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Environment and Communications Legislation Committee
06/03/2018

HAIPOLA, Ms Kirsti, Legal Director, Copyright Law, Department of Communications and the Arts

PATTESON, Dr Carolyn, First Assistant Secretary, Content, Department of Communications and the Arts

SHADBOLT, Ms Emma, Assistant Director, Copyright Law, Department of Communications and the Arts

[13:21]

CHAIR: Welcome. You've all received the information on parliamentary privilege and the protection of witnesses. I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about how and when policies were adopted. Is there an opening statement or would you like to proceed straight to questions?

Dr Patteson : We have no opening statement today. We are happy to move straight to questions.

Senator STEELE-JOHN: I think this might be a question floating around many of our heads as we come to the close of these hearings. We've heard many submissions today going to the benefits of the extension of safe harbours to the extent seen in the UK, the US and generally through the EU. It seems to me to be rather self-evident that that would be the simplest way to pursue this regulatory area. Could you give us some insight into why the department ended up framing this piece of legislation with the carve-outs that are currently present within it?

Dr Patteson : The first point I would make is that the government has taken this approach because, notwithstanding some of the evidence that you have heard today, but I think reflected across a variety of submissions—and certainly it has been evident in all the consultation that we have done to date—is that a blanket extension still remains a highly contested reform. It came through very clearly in our consultations. There was much more openness and more consensus around extending the scheme to the educational, cultural and disability sectors, but the very polarised views of the stakeholders meant that there is not consensus on a full extension. On this basis, the government is looking to take a balanced approach, taking into account balancing innovation and the rights of the creators. So it was decided that an incremental approach was appropriate at this time.

Senator STEELE-JOHN: I'm not sure how close to consensus it's ever possible to get, but it's been reasonably unanimous today. But one of the issues that's been raised continually has been the differentiation between the way that we in Australia deal with safe harbours, or don't, and the way the US and EU handle it. It creates a great disincentive for content creators and platforms to base themselves here in Australia and to grow and expand their businesses here in Australia. Did the department take into account that feedback when you were formulating this legislation?

Dr Patteson : Absolutely, the consultations that we conducted were wideranging and with a number of key stakeholders across all sectors of the economy. Certainly, that was evidence that was presented to us and part of the consultations. But it was also balanced by the concerns of the right holders and making sure that, if you extend safe harbour, there are still the appropriate protections in place. So, certainly, it came up in the consultations and was considered.

Senator STEELE-JOHN: We've heard today that the extension of safe harbours also contributes to the protections of right holders, particularly small right holders, that it helps us to combat piracy, that it promotes economic investment here in Australia and that it removes a lot of the lack of clarity around this process. We've heard from a company you're probably aware of, Redbubble, who have acted in this space as probably one of the most responsible corporate citizens I've seen. They have even tried to mirror safe harbour processes found elsewhere in Australia and have come to the conclusion through the legal process that there was in fact, under the current framework, nothing they could do to protect themselves in terms of liability. So I'm just wondering where the benefit to the Australian economy and to the sector lies in the nature of the balance that you've struck here? That's a really genuine question as well, because I'm struggling.

Dr Patteson : I think, as I've already said, it is fair to say that there are a number of complex and underlying issues in this. As I said, there are a variety of different stakeholder views and, certainly, the discussions that we have had have very clearly put those views from all elements of the stakeholder set. As I said, for every argument and piece of information that we have heard about why there needs to be a full extension of safe harbour, there are equally strong views that there shouldn't be a full expansion of safe harbour. What I would come back to is: what we have sought to do is look for where there is more openness and more consensus and, where we can make changes, look at how we take our Copyright Act and our copyright protections into a modern digital age. I would note, Senator, that we are not alone in finding this a complex issue. Notwithstanding the regimes that are already in place in the US and the EU, they are both looking at their safe harbour schemes as they are currently—

Senator STEELE-JOHN: They are.

Dr Patteson : and looking at whether they are fit for purpose in the modern environment. They are dealing with the issues that we are dealing with and—

Senator STEELE-JOHN: But they are not fundamentally changing the framework. They're looking at how they update the implementation of the framework that currently exists. Nobody is suggesting, and nobody has been able to tell us of a single suggestion internationally, that any of these countries are rolling back from the fundamentals of this structure.

Dr Patteson : Obviously, the reviews overseas are still underway, and we are watching them closely. Again, Senator, all I can say is that we have undergone a thorough and certainly comprehensive consultation process. We have sought a number of views, and, on balance, the government's decision is that an incremental approach is best and that extending it at this point to the educational, cultural and disability sectors is the best way to go.

