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Legal and Constitutional Affairs Legislation Committee - 01/05/2015 - Copyright Amendment (Online Infringement) Bill 2015

AGAR, Ms Sarah, Campaigns and Policy Adviser, Choice

CORBIN, Ms Teresa, Chief Executive Officer, Australian Communications Consumer Action Network

HEPWORTH, Ms Patricia Ruth, Executive Officer, Australian Digital Alliance

KIRKLAND, Mr Alan, Chief Executive Officer, Choice

O'HALLORAN, Mr Xavier, Policy Officer, Australian Communications Consumer Action Network

[13:54]

CHAIR: Welcome. Thank you for talking to us today and making a contribution to this important hearing. The committee has received submissions from each of your organisations. Would any of you like to make any changes, additions or modifications to your submissions? That not being the case, information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I invite you to make opening statements.

Mr Kirkland : Thank you for the opportunity to make an opening statement. On behalf of Choice, I would like to say that our primary concern is with the bill in toto in that we believe there are very strong arguments that it will not work and, indeed, a lack of any significant evidence that it will be effective in reducing online piracy. We would say it is the sort of measure that could only have been designed by people who do not understand the internet—because it is just so obvious that people who are seeking to access content other than in appropriate ways will continue to find ways to do so. There are numerous ways to get around a website filter such as this, including virtual private networks, smart DNS, and proxy and mirror sites; at the simplest level, a Google search will often help somebody to find access to content that they are seeking. All of those measures will continue to exist despite this legislation if it is passed. People who already have the sophistication to use pier-to-pier software will easily find their way through any other measures they need in order to access the content they are looking for. Our research has shown that the majority of people who identify as pirates at the moment would actively seek out ways to access blocked websites and would have the skills to do so. That is our primary concern.

Our second concern is that the bill does not address the root causes of piracy or online copyright infringement, which are essentially about access and pricing. We know that Australians still suffer from what we call the 'Australia tax', which means they pay around 30 per cent more for iTunes songs compared to US consumers and up to 350 per cent more for digitally downloaded PC games via Steam, just to give a few examples. But, of course, it is not just about price; it is also about timeliness of access to content and, once again, this bill does nothing to address that issue.

Our third concern is around unintended consequences. We know that there are large numbers of Australians who are already using VPNs. A survey by Choice last year found that eight per cent of respondents, which would be roughly 680,000 Australian households, access paid-for geoblocked services through VPNs and similar services. These are people who are going out of their way to pay for content, and it is very important that the bill does not capture them—and we believe that, with the way it is currently drafted, it may capture them by capturing VPNs.

Finally, a very significant concern is about the impact on ISPs. This bill, of course, comes on top of the recent data retention laws and the copyright code that has been developed by the Communications Alliance. When you put all of them together, we have a growing bundle of red tape that is stifling our internet industry at a time when we really should be liberating it and making it efficient, flexible, nimble and as fast as possible. So, for all of those reasons, we believe that the bill should not pass, but we also have a range of thoughts on ways in which it could be improved if it were supported.

CHAIR: Thank you for that. We appreciate your contribution.

Ms Hepworth : Because we are slightly less well known than, say, Choice, just to introduce ourselves, the Australian Digital Alliance was founded in 1998 by the former Chief Justice of the High Court, Sir Anthony Mason, and since then we have advocated for a flexible copyright system that benefits creators, users and innovators. The ADA members are predominantly organisations that could be categorised as intermediaries in the sense of copyright. We are schools, universities, libraries, museums, galleries, tech companies and organisations assisting the blind and vision impaired. Unlike my fellow panellists, we do not directly represent consumers. However, we do strongly advocate for the students in our schools and universities, the patrons of our cultural institutions, the users of our online platforms and technological innovations, and those with disabilities that hinder their access to content. We also strongly support the Australian cultural sector, our libraries, museums and galleries, our proud curators, patrons and educators. Our schools and universities inspire and train the next generation of Australian creators and our technology companies work with and are part of the creative economy, including providing new markets and audiences for Australian creators.

Overall, we do not oppose an injunctive process to block flagrantly infringing overseas based online locations as long as it is appropriately targeted as adequate safeguards and is implemented as part of a wider program to support content creation and distribution. A number of recent reviews have made urgent recommendations to update the copyright system. Without addressing these, such as fair use, geo-blocking, technological protection measures, orphan works and the ratification of the Marrakesh treaty for the blind and vision impaired, any new ad hoc enforcement measures will be less effective and will not optimally support growth in our creative, education and digital economy sectors.

In the discussion around piracy, the extension of safe harbours is a particularly relevant reform. Safe harbours provide the mechanism through which rights holders can notify intermediaries of infringing content, obliging the intermediary to promptly take down that content or disable access to that content in order to obtain legal protections. This method of copyright enforcement is particularly important to small-scale and independent Australian creators. Unlike the copyright code or the proposed website blocking, you do not need to use complex technologies or hire expensive lawyers in order to utilise the safe harbour protections. Unfortunately, in Australia, only carriage service providers, ISPs, are covered by safe harbours. The practical effect is that other intermediaries—schools, universities, libraries and online platforms—operate at a much higher legal risk than their overseas counterparts and there is no incentive. In fact, there is quite a high degree of legal risk for local development of innovative antipiracy solutions, such as we have seen overseas with YouTube's content ID or Dropbox's file scanning.

