Mr Oliver-Taylor's comments came as industry group Screen Producers Australia released an analysis of the response to the Options Paper by Free TV, the lobby group that represents Seven, Ten and Nine (the owner of this masthead and of streaming operator Stan), which showed their proposal would have a devastating impact on local production.

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Free TV’s submission called for an end to the sub-quotas that demand the commercial FTA networks broadcast set amounts – calculated using a complicated points-and-hours system – of first-release Australian drama, children’s content and documentaries.

As a compromise fallback position, Free TV advocated a modified sub-quota system, in which long-running and relatively low-cost dramas such as Neighbours, which Fremantle produces, and Home & Away would be worth more points, thereby reducing the need to commission shorter-run, higher-cost productions.

Foxtel and the streamers have also indicated their preference for a deregulated, or self-regulated, market.

Were the government to endorse full deregulation, Mr Oliver-Taylor says, the results for Australian screen stories would be catastrophic.

"I think we'll look back in five or seven years if there's no regulation, and we'll find it's gone," said Mr Oliver-Taylor.

"If there's nothing to incentivise people, or a stick-and-carrot model to create Australian stories in drama, docs and kids, they just won't do it. They'll find the most cost-effective way to generate an audience."

He argues quotas should be extended to the streamers, but traditional broadcasters should be permitted “to acquit their obligations in a much-more audience-focused way” as they increasingly opt to watch ad-free drama at the time of their choosing.

“I don’t want to be naively arguing that you’ve got to keep putting drama on at 8.45 on a Sunday night. The world has moved beyond that. If you’ve got SVOD or BVOD outlets or partnerships with a streamer, I think there should be a way to acquit your drama obligations in a way that suits the audience.”

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But if deregulation would destroy local drama, the SPA analysis released on Wednesday suggests even the compromise proposal put forward by Free TV would have a devastating impact.

The hours of adult drama on commercial TV would be reduced by one-third (down by 141 hours a year), while budgets would be cut by more than half (a result of tipping the scales in favour of those lower-cost shows). SPA claims 4600 jobs would be lost.

But Nine CEO Hugh Marks was scathing of SPA's analysis.

"I am constantly amazed by SPA ... failing to see the future of how their membership should be repositioning their business for where the content world of the future is," he said.

"Finding a flexible approach to make sure the industry can move to that world is what it is all about. You have to change and you need to move to where audience and consumption patterns are going."

Public submissions in response to the The Options Paper closed in July. The federal government has yet to issue its own response.

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