Senator STEELE-JOHN: We heard evidence this morning from Redbubble that their partnership with the State Library of Victoria would be left under this current legislative framework—proposed; still very much in doubt, due to its nature, being an educational facility partnering with a commercial entity. Can you give us your view on their concern and the department's response? The thrust of this legislation is to extend these kinds of protections to educational facilities, and yet it would seem we have a situation here where it is still manifestly, on its own benchmark of success, not going to be workable.

Ms Shadbolt : The intention is that the organisations that fall within the definition of service providers and undertake activities comply with the conditions, so, if a university does that and it's in partnership with, say, a private sector organisation, if it is doing it on its system or network, it will be covered as long as it complies with those conditions. In the State Library example, if something was being operated on their network or system and they complied with the conditions, they would be able to rely on safe harbour. That's the policy intention. Whether that affects commercial relationships is not something that the bill deals with.

Senator URQUHART: Dr Patteson, a couple of times you've said that you looked at the wider ranging sort of coverage, but I think your comments were that the decision was made to take an incremental approach at this time. Does that mean there is another leg of the legislation that will deal with those other non-education and not-for-profit entities?

Dr Patteson : In the media release that the government put out, it's quite clear that we'll continue to work with stakeholders on reform to the safe-harbour scheme, but at this point the extension is to the disability, educational and other sectors. But there are a range of consultations that will continue, and we continue to consult with all stakeholders to see what it might look like in the future.

Senator URQUHART: When you use those words, and the media release clearly outlines that, it appears to me that the door is still ajar, if you like; it's not shut. Would that be—

Dr Patteson : I think that would be fair.

Senator URQUHART: In your submission you say that Australia's safe-harbour legislation should take into account the international experience of the US and the EU. Can you talk about the overview of the takedown regimes and the strengths and weaknesses of those regimes?

Ms Haipola : Between the EU and the US?

Senator URQUHART: Yes, and how Australia would compare with that.

Ms Haipola : To start with between Australia and the US: as Australia's scheme is based on the US scheme, they are quite similar, not identical. There are very minor changes—of course, the key difference being the range of service providers that Australia's applies to compared to the US.

Senator URQUHART: Is that the only difference in the two regimes?

Ms Haipola : There's also a subpoena process in the US where a rights owner is able to seek the identity of a possible infringer from a service provider. There's a process under the US act. That wasn't something that was incorporated in the US free trade agreement, so it's not something that is present in the Australian act.

Senator URQUHART: So that's the reason why—because it's not in the US free trade agreement?

Ms Haipola : Yes.

Senator URQUHART: The other query that I've got is in response to the proposition put by Google and others that safe harbours are necessary to support technological innovation and a global level playing field for Australian start-ups. Would anyone like to comment on that proposition that was put by Google and your view on that from your department's point of view?

Ms Haipola : I'd say that safe harbour is a factor in creating an environment of innovation, but there are a number of other factors also.

Senator URQUHART: Are they necessary factors though? That's what Google has put to us.

Ms Haipola : In saying is safe harbour a necessary factor? I think there are a number of countries around the world that don't have safe harbour but still have innovation. We've had disputed evidence about how important safe harbour is to innovation. I think you may have heard evidence from the music industry today saying that safe harbour contributed to a decrease in the music industry.

Senator URQUHART: Yes.

Ms Haipola : But you will also, of course, have heard the evidence from Google that it is absolutely essential. In the face of disputed evidence often the true position is somewhere in the middle. I don't need to tell you that in creating an environment for innovation there are all kinds of things that a business needs to take into account. Tax breaks, wage conditions and general economic conditions all work together to create an environment of innovation, and copyright laws and other legal systems also contribute.

Senator STEELE-JOHN: I'm here in my most genuinely inclined effort to understand the thinking here. I hear that, basically, where the department has landed is a balanced approach. It's a balanced approach born of consultation that you've been through with relevant stakeholders. Would you be able to provide us with a list of the stakeholders with whom you've consulted?

Ms Haipola : Yes.

Senator STEELE-JOHN: Would you be able to provide us with where they landed in terms of expansion or—

Dr Patteson : I wouldn't be able to do that, because the consultations that we conducted were done in confidence. What I can say is that, broadly, the views that have been put forward in their submissions and in some of the evidence that you have heard today is broadly consistent with the views they expressed to us during the consultation.

Senator STEELE-JOHN: Would a list of those organisations be possible?

Dr Patteson : Yes.

Senator URQUHART: Why were the stakeholder consultations done in confidence in?