The ADA recommends that the extension of safe harbours, as proposed in the online copyright infringement discussion paper, be added to the current bill and proceed at the same pace. As noted previously, if done in conjunction with these wider reforms, the ADA does not fundamentally oppose site blocking. However, we do worry that, as currently drafted, the bill risks catching legitimate services and has inadequate protections for those affected, and those affected are unlikely to be parties to the original case.

In the time remaining, I would like to very quickly mention our two biggest worries. First, the concept of facilitation in section 115A(1) is novel and unclear. Australia has a number of doctrines that extend copyright infringement to sites that are not themselves hosting infringing material—most notably, authorisation liability. If I could draw your attention to the 2006 case of Universal v Cooper, a court had no trouble finding that a site that hosted user-uploaded URLs that simply linked to infringing music was authorising copyright infringements. Sites that authorise infringement will be infringing sites. If 'facilitation' is broader than authorisation, the result is that sites that would be legal if hosted in Australia may be blocked. This would be a quite drastic legal precedent. The including of the word 'facilitation' is also the source of the majority of concerns about legitimate tools being blocked, such as VPNs, other geolocation bypass services, cloud storage and URL shorteners.

Finally, the court is directed to take into account a number of factors when deciding whether to issue an injunction. These factors are particularly important in an Australian context as, unlike other jurisdictions such as the EU, our courts do not run under EU directives that require the court to look to fundamental human rights. In the EU, each case includes a consideration of rights, including the right to freedom of expression and information, and that right must be balanced against the rights of the rights holders and the ISPs. Students, library patrons and consumers are unlikely to participate in the court process but may have their freedom to expression and access to information curtailed by the results of these injunctions. It is essential that the court is directed to consider the effect on their fundamental human rights.

So, in summary, the ADA recommends that the bill is amended to narrow the scope of the injunctions, increase the safeguards and introduce new provisions to extend safe harbours to all online service providers. We also ask that other outstanding copyright reforms are promptly addressed, to bring Australia into line with other innovative countries.

CHAIR: Ms Hepworth, this is a bit of an unusual request, but could you just go back. You said there that this bill gives rise to circumstances where, if an entity had the same circumstances applied to them, operating in Australia would be an offence simply because this bill looks at the international implications. Could you just elaborate on that for me? I do not quite understand.

Ms Hepworth : What I am saying is: because of this concept of facilitation—to facilitate copyright infringement—it looks to be much broader than what would constitute infringement, either straight-out infringement, authorisation liability or something else in Australia. So it means that a site that might be a facilitating site would be perfectly legal if hosted here, but might be blocked—so your access to it would be blocked—if it were overseas. So you have the possibility of this bill—

CHAIR: But if the site here engaged in the publication of material that would infringe copyright—

Ms Hepworth : The trouble is, as I said, with this word 'facilitation'. So we are not sure what facilitation would catch, but, for example, we have seen serious concerns raised over VPNs. If someone is using a VPN to bypass, for example, geoblocks, could you block access to that site that hosts the VPN? A VPN hosted in Australia would not be liable for authorising copyright infringement. It would be fine. Under the broader test of facilitation, you might block access to an overseas based VPN that does exactly the same thing. So, as I said, the difficulty is facilitation—

CHAIR: No, sorry—let me break this down a bit. I did not finish grade 10, and it shows some days. Come back. You are suggesting that a corporation—I will call it a corporation, or an entity—in Australia could infringe copyright laws by their behaviour, their act or omission, and be exempt from civil resolution, and yet, if you took exactly the same thing, where they breach copyright laws overseas, they would be subject to the laws of—

Ms Hepworth : Not quite. What I am saying is: this bill has the potential to catch overseas sites that do not breach copyright under the Australian test, because facilitation of copyright infringement is probably broader than conduct that would actually be a breach of copyright in Australia.

CHAIR: In the whole day here so far, and from what I have read, no-one has raised the proposition that this bill can enliven an action that is absent of a breach of copyright by the party on the other end of the action. So are you suggesting that that can occur?

Ms Hepworth : Yes, and it is because facilitation of copyright infringement is not an infringement in Australia. It is a novel concept. To be honest, we are not entirely sure how the court will construe it, but there is definitely potential that activity that is legal in Australia could be blocked.

CHAIR: Sorry, Senator Collins.

Senator JACINTA COLLINS: No, we are up to Ms Corbin.

CHAIR: We are too—my apologies.

Ms Corbin : That is okay, because we cover that point a bit as well, so I was busy nodding. The Australian Communications Consumer Action Network is supportive of effective and proportionate efforts to prevent online piracy. The consumers stand to benefit from a vibrant and creative industry which is adequately compensated for its intellectual efforts. So we want to get that clear before we make any other comments. Blocking access to online locations which infringe or facilitate the infringement of copyright is one step rights holders can take to prevent piracy from continuing undisturbed. However, we have a number of concerns about the reach and effectiveness of the proposed legislation, which picks up directly from Ms Hepworth's point. We also maintain that without adequately addressing problems with access and affordability to content the problem of piracy will persist regardless of regulation.

