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Thursday, 24 May 2001
Page: 27066


Mr McMULLAN (5:31 PM) —It is a great pity that the Copyright Amendment (Parallel Importation) Bill 2001 is being called on at this time in this way. It rather suggests that the government does not regard this bill and the matters with which it deals as very important—rather, it seems to be just something that might fill in the remaining half-hour of the parliamentary day. This does not enable a sustained debate on the matters and it will not allow a serious consideration of the bill. Indeed, it is unclear when the debate will be resumed. But it is an important matter, and it is a matter that requires serious consideration by this chamber. I am fairly confident that we will get serious consideration in the Senate. It is a bill which the opposition will be opposing, and I want to make the grounds for that opposition very clear. It is a matter that I have spoken on in this House before, both when a related bill involving the music industry was considered and on this matter on a previous occasion.

The purpose of the bill is to amend the Copyright Act 1968 to extend the unrestricted parallel importation regime which now applies for music CDs to computer software and computer games and to books, periodicals and sheet music in both electronic and print form. It strikes a serious chord with me as a resonating problem about this government's attitude towards the future of this country, because it is part of a pattern of initiatives which undermine the strength of our copyright protection and the protection of the intellectual property of creative artists and innovators in this country. I am concerned about that for the individuals involved—in a moment I will refer to that issue and to some of the very compelling evidence that some individuals gave to the Senate committee looking into this matter—but first I want to put on record my concern from a national perspective. Proper copyright protection laws are fundamental to the success of a modern economy. They protect the interests of creators and protect their capacity to generate income from their innovation; they therefore encourage innovative activity. The existence of copyright and the continuing enforcement of rigorous copyright protection regimes allow creators to generate an income from their creativity through royalties or other payments, and they foster investment in creative works by businesses in Australia.

If you wonder what the core, fundamental heart of the knowledge nation is, it is the capacity of individuals successfully to create, to innovate, to benefit from that innovation and to capture those benefits within Australia. Australians will still be creating, whatever happens to this legislation, but whether they will be able to be commercially successful as a result of their innovation, whether they will be able to remain in Australia or whether the economic benefits from their activity will flow to Australians and Australian businesses will be significantly influenced by what happens to this bill.

The idea of parallel importation, with which this bill deals, refers to the importation of works that have been legitimately purchased overseas—that is, purchased without infringing the creator's copyright in the overseas country—by someone other than the authorised importer. We have already had two major changes to the basic, rigorous regime that says you cannot import copyright material into a country without the agreement of the copyright owner. One was made in 1991. It was controversial at the time and was opposed by many in the book industry, but I think it struck a correct balance between the interests of the copyright owner and those of the consumer. The old regime was aimed 100 per cent at protecting the interests of the copyright owner, and it created in the book industry the potential for either price or availability problems for consumers. In 1991 there were amendments, which are now sections 44A and 112A of the act. The legislation introduced what I would call, for a rule of thumb, the `use it or lose it' regime into Australian copyright as it related to books. Even in half an hour, the number of issues that I want to deal with probably will not allow me to explain the fundamentals of a `use it or lose it' regime, but those involved in the debate know what it is and we have expressed it in the House before. If time permits, I will talk about it in more detail.

That was controversial at the time—not everyone in the industry welcomed it—but I think it has been successful. Those arrangements are also referred to as the 30- and 90-day rules because those are the rules that require the availability of publications under various categories. If the copyright owner's rights are to be retained, they have to make books available within 30 or, in some circumstances, 90 days. The second major amendment related to sound recordings—in effect, CDs. It was introduced in 1998 and removed the prohibitions on parallel importation of sound recordings. It became law only because it was rorted through the Senate with the complicity of Senator Colston at the time. I regret very profoundly that that took place—though whether he was willingly duped in that or whether it was a mistake is not something I know or, in hindsight, care about, but it was a great pity.

That legislation removed the prohibitions on parallel importation of sound recordings. Consequently, copyright is no longer infringed by importing into Australia what is called the non-infringing copy of a sound recording. That has caused significant problems in the music industry. The argument at the time that legislation was introduced was between those who said that there would be great benefits to consumers and tried to argue that there would be no problems for the industry and those at the other extreme who sought to argue that there would be enormous problems for the industry and no possibility of benefit to consumers. My position was that the balance between the interests of producers of copyright material and consumers was tilting—was getting out of balance. I contend that the `use it or lose it' approach will achieve that balance much more appropriately. But I did argue that the claims that there would be great falls in CD prices was an absolute furphy—and, sadly, history has proved that to be correct.