Dr Patteson : Part of the aim of the consultations was, obviously, to try and understand and unpick all of the issues around such a complex issue. We wanted a full and frank discussion from all parties to the discussion. It became very clear early on that people were more likely to contribute if they felt that the conversation was being held on a confidential basis and that the department would then draw on that advice; whilst it was broadly consistent with things that they have said in public, they felt freer to talk given the confidentiality.

Senator URQUHART: Given the request that Senator Steele-John has made—you said it was in confidence—are you able to provide that information to the committee in confidence?

Dr Patteson : I would have to take that on notice. I think the consultations were very strictly confidential.

Senator STEELE-JOHN: If you could clarify that, because as legislators we're in a difficult position. If the balance you've struck is the critical thing here then we need to be able to scrutinise what fed into that balance. If you consulted with 10 organisations and nine of them said expand safe harbours, but one of them said don't and it's been the view of the department that that's balance—I'm not suggesting that this is the case—or that two of the eight said don't, then you can see how it would be difficult for us to be able to say you came to a balanced view with a piece of legislation that represented balance.

CHAIR: Dr Patteson, you've agreed to take on notice whether you can provide that.

Dr Patteson : Absolutely. But I would reiterate that the views that were put during the consultations are well reflected in the submissions before the committee and in previous submissions to previous reviews. You'll certainly see from all of those submissions that there are a number of different perspectives, and there are a number of different stakeholders with each view.

Senator STEELE-JOHN: Certainly there are, but I'm also aware that there is a long history in this area of many extensive reviews conducted by many august and intelligent bodies who have landed in the area of extension of this framework beyond what is proposed in the legislation, such as the Productivity Commission. I'm not for one moment suggesting that the work that the department has done in this area is below the standard that's usually produced, which is very high. I'm just keen to get as much detail as possible about what fed into your report processes. But I accept you've taken it on notice. If we can get a list of the organisations that participated, that'd be great. If you could get back to us on Senator Urquhart's query as to whether you can provide—

Senator URQUHART: Yes. I understand the confidentiality, but if you're able to provide us with some of the statistics for the full disclosure, without identifying which, that might be something that you might be able to assist the committee with.

The last question I have is in relation to going back to the incremental approach. You indicated that consultations were continuing. Is that informal or formal? Is there a time frame proposed? What's the process for those consultations to continue?

Dr Patteson : At this point, there's obviously the consideration of the bill that is before the parliament. The consultation on copyright at this point has moved on to other elements that were out of the government response to the Productivity Commission's report. There was a paper released recently—I'm going to get the name of it wrong, so I'll look to my colleagues here. We're also about to commence consultation on flexible exceptions in some of the other recommendations.

Senator URQUHART: So not specifically on the safe harbour?

Dr Patteson : Not specifically on safe harbour. As I think the government stated, this is the reform that is being proposed at this point. There will continue to be consideration but, given the priorities in the copyright space and other elements of the PC report, the more formal consultations that will occur in the near future around—

Senator URQUHART: Around other issues?

Dr Patteson : Yes—contracting out and flexible exceptions.

Senator URQUHART: Okay.

Dr Patteson : Website blocking was the other one.

Senator URQUHART: Excellent. Thank you.

Senator STEELE-JOHN: Ms Haipola, you said something pretty interesting earlier on in answer to Senator Urquhart's question about the role of safe harbours and the promotion of innovation. I think you made the observation that some other countries have experienced good innovation, and presumably you were referring to the copyright space. So they have healthy industries in areas affected by copyright that don't have safe harbour legislation. Would you be able to provide us with the examples you had in your head?

Ms Haipola : I wasn't referring to particular examples. It is just that safe harbour is not a universal regime.

Senator STEELE-JOHN: Yes, of course. We know that Japan, New Zealand, Israel, South Korea, the United Kingdom, the European Union, Singapore, Canada and the United States all have more extensive safe harbour regimes than what is proposed in this legislation. I am struggling. That is a massive portion of the global economy that's covered by this kind of regulatory framework. Did the department explore other nations beyond the ones listed that do not have this regulatory framework, and the impact of having it and not having it, in your consideration?

Ms Haipola : We really were looking for strong evidence that linked safe harbour to innovation. We didn't find that direct linkage. There's some evidence about a general copyright approach. I know that there have been some studies that have looked at flexible exceptions and their contribution to innovation. But we did not find any evidence that directly linked safe harbour to an increase in innovation.

Senator STEELE-JOHN: Did you explore the absence of safe harbour and its impact on innovation?

Ms Haipola : I don't think we found that evidence either.

Senator STEELE-JOHN: But did you explore it? That's the question.