ACCAN's submission explored the impact this bill may have on consumers if it exceeds its intended scope and explored possible ways to make it more fit for purpose. ACCAN notes that the Standing Committee on Infrastructure and Communications is currently dealing with similar concerns around website blocking. We believe much could be gained from reviewing submissions made to that committee in developing policy targeted at curbing online piracy. This is particularly relevant to ensure proper processes are in place to minimise problems with blocking at the technological level. We recommend that the website blocking should mirror the criteria for inclusion in the Interpol worst-of list. For example, the Interpol scheme contains a stop page which states the site has been blocked, names the agency that has enforced the block and links to information about an appeal. Use of this type of blocking could create an important teachable moment for consumers by directing them to legitimate forms of content.

There is evidence from the UK and Australia of website blocking powers being misapplied. If the blocking power is mistakenly applied, the impact on small businesses and other website operators could be minimised by having a quick, accessible and free path for appeal, perhaps through the ACMA acting on their behalf. The impact of a misapplied block on small business is likely to be extremely costly for both reputation and/or direct loss of sales. ACCAN commissioned research found that 66 per cent of small businesses would find even one day without fixed broadband services to be severe or catastrophic to their business.

The legality of bypassing geoblocking is particularly important in a discussion that reforms the Copyright Act. Many of these reforms have been proposed in the context of treaty obligations designed to promote globalisation and free trade. The benefit for Australian consumers from these efforts is access to greater choice of products and services. However, this choice is curtailed if the Copyright Act is used as a tool to direct new trade barriers based on exclusive geographic licences. Geoblocking better serves geographic market segmentation rather than the goal of copyright protection, which is to enable creators to receive compensation for their intellectual effort. The website blocking bill is an opportune time to clear up the lingering doubt about the legality of bypassing geoblocking. Not addressing this issue now may have an impact on consumer choice if rights holders successfully apply to have access to geoblocking bypass services shut down.

Dutch research found that site blocking against popular file-sharing website The Pirate Bay had an immediate effect on levels of piracy. But this faded out after a period of six months as new sources of pirated material emerged. ACCAN's concern is that this website blocking bill may devolve into an expensive game of Whac-A-Mole which consumers end up paying for through higher internet bills.

CHAIR: I love that game.

Senator JACINTA COLLINS: I like the analogy.

Ms Corbin : Yes, it does conjure up a good picture. This is particularly concerning in the context of a number of recent government policies which have added significant cost to the telecommunications industry, and that has already been mentioned by Choice in their opening statement. The uncosted copyright notice scheme, which has yet to be registered and implemented, and the metadata retention legislation are expected to add hundreds of millions of dollars of operating costs across the industry. Industry has an obligation to maintain its profits for shareholders and will have to—it has no choice—pass these costs on to its consumer base, to recoup them.

The affordability of connecting to the internet should be a paramount concern in the light of the government's goals of creating digital engagement and service delivery through the Digital Transformation Office. We are worried that internet bills are going to go up. The costs of ISPs maintaining any scheme will ultimately fall on consumers in the form of higher internet access charges. The percentage of households without internet is currently 17 per cent in Australia, with access falling to just over 57 per cent for households with incomes less than $40,000. Rises in internet costs, even slight, are likely to further exacerbate this digital divide.

To minimise impact on consumers, it is our preference that the costs of this amendment be kept to an absolute minimum. We believe the most equitable cost allocation would see rights holders pay for the ISP costs of implementing and maintaining the blocking capability. This is equitable because it shifts costs onto those who will derive benefit. In contrast, cost on ISPs are likely to be passed on to consumers equally, regardless of their ability to pay or whether in fact they are using any of those services. Just to summarise the recommendations that we make, I will pass to my colleague Xavier.

Mr O'Halloran : We have recommended that some of the ambiguity around the legality of using VPNs and other technological measures for overcoming geoblocking be cleared up to prevent unintended consequences and the curtailing of competition. We have also recommended that there be a presumption in the bill in favour of allowing parties to become interveners or amicus curiae in the context of injunction applications, to ensure that public interest is adequately represented, also that a cost-benefit analysis of the amendment take place now and after a period of 18 months of operation so that we can get some solid figures around the effectiveness of this bill. We also recommend that the government adopt proposals laid out in the Copyright and the digital economyfinal report, particularly those in relation to the fair use exception, and that provisions in the Copyright Act which offer incentives for service providers to terminate accounts should also be repealed.

Senator JACINTA COLLINS: Going back to the discussion about costs, Choice mentioned—I think it was you, Mr Kirkland—the quantum of the 'Australia tax'. I wonder if you would care to elaborate on exactly what the components of it are.

Mr Kirkland : We have done, over a series of years, quite a lot of research on this issue, and the simplest answer is profit. It is clear to us that, for many years, Australians have paid more than overseas consumers for a whole range of goods and services. Often the arguments that are made by retailers or product distributors are about things like labour costs in Australia, costs of compliance or costs of transport. Clearly those arguments simply do not apply at all when you are downloading something from an overseas server. So it is very clear that there are very few, if any, additional costs that come with distributing a product in Australia where it is simply a bundle of electronic content.