The most enthusiastic advocates of the policy, in hindsight, sometimes claim that the prices of CDs might have fallen by a dollar. It is pretty hard to prove that, but it might be right. But there are certainly significant problems for a number of participants in the music industry. They sought the opportunity to come before the Senate committee, even though not covered by this bill—because parallel importation had already been applied to them—so they could articulate their concerns about what that policy was doing to them. They did not have a vested interest in doing that, because they are not affected by this bill—whether this bill passes or fails, their circumstances remain the same. They were concerned that what had happened to them should not happen to others. It should not happen to creators of books, computer games and computer equipment. There are many fine creators of those various items in Australia operating successfully and many others battling—because this industry, as most of us know, is not renowned for its great returns in the case of most of these authors, although some do well.

Those in the music industry have been concerned, as have people in the book industry and the computer software industry, since 27 June last year when the government announced its intention to lift restrictions on parallel importation of books, periodicals, printed music and computer software products, including computer based games. I, as the then shadow minister for industry, and my colleague the then shadow minister for arts, the member for Denison, made it clear on 24 August last year that our party's policy would remain—that we would not support the complete removal of parallel importation restrictions but that we would move to a comprehensive `use it or lose it' policy by extending to other areas, music and computer software, the regime that applies to the book industry. That is, I think, an important argument for striking the balance. We argue that this approach would place pressure on importers to make products available to Australian consumers faster and at a better price. I will refer, if time permits, to evidence which suggests that it certainly has, because of the 30- and 90-day rule, prevented book publishers extracting monopoly profit. This approach would also make the material available faster and at a better price, while protecting the interest of Australian copyright owners. It is that balance that I wish to argue for and which I contend this bill undermines.

There have been some serious problems of process with regard to this bill and there are serious problems with the nature of the research on which it is based. I have spoken about that in this House before. I think the material which the ACCC put forward in an attempt to justify this legislation and the way in which they publicly presented it—in what I considered to be a most misleading manner—were a scandal. I am appalled that the ACCC would have engaged in such misleading conduct. They would not have accepted such conduct from people subject to their scrutiny.

Almost all of the bodies representing the industries concerned with the proposed changes have made it clear, mainly in evidence to the Senate committee but also publicly, that they were not consulted in the preparation of the current bill by either the Attorney-General's Department or the ACCC, whose research the Attorney-General's Department has blindly accepted. Neither the department responsible for the arts nor the department responsible for industry made any submissions to the inquiry—they did not appear before any of the public hearings—and, on the face of it, they have not been involved in the development of this policy.

Obviously, the industry is not entitled to determine the government's policy. In a democracy that is what governments do. They listen to people, and they say, `Sorry, I don't agree with you; I am going to go in a different direction.' But you do have an obligation when you are making decisions that affect the very viability of an industry and affect very profoundly the very viability of some communities to listen to them. I have never been able to understand what this government has against, for example, the community of Maryborough in Victoria in the seat of my colleague the member for Bendigo—a community very significantly dependent on the book industry. Why they consistently and persistently attack the viability of the industry upon which that community depends is beyond me. Sometimes people in Australia feel that if you do not live in a marginal seat you tend to get ignored. These people live in a marginal seat and they still get ignored. I suppose all you can give the government points for is consistency.

I am also baffled as to why in the preparation of this bill to extend parallel importation to industries other than the music industry no research was conducted into some of the areas that are going to be affected, such as sheet music, electronic books or periodicals. No research was done about the impact of the previous changes on the music industry. We are proposing to extend those changes to other industries without any serious research about the impact of these changes on that industry, and I am concerned about the nature of the research as it related to the book industry. It is a flawed process. One of the witnesses before the Legal and Constitutional Legislation Committee, Mr Fisher from the printing industry, said that the only way he felt anybody could have come to the conclusions that they did on the evidence available was to let their ideology draw them to a conclusion and then work back to try to find some evidence to justify the conclusion to which they had already come—and I think that gentleman essentially got the point right.

The Attorney-General's Department and the ACCC stated during the hearings that they were acting on instructions from the government in relation to the proposed changes. That is fine; I do not object to government agencies doing that. The policy is drawn up in our democracy by elected governments and implemented by agencies which it appoints. That is the nature of the Westminster system. But, if that is the case, you cannot use the same people who are your agents as your independent sources of research, and that is what took place in this circumstance.