Ms Haipola : We definitely looked for any evidence that we could that linked safe harbour and innovation, whether in a positive or negative sense.

Senator STEELE-JOHN: We've heard very clearly again today that the absence of this regulatory framework has had a chilling effect on Australian innovation in this space, and its presence has had a facilitatory effect on innovation in other jurisdictions. Are you telling me you didn't come across the same information when the department looked into this?

Ms Haipola : What I'm saying is that we didn't find any studies that had correlation between safe harbour and innovation. I'm not sure that that information is available.

Senator STEELE-JOHN: Would you be able to provide us, or give us an idea of, the steps you undertook to find that information? What I'm trying to discover is, beyond the consultative process that you went through to come to the balance which sits at the heart of this proposal, what steps you went through to form a view of this and where we should land on it. You go into a consultation and you'll hear one side and another; that's what's expected in a consultative process. But you have to have a baseline view and understanding yourself to be able to get the most out of that process.

Senator URQUHART: Just to follow on from that: I guess the issue arose that you took the positions out of the submissions. Is that correct to say? You looked at all the submissions and that's where you landed with the proposed legislation?

Dr Patteson : We certainly took into account submissions that we were obviously aware of from a variety of different views—

Senator URQUHART: And a number of them would have picked up the innovation discussion. There would have been some detail around that within the submissions.

Dr Patteson : There are some that pick up innovation, but there are some that pick up other issues as well. We certainly took into account all of the submissions that we were aware of, and have seen published. But then it also went to the detailed consultations we did with all of the stakeholder groups to further tease out the issues. What we were looking at was: how do we try and advance copyright?

Senator URQUHART: I think you've answered this, but I want to put it another way: we've got models like the USA and the UK that extend a little bit further than the proposal for this legislation does. I think most of the witnesses today have said it's quite complex. Is it linked to the US free trade agreement; is that one of the reasons? Why do we not just pick up the US legislation and say, 'That's there; why don't we just use that'? Am I being too simplistic? I'm trying to get my head around why we can't just pick up a model that looks okay and dump it here.

Dr Patteson : But, the thing is, it also goes back to the view that it looks okay, and this goes back to—

Senator URQUHART: And then you base that on the submissions?

Dr Patteson : You base it on the submissions and the further consultations. Safe harbour in the US has been in existence for about 20 years, and I think it is fair to say the world has changed in 20 years. I think it is really informative and instructive that the US is having a look at the effect of this scheme and how it is implemented. The EU are certainly having a look at the scheme that they have and are thinking about additional directives and things they might put in place. For us, that's really helpful. I think it really shows that, around the world, there are a number of issues that are being considered in jurisdictions. What is really important is that we look at how we can advance.

Senator STEELE-JOHN: Dr Patteson, I just want to explore this in a bit more depth, because this issue of the review in the US and the EU has come up a couple of times. Those are two of the nine nations which currently have more expansive regulatory frameworks then we do. None of the others are undertaking these review processes. You hit on a key phrase: additional steps. So, unless the department is in possession of information that hasn't been presented to us today, none of those review processes, though ongoing, are considering a fundamental change to the framework. They're considering how to modernise the framework in the 10 years or more since this was laid down. So I don't know how or why, beyond that being a useful talking point that's been given to us today by people on one side of the argument, that is particularly relevant to the department's consideration in this space; otherwise, you would be looking at what the actual aspects of the reviews are and incorporating those into the legislation or at least waiting for the completion of the reviews, presumably.

Dr Patteson : Senator, I take your point that neither of those reviews, as we are aware, are necessarily looking at pulling back who safe harbour applies to. I can't reiterate enough that what has happened overseas and what is in place overseas is important, but we need to look at what is appropriate and fit for purpose in Australia. The complexity of the issues and the really diverse views and polarised views of stakeholders makes it a really difficult path to navigate, and that is why we are really trying to take what is a balanced approach where there is an openness to extending safe harbour. One of the things that we can improve right now, because there isn't that consensus and the polarised views are very, very strongly held. For every view that extended safe harbour is an absolute must, there is an equal and opposite view that it would be the absolute worst thing for our industry.

Senator STEELE-JOHN: Forgive me, but that's not quite the ratio we have heard today. I understand that there are polarising views—of course there are—but, where someone is in favour of one, there is also another that hasn't been reflected in what we've heard. More interesting to me—because that's a bit semantic, really—is that you mentioned that you have to look at the uniqueness of the Australian environment when thinking about this issue, in relation to what's been done overseas. What are the things that you think set us apart in comparison to the US or the UK or the EU?