Senator JACINTA COLLINS: So it is the benefit of monopoly.

Mr Kirkland : Absolutely, and I think that the IT product-pricing inquiry laid that bare, where we had representatives of Apple and other major corporations who were unable to give any reasonable explanation as to why the content that they sell costs so much more in Australia than in the US.

Senator JACINTA COLLINS: Going to the VPN issue, I just want to make sure I have this right. You mentioned the 680,000 households who would use a VPN to access—did you say?—legitimate content.

Mr Kirkland : Yes. Eight per cent of respondents to a nationally representative survey told us that they access paid-for geoblocked services through technology like VPNs. They are basically finding ways to get around geoblocking in order to pay for content. Extrapolating that out, that makes about 680,000 households.

Senator JACINTA COLLINS: To pay for content?

Mr Kirkland : Yes. The simplest example would be using a VPN to pay for the US version of Netflix.

Senator JACINTA COLLINS: Because you could not get it here because Netflix is not available here?

Mr Kirkland : Correct—or, even with Netflix being available here, it might be because there is a show that is not available on the Australian version of Netflix, so you are seeking to pay for it via the US version.

CHAIR: Equally, could the products be available here at perhaps a greater cost than what you are able to access them for via this medium?

Mr Kirkland : In some cases they are. Our research has shown that in some cases people are looking for other ways to access content, because of price, because it is available here but the price is considered to be too high—our research bears out that that is often the case—and in other cases because it is simply not available, because there has been a delayed release for some reason.

Senator JACINTA COLLINS: Yes. I am trying to get my head around the ambiguity issue, so bear with me for a moment. Is it illegal under copyright law to evade geoblocking or to use a VPN to access legitimate content overseas which is not available here?

Mr Kirkland : Our view would be that it is legitimate, but we would support the view in the IT pricing inquiry and supported by comments in the Competition Policy Review, recently handed to the government, that it would be very valuable to clarify that by amending the Copyright Act to remove any doubt.

Senator JACINTA COLLINS: And this is ACCAN's view as well?

Ms Corbin : Yes, it is.

Senator JACINTA COLLINS: It was put to us earlier today that someone could set up a VPN which is quite specifically designed to facilitate piracy. Should this law have the capacity to act on such a VPN, or should we just completely rule out VPNs?

Ms Hepworth : Could I speak to that?

Senator JACINTA COLLINS: Yes.

Ms Hepworth : There is a very interesting case that just got handed down by the UK High Court on a service called Popcorn Time. Popcorn Time basically is an application that you install on your computer, and then it goes with a look-up system and it just streams to you. It makes it very easy, basically, to find pirated material—a very easy infrastructure. Because it is specifically used for integration into this wider infringing system, the UK High Court had no problem in seeing that just as infringing copyright. I cannot see that there would be any difference to that happening here.

Senator JACINTA COLLINS: The reason I raised this is that Mr Turnbull has indicated that this legislation is not directed at VPNs, but I think it would be misleading to suggest that it will not have some scope over VPNs unless we specifically exclude even the example you are talking about from the scope.

Ms Hepworth : Exactly. I would say that the important thing is to go back and look at the intent of the legislation. If the intent of the legislation is to make sure that you are just getting those flagrantly infringing sites, then you make sure that the scope of the injunction is just for those flagrantly infringing sites, and that would catch an application that only was used for piracy. So, rather than trying to carve out VPNs or something like that, it would be better just to make sure that the injunctive power can only get flagrantly infringing sites or online locations.

Mr Kirkland : If I might add to that: the approach that we have suggested if the bill does proceed is to be much clearer about the intent and what is captured. I think the suggestion about deleting references to 'facilitating' is extremely important. That would certainly narrow it and give it focus. I think also that clarifying the primary purpose test to ensure that websites that have a substantial non-infringing use are also excluded would help to ensure that the bill was really focused on cases of flagrant infringement and services that have a primary purpose of allowing—certainly not facilitating—infringement.

Senator JACINTA COLLINS: We heard from the Digital Alliance, I think, a discussion around the factors that the courts might consider and what has occurred in the EU. I have asked people previously about how we might suggest factors that capture freedom of expression. You have also mentioned freedom of information. I am curious about the extent to which that freedom-of-information element might actually help deal with the failure of the government to progress the fair-use issue as well. Am I being optimistic here—

Ms Hepworth : I think so, yes.

Senator JACINTA COLLINS: or could it do so?

Ms Hepworth : I think fair use is a domestic exception that allows a greater range of use of copyright material in cases where it is fair. It is really has no direct relationship with website blocking except to the extent that material that is put up, say, in the US under the doctrine of fair use may actually end up being blocked because it would be infringing content in Australia.

CHAIR: Do you have a problem with that?

Ms Hepworth : Yes, we do, because we very strongly advocate on behalf of fair use. We do not, for example, have an exception that allows the use of small amounts of material for educative purposes or for quotation and a whole of other ones.

CHAIR: No, but as a principle—take away your specific case—do you think that if there is an act or omission in Australia that has an international nexus and it is not an offence there then we should not treat it as an offence here or punish it? There is a very timely one. Let us deal with drug trafficking. You drug-traffic in Indonesia; that is the result. Are you happy to have that mirrored here—the same behaviour?