The Australian Consumers Association, which came before the committee, declared that they were basing their decision to support the bill almost solely on the research of the ACCC and they had done little or no independent research. Given the nature of that research, I think that is not an appropriate manner for the ACA—which is an organisation which in many ways I have a lot of sympathy with and with which I have worked closely over a number of years on many matters—to discharge their obligations in dealing with a bill like this.

It seems, on the evidence available, that the government is pursuing the extension of parallel importation based not on the evidence but on the ideological preconception that it must be good and, therefore, it should be applied in other places. Ironically, they are not, however, going as far as the previous New Zealand government did and applying it universally. I think they fear the reaction from the United States if they sought to extend it to the film industry. So this is a principle of selective application.

I cannot support the proposed bill. It extends what I thought was a deeply flawed decision to allow parallel importation in the music industry to other industries without any evidence to underpin it, in a manner which I think undermines the proper copyright and intellectual property regime, without any evidence that there would be sufficient or compensating benefits to consumers. It does not even attempt to strike a balance between the interests of the industry and the consumer—and that is government's obligation: to look at the interests and weigh them in the balance and determine some balanced position.

I come back to my fundamental concern. There is nothing in the government's advocacy of this position, nothing in the evidence they presented to the committee and nothing in their public position—those of the Attorney-General, the Minister for Communications, Information Technology and the Arts or the poor old Minister for the Arts and the Centenary of Federation here, who I have never heard speak about this matter. As far as I can tell, he does not have any understanding about it at all. The senior minister in the portfolio, Senator Alston, has been whingeing away about this for years and continues to seek to parrot the ACCC's line without any consideration of its cultural significance and, as a lawyer, I am amazed, with an apparent lack of understanding of the importance of intellectual property rights for Australia's cultural industry, Australian industry in general, if we are going to succeed in the 21st century. On the evidence put to the committee it is also obvious that the government in preparing the bill has not sought or been provided with information in relation to the impact on the relevant industries, on employment, on cultural identity or on investment in Australia's cultural industries.

The opposition's decision to oppose the bill is based on the fact that it was bad policy when it was introduced in relation to CDs and that attempts to extend it to other industries just continue that bad policy. As shadow minister for the arts, my particular concern relates to the book industry, but the principle applies—and the evidence before the committee seems to reinforce the view—that the problem for business software and computer games, the visual software distributors' industry, seems to be similar.

The ACCC's evidence seemed to be of very limited unrepresentative samples, all conveniently pointing in a direction contrary to the evidence from the independent analysts. Access Economics presented a report. I realise the industry association have come forward and argued their case, and in a sense you would expect them to, and you have to weigh their evidence in that light—that they are coming along arguing a particular brief. It does not make them wrong, but it does not make them right, and you have to assess their evidence in that light. I regret to say that in matters to do with parallel importation you have to take the ACCC in the same way: they are partisan participants in the debate, not objective observers. It does not make them wrong, but it does not make them right; you have to weigh it in the balance. Although Access Economics were presenting evidence on a report commissioned by the Visual Software Distributors Association, I am not aware that anybody has established that they in any way had a vested interest. None of the evidence seemed to challenge the legitimacy of their report.

Their report showed that prices for games software were 32 per cent higher in the UK than in Australia and only seven per cent lower than in the United States. They questioned the validity of the ACCC report, which stated that computer games were `on average 33 per cent higher than in the US'. The Australian Competition and Consumer Commission's comprehensive analysis of this was based, would you believe, on nine titles. You would be expelled from any statistics course for pretending that you could present a representative source on that basis. Allan Fels, when he was a professor, would have failed any student who came before him who purported to put that evidence forward and pretend that it made a case. It is a continuing disgrace that this body, which is designed to be an independent agency of the government, has become so partisan. Perhaps we should pretend that it is not independent and stop using its evidence and commission other people to do it. It looked at nine titles.

It is not as though the evidence is not available. There is independent—that is, not from the Australian industry—analysis from people like PC Data in the United States and Chartrack in the UK, who do not have a vested interest in saying how much better Australian prices are than UK or American prices. Their information—at least on the evidence that I have seen—appears to be more representative than that from the ACCC and shows that Australia is competitive, that the material is much cheaper in Australia than in the UK and, in most instances, in the US. Of course, that is influenced by the value of the dollar—it always is. But, on the evidence, or the evidence I have seen with regard to CDs and books, a price difference does not seem to have originated during the last 12 months since the dollar collapsed. There is nothing that I have seen to suggest that; in fact, most of these figures go back before that period.

