ABC via a programming deal would have made it even more appealing.

The Government, though, took a different view, clumsily and belatedly shifting the management of the contract back to Communications, or Broadband as it’s called these days. It should have been there all the time, or it and the Radio Australia funding both managed by DFAT. But several years ago, the RA funding was absorbed into the ABC’s base funding. In any event, the specific portfolio where the decision is made isn’t particularly relevant – as under the Howard Government in 2005, the actual decision will be made by Cabinet, not by an individual minister or by a senior bureaucrat. Claims about a lack of probity in the process seem to miss this point entirely.

The other point to consider is, if Kevin Rudd indeed belatedly wants to extend the service to the Middle East, it’s going to cost a little more in content funding, and quite a bit more in transmission funding, meaning an increase in tender cost.

The better solution yet would be to dump the entire TV contract. Those DFAT officials in 2000 were right – the service aimed at burnishing our image in the region is a waste of money. The issue isn’t who gets the contract for the Australia Network, it’s why we blow $45m a year on it.

Disclosure: Bernard Keane is a former officer of the Department of Communications and participated in processes relating to the establishment of an international television service and additional funding for Radio Australia.