Ms Hepworth : There are definitely some arguments towards that, but I do not think this is the intention of the bill. The intention of the bill is those flagrantly infringing sites that throw up Game of Thrones and throw up blatantly ripped-off material. What you might catch under that sort of thing are cultural institutions overseas that have digitised collections, say from the 1800s or the 1900s, that are not out of copyright over here—and so suddenly you have blocked off access to the Smithsonian. For example, US government materials are copyright free but only within the borders of the US, so we do not necessarily block off Australians' access to American government material.

CHAIR: Go back to your Smithsonian example. You are saying that something in the care and custody of the Smithsonian could be digitised, published and accessed here in Australia, and somebody here in Australia could make a claim that that offends their copyright? Just give me real life example in the Smithsonian.

Ms Hepworth : This is probably the easiest thing. The national museums of Canada have a copyright term that is 20 years shorter than our copyright term. They could have something from an artist who died 50 years ago. They digitise it, and they put it online. The rights holders could say that would be infringing in Australia, even though it is not in Canada. There is a lot of stuff that is not Game of Thrones that is technically infringing in Australia, but it is not infringing in their domestic—

CHAIR: But it is infringing in Australia, isn't it?

Ms Hepworth : If an Australian institution puts it up, it is.

CHAIR: Notwithstanding that the Australian law is different to the Canadian law, in Australia that act is infringing a copyright law.

Ms Hepworth : Yes, it can be.

CHAIR: But your problem with that, if I understand you, is that we should ignore that because the Canadians do not do it, so we should not?

Ms Hepworth : My problem is that, if you are going to block access to everything that is potentially infringing, you have probably just isolated Australia into only being able to access a very small portion of the World Wide Web. The bill made this really clear when it said it was not after sites such as US Netflix, because they operate legally in their country. Obviously, their primary purpose is not to infringe. Obviously, the Smithsonian's primary purpose is not to infringe, and the national museums of Canada's primary purpose is not to infringe. I think you would find Australian citizens quite upset if they suddenly could not visit the web pages of the national museums of Canada.

Senator JACINTA COLLINS: What you are saying though is that if the courts would consider factors such as freedom of information, or in some way we capture the fair use concept, that would overcome this problem?

Ms Hepworth : Definitely. I think there are a whole lot of things. Primary purpose is really important in those factors. Looking at freedom of access to information will be crucial as well.

Senator JACINTA COLLINS: Tell me if you think this is beyond your immediate capacity. Could what has been captured by the EU in relation to freedom of expression and freedom of information be looked at in terms of how it might be brought to be defined as one of the factors in this bill?

Ms Hepworth : Yes, definitely. It comes directly out of article 16, I think, of the EU.

Senator JACINTA COLLINS: I was wondering if you would not mind taking that on notice and providing it to the committee.

Ms Hepworth : Yes, I will definitely do that.

Senator JACINTA COLLINS: My final question is in relation to how one might go about directing the costs to the rights holders.

CHAIR: Good question.

Senator JACINTA COLLINS: The suggestion, and I think it might have been ACCAN's, was that the rights holders should be the ones to bear the costs. How do we go about doing that?

Mr O'Halloran : There is a similar process happening now with the copyright code which is aimed at sending infringement notices to consumers. We understand there has been a negotiation as part of that between rights holders and ISPs about how the different costs will be paid for. I am not sure how that process is going. You would have to ask those parties. I think one possibility, in situations where cost agreements cannot necessarily be arrived at, is to have an independent arbiter consider what the costs of an ongoing implementation of a scheme like this are and establish a cost regime for that.

Senator JACINTA COLLINS: I am yet to have a look at more detail around this cost estimate of $130,000 to CSPs. It only talks about the cost to CSPs not the overall cost benefit, which I think is a bit limiting but we will explore that further with the department. Thank you.

CHAIR: You would agree that some of these service providers have policed this themselves thereby limiting the risk of them having infringed material delivered through their site. One of the previous witnesses said eBay has a very thorough intensive program to prevent breaches of copyright on their site. Are you aware of that?

Mr O'Halloran : Yes. Google I think undertakes similar steps through YouTube to identify infringing content. They have a system that basically identifies that and gives the options of rights holders to monetise some of the material that is on that website. I think that is more of a digital solution to a digital problem and probably a little more fitting and appropriate to the kind of problem that we are facing.

CHAIR: But what if a service provider knows that a substantive amount of the content that they are facilitating the delivery of is in breach of copyright? Do you still want someone seeking injunctive relief there to pay their costs when these people are sort of in the mix?

Mr O'Halloran : You are probably getting into the area of authorisation there and there are possible liabilities then on that service provider.