Dr Patteson : If I said 'uniqueness' I apologise because I didn't mean 'uniqueness'. What I said is that, because we have a different regime in Australia at the moment, it is incumbent and it is something that the government is committed to—looking at whether there are modifications to the scheme that we have. We are different because we don't have the same safe harbour regime that exists overseas. I'm not suggesting—

Senator STEELE-JOHN: That there is anything unique about the Australian context?

Dr Patteson : No. This is more about where we are coming from at the moment and the safe harbour regime that we have. Is there an opportunity to extend it and, if so, what should that extension look like?

Senator STEELE-JOHN: So you wouldn't necessarily say that there is something contextually different about the Australian space compared to the US space pre the existence of safe harbours there? There's nothing that would limit or mean that the extension of safe harbours into Australia would have a different effect to that seen in the US? It's simply the fact that we are not so far along?

Ms Haipola : Perhaps I could answer. If the US were asking the same question that Australia is asking, the thousands of submissions that were made to the review would have been amplified. I'm sorry that I don't know the exact number in the US, but the submissions that were made to the US review were in their thousands and I would not wish that on this committee at all. In those submissions, there will be those from the service-providing industry who say that there's either nothing wrong or it needs tinkering, but, from the creative sector in the US, there have been substantial numbers of submissions saying that there is a critical problem with the scheme and that the deal that was struck 30 years ago is an inappropriate deal to strike now, given the way that the internet has evolved. If the US were doing the process that we are doing now, I think they would be in exactly the same, very difficult position, where we have a creative sector saying that this is going to have a terribly negative impact on the industry and a service-provider sector saying, 'We need this; it's essential.'

Senator STEELE-JOHN: But that's not really the discourse, is it? You've got a section of the creative industry saying that to you. This goes fundamentally to the challenge of this space, which I'm sure you're familiar with, which is that the line between creator and user is increasingly opaque. It is not what it used to be 20 or 30 years ago. User and creator are interchangeable, and it happens multiple times throughout a day.

What I'm really struggling with here is that balance is so central to what you're talking about here. It seems so central to your thinking, yet I can't see much balance in the proposed legislation. What I see here is a minor extension of free harbours, which doesn't give protections to all of those creators who sit outside the licensing framework and doesn't actually give any support or clarity in this space. Again, I'll bring you back to the fundamental of the Redbubble case. This is a corporate actor that functioned to the highest possible standard and was given, at the end of a costly court case, no real suggestion as to how it might protect itself in terms of liability into the future. This is a space where we've heard repeatedly today that, in the absence of this framework, there will be no protection for smaller copyright holders and no certainty for smaller creators who are unable to access those methods of redress available to larger entities. I can't see the balance. I can see a way forward which will make the least noise, but that's not the same as balance. That's consensus, which isn't the same thing, is it?

Ms Haipola : I think a perspective that you might not have heard today—I'm sorry that I wasn't here for the first speaker. One of our roles is that we respond to members of the public who write to us with their questions and their queries. I recall one that we got from an author. Her book was being put onto a Facebook group and she also had problems with her book being uploaded onto other social media sites. While safe harbour enabled her to send a notice and have that taken down, as soon as that got taken down it would go up somewhere else. She said that it became basically her second job. Every night after she had written, she would then scour the internet and ask for her material to be taken down. That is one anecdotal example, but we have heard from the creator sector—and I don't mean here the copyright owners; I mean the individual creators—that where you are an independent creator and you don't have the protection of a record company or a large publisher safe harbour actually isn't 100 per cent in their interest.

Senator STEELE-JOHN: But it does give you an avenue that doesn't currently exist, doesn't it? It does give you the ability to give a takedown notice, for the respondent to respond and for it to be dealt with.

Ms Haipola : There is an avenue under the normal law, or the status quo, that you can ask somebody take something down. Whether they take it down or not and the steps that they take are taken into account by a court in determining infringements. While in the US it is there as an automated approach, which might provide some benefits, if you having to send 100 takedown notices a day then it stops having the benefit that it was intended to have.

Senator STEELE-JOHN: But it would be better than nothing. I think that just about does us.

CHAIR: There are those couple of issues that were taken on notice. We were hoping to have answers or responses back by 9 March. Was there a document listing those who participated in the consultation?

Dr Patteson : We will check and see if we have got it.

CHAIR: It's the same process—on notice, if you're okay with that, Senator Steele-John.

Senator STEELE-JOHN: Yes.

CHAIR: That concludes today's hearing. We will hand down the report on this particular inquiry on 19 March. Thank you for your time today.

Committee adjourned at 14 : 00