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Wednesday, 10 February 1999
Page: 2404

Mrs Crosio asked the Minister representing the Minister for Communications, Information Technology and the Arts, upon notice, on 11 November 1998:

(1) According to the Minister's most recent figures, how many pieces of official correspondence has the Minister received from (a) individuals, (b) organisations, and (c) companies registering (i) concern over the effect the parallel importing of CDs will have on the Australian music industry and (ii) approval of the decision to allow the parallel importation of CDs into Australia.

(2) Will the Minister provide the name and address of every (a) individual, (b) organisation and (c) company that has registered (i) concern with his office over the effect the parallel importing of CDs will have on the Australian music industry and (ii) approval of the decision to allow the parallel importing of CDs into Australia; if not, why not.

(3) Will the Minister provide evidence that CD prices have dropped across Australia since the parallel importation of CDs was allowed; if not, why not.

(4) Will the Commonwealth compensate the owners of Australian (a) independent record labels, (b) recording studios, (c) music magazines and newspapers, (d) live music venues and (e) music artists who lose their businesses and livelihoods as a result of allowing the parallel importation of CDs into Australia; if not, why not.

(5) Are Australian CDs overpriced compared to the full-list price of CDs in other Western nations; if so, why.

(6) Is the Minister able to say whether the cost of a full-list price CD in (a) the US is approximately A$30 including state sales tax, (b) the UK is approximately A$37 before VAT has been added and (c) Japan is approximately A$34 including tax; if so are Australian prices better; if not, why not.

Mr McGauran (Arts and the Centenary of Federation) —The answer to the honourable member's question is as follows:

(1) The Minister for Communications, Information Technology and the Arts has received about 300 pieces of correspondence on the topic of parallel importation and CDs since coming into office.

These letters referred to both the slow progress of legislative change to allow parallel importation of sound recordings and concern about its impact on the Australian music industry.

(2) As there was a considerable amount of correspondence on the matter of parallel importation the Minister for Communications, Information Technology and the Arts has indicated that he is not prepared to authorise committing the considerable human resources needed to search records to obtain information to answer this question. Further, the Minister considers that it is not in the public interest to disclose individual details about this correspondence as people generally expect that the opinions they express will not be publicly recorded. If people become aware that their views become a matter for public debate, it may deter them from expressing frank opinions.

(3) There are indications that some retailers are obtaining lower priced legitimate sound recording from a range of countries overseas.

The Big W chain has been reported in the Sydney Morning Herald of 14 November 1998 and the Herald-Sun of 22 November 1998 as being ready to provide legitimate and popular albums at less than $20 before Christmas. Recent media reports are that a number of discount stores also plan to retail chart CDs at $19.95.

(4) The Government believes that the removal of parallel importation will be a net employment generator in the music sector as lower prices are expected to lead to increased sales.

Parallel importation of sound recordings is unlikely to have any impact on live and broadcast music in Australia.

Recording companies will continue to develop new Australian artists while consumers wish to buy Australian music.

Major companies have been criticised by some contemporary artists for failing to adequately support the local music sector while heavily promoting overseas acts.

To address any short term adjustment in the industry, the Government has also decided to allocate $10 million over three years to an Australian music industry assistance package, including:

- funding for promotion of Australian acts, particularly on the Internet;

- increased assistance for touring, through the Playing Australia and Festivals Australia programs;

- assisting young artists in the development of business plans;

- expanded funding for the Contemporary Music Export Initiative, which is focused on assisting the independent sector; and,

- pilot assistance programs in South Australia and Tasmania.

(5) and (6) International price comparisons are complex and costly to do accurately. The Minister for Communications, Information Technology and the Arts has indicated that he is not prepared to authorise the expense of time and diversion of resources required.

However, the Senate Legislative and Constitutional Committee examined the issue of parallel importation and evidence given to the Committee in early 1998 about prices included:

- Woolworths' statement to the Committee that it expected prices to fall by 25 to 33 per cent (Top 30 material). Press reports indicate recently that Woolworths has reduced the price of Top 30 material to $19.95. Press reports also indicate that a number of other retailers have also reduced prices of charting material to a similar level.

- Australian Competition and Consumer Commission (ACCC) analysis which indicated that after allowing for tax differences the price differential between Australia and the US was consistently higher since 1989. By June 1997, the price differential with the US was 33% for a top-selling, full priced CD.

- The Australian Consumers' Association updated the ACCC estimates and believed in early 1998 that the price differential was around $7.

However, a number of factors can influence price differentials observed between Australia and overseas over a period of time including:

- exchange rates

- differences in taxation regimes between countries

- discounting practices

The effect of the reforms on CD prices was expected to take some time to filter through to the retail market as retailers clear existing stocks for example. Recent media reports indicate that both Woolworths and a number of discount stores have begun retailing a wide range of recent CDs for under $20, substantially less than the standard retail price. One discount chain has begun advertising chart CDs for $19.95. The Woolworths move is particularly significant, as it will be the first time that a major retail chain has taken advantage of the reforms.