CHAIR: Scope and knowledge I am talking about. I am sitting on the front veranda of the cottage with my feet up. I am not dealing drugs but my nephew is coming out and doing it. I know he is doing it and I am giving him a roof, a place, and I am keeping a bit of an eye out. I am interested in this point because the things that are of real interest to me as a politician when we are considering legislation is access, affordability and the ability of someone to get the relief. If we are trying to generate legislation that provides relief, I do not want them barred from it because they have to cut a cheque for $183,000. So the legislation has to work that way for all the parties, particularly genuine claimants and third parties like we are dealing with here who might not even know this is going on and are whisked into court. I am interested in the isolation of those who are financially benefiting in particular and know what they are doing. They know they are in the mix but say: 'I am innocent, mate. I did not know he was putting stolen cars in the garage.'

Mr O'Halloran : In terms of the actual costs, this bill is targeted directly at CSPs so they are not directly involved in that kind of facilitation process. That kind of cost can be separated out. The benefit from them blocking these kinds of websites is a benefit that is more accruing to rights holders, so it is more justified that the costs be apportioned that way as well.

In terms of actual infringing websites, we do not have a problem with that kind of thing being blocked. The way we have approached it is from a competition point of view. There are certain websites, such as VPN websites, and other technologies such as Smart DNS service, which is what most of the servers that people use to access content overseas are called. They should not be prevented from operating that business, because it is good for global trade and competition in Australia if they are allowed to operate and ultimately good for consumer choice.

CHAIR: That is a good segue into a question for you, Mr Kirkland. Earlier you talked about early release at a competitive price will help deal with this. I have two questions. If I have invested in the development of a product—in this case with artistic content, if we stay with entertainment—surely in the free market world I am entitled to put that out at a time of my choosing and at a price that I choose and let the market deal with it. That is my inherent right. In fact, there is probably not a corporation or a manufacturer on earth that does not think about the timing of releases and what price they might put about. Do you agree with that principle?

Mr Kirkland : I am not suggesting in any way that the government should intervene to dictate when people should release, or the price at which things should be released, but nor am I suggesting that the government should intervene in a way that is likely to be costly and ineffective.

CHAIR: Coming back to this solution, my interest is—I come from private enterprise—that it is not really a solution at all. You are saying to the marketplace, 'If you want to prevent the crook getting your lettuce out of the paddock and selling it for less than you do, you need to get it out quicker and sell it for less, effectively, than the crook.' For example, would it be fair to say that someone who is distributing pirated material for profit can do that from a much lower cost base—being zero—than the producers who invested $100 million in the production of the movie?

Mr Kirkland : I suspect that is true, but I am not sure how it relates to this bill.

CHAIR: You have suggested, and other witnesses have, that, if the owners of the material got it out quicker and got it out at an effective price, it would stop the pirate competing with them. The pirate would be rubbed out, because it is there tomorrow for them at $14.99.

Senator JACINTA COLLINS: I think what Mr Kirkland was saying was that Australia has not been a free market to date.

Mr Kirkland : We have done research on why people engage in online copyright infringement in order to seek access to content, and there are a very small percentage of people who do it because they have some sort of ideological belief in piracy. Our research bears out—and it is not the only research to show this—that it is primarily because of the price of content and because of lack of access, and often that is about the time windows before content is released.

CHAIR: That helps me understand why people do it, but that is not a justification for them to do it.

Mr Kirkland : And at no point did my comments seek to justify piracy. I guess what we are talking about though is, if we acknowledge it is a problem, what is the role of government in intervening in a market? Our argument would be that, if government is going to intervene in this kind of way, then there needs to be clear evidence that it is likely to be effective.

CHAIR: We do that every day though, don't we?

Mr Kirkland : Yes, although—

CHAIR: ASIC and the ACCC every day fire into markets in the application of laws in the marketplace.

Mr Kirkland : And are subject to considerable scrutiny about the efficacy of its markets interventions, at a time when there is a considerable debate about trying to reduce red tape So we are often found in other sectors in debates where we are arguing about why very good consumer protection laws need to be retained when they are being described as red tape. In this case, we have got a measure being entertained that is excessive red tape with very poor justification and very little evidence that it is likely to work, and it is unlikely to deliver any benefits to consumers. So we find it difficult to understand the arguments trying to justify this bill.

CHAIR: But you would agree that this is not just about consumers; this is about people who have invested either their time, energy or emotion in the production of, in this case, artistic material.

Mr Kirkland : And if there were a measure that we thought would deliver benefits to artists and creators and rights holders and that was likely to be effective and would not have unintended consequences or constrain the rights of consumers, we would support it, but we do not feel that that is the measure that is in this bill.

Senator JACINTA COLLINS: Can I interrupt for a moment on that point. We heard evidence previously about the impact of the measures in the UK and Singapore. Does Choice have a view about those?

Mr Kirkland : Website blocking measures?

Senator JACINTA COLLINS: How they have worked in the UK and Singapore. The evidence to us was that they have worked reasonably effectively—

CHAIR: 45 per cent.

Senator JACINTA COLLINS: Yes, there were some questions about how that measurement is calculated, but the evidence was that similar regimes introduced in the UK and Singapore have been effective. Do you have a different view?