So I am particularly concerned about the nature of the evidence and the arguments about price benefit. There was compelling, concerning evidence—entirely unsurprising—about the risk of piracy. The government continually argues—it did with regard to CDs—that piracy is a separate issue that should be pursued by the law enforcement agencies. It blithely ignored the fact that it knew—and we all know—that the only way that Customs can effectively pursue piracy is on the basis of the evidence from the copyright holder who says `No, this material wasn't introduced by me so it must be pirated.' Once you introduce parallel importation, that evidence is not available. So the capacity, effectively, to enforce piracy is significantly reduced. That is a problem that the music industry raised before parallel importation and has reiterated since, including before the Senate committee. The software industry is seriously concerned about it. Because it does not suit the government's predetermined position, they reject it. They say, `No, it's not a problem.' But nobody in the industry believes them. No law enforcement agencies have been able to convince anyone in the industry, before this happened or, in the case of the music industry, since, that the piracy issue is not serious. It undermines in practice even more fundamentally our intellectual property regime, as parallel importation in the way the government outlines it does in principle.

I was most concerned, however—and I will not reiterate it all because I spoke about it in the House before—about the manner in which the evidence has been argued about the book industry. As shadow minister for the arts, this is where my most direct concern arises. There was argument put forward by the ACCC on the basis of their assessment that books were up to 44 per cent more expensive in Australia than in the UK and in the US. What I found, to my amazement and horror, was that they had doctored the figures—that, in fact, the most recent figures show that books were cheaper in Australia, but they had used a 12½-year average to come to that figure. Everybody knows that, if you are averaging a downward trend, the average will be higher than the current amount. The ACCC would not accept an advertisement that claimed, `We'll sell it to you cheaper, when it's actually more expensive, on the basis that, on average over the last 12½ years, it would have been cheaper but actually now it is more expensive.' They would prosecute you for saying that, but they have said it to this parliament, and I consider it a scandal. So that is my most serious concern—that the evidence for price benefit has been doctored.

But I am concerned about the impact on the copyright owners, and I want in the brief time available to refer to that as it relates to authors and to the cultural significance of this. I have about three minutes left in which to do it. If I do not seek leave to continue my remarks, I am going to cause a bit of a problem for the continuation of the parliament.


Mr DEPUTY SPEAKER (Mr Nehl)—The chair is prepared to let you finish your time.


Mr McMULLAN —Thank you. I appreciate that, Mr Deputy Speaker. If the House is willing, it might facilitate the whole proceedings. In its submission, the Australian Society of Authors stated:

Any move that weakens the positions of copyright owners now will be seen as incredibly short sighted in a few years time. At a time when Australia is being criticised for being out of step with the burgeoning knowledge-based economies of the world, it will be seen as remarkable that we should even contemplate undermining our home grown copyright creating industries.

Three successful authors came before the committee. Garth Nix said that the proposed changes would reduce the income of authors and drive established authors to be published in London and New York. One of our most successful contemporary authors, Frank Moorhouse, spoke very passionately before the committee about the importance of maintaining Australia's cultural identity and the way it is threatened under this legislation. But I want, in particular, to quote the evidence by Shane Maloney, an Australian author who stated that he did not understand why the government felt it had the right to take the result of his work and take away his right to sell it on a contractual basis to earn an income. He said:

My work is the result of my intellectual activity; it is my intellectual property. It might not be much, but it is all I have got to sell. If I can find a buyer for it and establish a contractual basis on which I sell it to that buyer, I am really at a loss to understand why the Australian government would see it as its right to intervene in that contractual relationship. If this legislation advances, it means that a writer in Castro's Cuba would have more control over their intellectual property rights than a writer in Australia. So it is quite unusual to find an Australian Liberal government pursuing a line like this.

That is the core of the argument. He is a writer; he has a flair for prose. But the core argument is: the intellectual property is the property of the creator. If it were physical property, we could all tell straightaway that no-one else but the person who owned it had the right to sell it. But under this legislation other people can sell your property and take away your right to benefit from it. That is why we are opposed to it. That is why we do not believe this legislation strikes the right balance. It undermines what is so fundamental to the future of the knowledge nation, which is the capacity of creators to benefit from their creation, from their innovation, and therefore it undermines the encouragement of innovation, and in the 21st century we will regret that. The only way that the government can justify the argument is to doctor the case on prices. I thank you for your courtesy, Mr Deputy Speaker. (Time expired)

Debate (on motion by Mr Baird) adjourned.

Sitting suspended from 6.02 p.m. to 7.30 p.m.