Mr Kirkland : There is certainly other evidence in the UK that says that, following the introduction of blocking of Pirate Bay, the usage of Pirate Bay by people based in the UK went up. The UK still had one of the highest rates of piracy in relation to Game of Thrones, despite the presence of this legislation. I would contest evidence that this is likely to have—

CHAIR: What is the harm? Why don't we just let it roll out? It is not going to have any effect. It is not going to affect your people. They are still going to get their choice and get their pirate movies. It just does not work. This is from witnesses who, today, were clearly satisfied that their people, the groups that they represented, were going to benefit greatly from this. To a person, they all thought that this was going to work. There were varying views about the efficiency of the drafting of the legislation. They all had concerns about bits and bobs, but as a whole, as a concept, they thought it was going to work. So, if it does not work, what is the bother?

Mr Kirkland : I guess our view, which is a view that would often be thrown back at us, is that 'Let's just give it a go' is not a strong enough argument for government intervention in a very important industry for almost every Australian.

CHAIR: Yes, but that is your view—that someone is just 'giving it a go'. It is not a view shared by everybody. There are those, and I am one of them, who believe that this is a big problem and, at this moment in time, I am satisfied, on balance, that this, in some form, may well have an impact.

Mr Kirkland : Ultimately that is a judgement that legislators each need to make. Our view, as set out in our submission, is that there is not strong evidence that this is likely to be effective, that there is clear evidence of likely unintended consequences, and that there is a strong sentiment in the Australian community that this is not the right way to address online copyright infringement.

Mr O'Halloran : Just on the issue of the evidence that has been presented today, we have taken some time to go through it and look at some of the issues with it and look at some of the other research that is available as well. Some of the problems with some of the evidence that rights holders have been presenting are: a lot of it will measure the reductions on the sites that are actually blocked or a subsequent site that seems to be kind of the same, and then draw a conclusion that is has been quite effective, without looking at, say, whether there might have been 20 other websites that did exactly the same thing and continued to operate undisturbed, or looking at the level of torrenting behaviour that was going on after a block and seeing that that was kind of continuing undisturbed or—

Senator JACINTA COLLINS: You will have to help us with 'torrenting behaviour'.

CHAIR: Everyone knows what that is! But go on!

Mr O'Halloran : The final point—and this is the research that we raised in our submission—is: you can actually map what consumer behaviour is, and that has been done in the Netherlands around the website blocking power. They measured the number of consumers that said they would pirate material before a block took place, and then they measured it, I think, at three months, six months and it might have been 12 months afterwards, and they found that only about four to six per cent of those that they surveyed had actually decreased their downloading behaviour over that time. So, yes, there is some positive benefit to it, but we are talking about a really small benefit overall, for what could, potentially, be quite a laborious scheme to set up and eventually cost, and that cost, again, falls on consumers. That is why we have called for a cost-benefit analysis to be done on this, so we can look at what the research is out there, consider it separately from everyone else's interests and say, 'Is it worth the effort that we are going to?'

Senator JACINTA COLLINS: So you, too, would like to see there is?

Mr O'Halloran : Yes, definitely.

CHAIR: For torrenting. And what is torrenting?

Ms Corbin : That is a form of downloading. Do you want me to explain that?

Senator JACINTA COLLINS: Yes. What type of form of downloading?

Mr O'Halloran : Basically, you can—

Senator JACINTA COLLINS: Is that like a downpour—a torrent?

Mr O'Halloran : Basically, you will get access to a link which tells you where the files are, and you can join a swarm of other people that are all sharing little bits of the file, and eventually you will end up with the entire file, and that is basically the torrenting process.

Ms Corbin : And many of those joining torrents also share those files on themselves, so they become part of the system of file sharing. That is another reason why it is called a 'torrent'.

CHAIR: The unintended consequences aside, though, do you accept that, as to this bill—at least in, let us call it, form A: that is, where Fred in Russia is making content available that I can download in Australia; it breaches copyright; 10,000 movements a week are coming through; the site is shut down; and we can all at least agree that those 10,000 will not pop up next door or around the corner, but we can agree that those 10,000 transactions are gone—what you are arguing is that there is a lack of evidence that Barry the poet is going to benefit from that happening, and that all I am going to do is get the satisfaction that 10,000 of my poems did not get illegally downloaded this week?

Mr O'Halloran : Yes.

Ms Corbin : We also had some really terrible unintended consequences in Australia when websites were blocked for another reason, which was that perhaps there were scams going on or other types of content that are illegal in Australia, and those sites were blocked by ASIC and the ACMA. Unfortunately, because of the lack of knowledge of those who were implementing this, in actual fact they caught an enormous number of small businesses who had no idea that they were offline for months.

CHAIR: We were told that INTERPOL have found a more surgical way to apply their interests. I do not speak for Senator Collins, but I will be asking the Attorney's office this afternoon why we cannot be like INTERPOL, at least in that regard.

Ms Corbin : We would recommend that you use the same criterion.

CHAIR: That is a no-brainer, for me at least.

Ms Hepworth : Like most people, I am baffled by the range of evidence on the effectiveness of site blocking. What I would say is that it would be nice to see a focus on things that we have seen to be effective. You referred to the system used with eBay, of takedown notices, and things like ad blocking to try to decrease advertising revenue to pirate sites are methods that have a long history of being very productive. They also all rest on having safe harbours, which is why we would suggest that we need this extension of safe harbours.

CHAIR: I think we join you on that. I am not going to move onto trying to get that in this space until I have climate change worked out. Once I have worked out who's who in the yard and farm there I will move onto trying to find the efficacy of these measures.

Senator JACINTA COLLINS: I was going to ask Mr Kirkland earlier whether avoiding ads was one of the reasons people went offshore too.

Mr Kirkland : We did not research that, but it may well be a powerful motivator.

CHAIR: During in your earlier evidence, Mr Kirkland, I made a note, which was not sufficient. It was: 'can't be enforced'. That was my note to myself. Do you remember what you were referring to? It was very early in your evidence.

Mr Kirkland : I am not sure; I am sorry.

Senator JACINTA COLLINS: It might have been related to VPNs

Mr Kirkland : Or it may have been, I guess, the idea that even if a site is blocked another one is likely to pop up very quickly and may well be operated by the same person and serving the same people who would have gone to the first site.

CHAIR: There was talk that the legislation could accommodate that by making a more general order that was mobile in itself, so they did not have to go back each time to get relief from the Federal Court. If it popped up over here that order would apply here and if it popped up over there the order would apply there: it just continues until it exhausts itself.

Mr Kirkland : I understand that that may be the intention. I think that in practice it would be very, very difficult to execute, because the internet moves much faster than the legal system.

CHAIR: I am going to show my ignorance again: I understand that there is an IP address and then under that there could be at the moment and there could be 100 businesses hanging off the domain.

Senator Jacinta Collins interjecting

CHAIR: It disturbs me that you know more about this than I do! It will not be long, if there are only one or two offending hangers in the closet and the entire domain keeps getting shut down from time to time, that whoever owns the closet is going to start paying attention to this, aren't they? Aren't they going to try and get the offending sites out of their life or be more careful about bringing them into their life in the first place?

Ms Corbin : I think it is worthwhile understanding a little bit about how internet governance works. There are thousands and thousands of domain names and any one operator may have an enormous number of domains under their control.

CHAIR: Sure, but they know who they are, don't they? They know who they are and they know what content is streaming through there, don't they?

Mr O'Halloran : Not always before the website is set up. That might happen subsequently. The way some of these websites operate is that it will be basically like a directory list of links to infringing content. That directory, because it is a kind of user generated world that we are dealing with here, gets shared around multiple people, different countries.

CHAIR: Let us say we could wave a magic wand at everybody who put child pornography on the internet and extinguish, self-combust, it within two seconds of it being switched on. Wouldn't the person or people who have a commercial interest in the efficient operation of that domain name find a way to weed out by whatever due process, due diligence or due governance child pornographers from coming into their life, because they do not want to go up in flames? That is what I do not understand. I am from the business world. I have a couple of hundred staff. We know what is going on in our life and who our customers are. We have diggers and dozers. I do not go and dig holes for them to bury bodies; I know why I am going to dig the hole. What is it about this world that these people, who profit from the ability for me to transmit knowledge to you at will, do not know that I am doing it or do not care that I am on board as long as I pay the rent?

Mr O'Halloran: With this kind of thing, because there are not too many barriers to entry, people can set up more quickly then you can identify that they are doing something wrong and shut them down. That is why the whack-a-mole analogy is there.

CHAIR: Why should we care about them, if we have shut them down. I am interested to know about the unintended consequences. I am interested about a decent, honest family in America setting up one of these domains and getting 100 customers: 99 are good but No. 100 is distributing child porn and my whole business collapses overnight because the federal court lays an order on me. I want to know how they do not know that one of their customers was involved in this behaviour, if you will. How do they not know? Is it blind? Do you ring me and I go: 'Look, I don't want to know who you are. You're room 68. Go and do what you like down there. Is it like that?

Mr O'Halloran: It is probably more of a technical question as to how you would actually find out what everyone is doing online at all times. I guess there are probably serious barriers to that without expending significant man hours of creating our logarithms that are so advanced that—

CHAIR: How does the parental lock that my son uses on his children work?

Mr O'Halloran: They are not very effective.

Senator JACINTA COLLINS: It doesn't is the answer!

CHAIR: Honestly, I pine for the party line.

Ms Corbin: In fact, most kids know how to get around them very quickly. I have one comment about an earlier question of yours, Senator Collins, in relation to reasons why people want to access content that might be available only overseas. It relates to accessibility: in Australia, the amount of content that is captioned, perhaps subtitled in another language or even audio description for blind consumers, is considerably restricted. However, it is available overseas, perhaps on the BBC's equivalent of iview. For example, they have a lot more audio described content—that is one example. That is a legitimate reason why somebody would want to access that content.

CHAIR: I should be put forward as an exhibit in these circumstances because I am just an ordinary old mate who would like to seek copyright law enforced for individuals who put in time, effort and investment, just like I do in my own business. I know it is complicated, but I do not want to surrender to the idea that it is too hard. I do not want to just put my hands up and go: 'This is too hard.' We have to have a crack. Suck it and see, you can accuse me of, and maybe we do a bit more sucking than seeing down there in Canberra, but the fact of the matter is that we have to have a crack at this, as far as I am concerned. I am editorialising, but that is my view.

We have no more questions. We thank you all for your contributions. We could go all afternoon. We appreciate the time.