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Wednesday, 28 February 2001
Page: 24578

Mr WILLIAMS (Attorney-General) (9:52 AM) —I move:

That the bill be now read a second time.

The Copyright Amendment (Parallel Importation) Bill 2001 is another demonstration of the coalition government's willingness to act in the best interests of consumers, the education sector and business.

In 1998 the Copyright Act was amended to allow the lawful parallel importation and sale of sound recordings (CDs). There has been strong consumer support for this move as it has resulted in lower prices, particularly for top 40 CDs.

This bill will extend the application of that policy to key sectors of the information economy, and will enhance competition in price, availability and choice.

Australia is a net importer of copyright material.

It is therefore in Australia's interest that printed material and software products are widely available on a competitive basis.

The term `parallel importation' refers to the importation for commercial purposes of copyright material lawfully produced overseas, without the authority of the Australian rights holder. Local rights holders currently have the ability under the Copyright Act to limit access to the Australian market for commercial distribution of software products, books, periodical publications and printed music.

The price and availability of much of this material is therefore not subject to open and genuine competition.

And unlike some other products, there is not necessarily a natural substitute for these goods.

The central aim of the bill is to improve access to a wide range of software products, books, periodical publications and printed music on a fair, competitive basis.

The bill does this by allowing the importation for commercial purposes of non-pirate copyright goods without the permission of the Australian rights holder.

The bill offers the prospect of cheaper prices and increased availability of products for all Australians, but especially for small businesses, parents and the education sector.

Retailers, particularly large retailers, are likely to support the reforms due to the beneficial impact the changes will have for them in competing and potentially extracting better terms of trade.

Small businesses will benefit from increased access to popular applications for word processing, database management, accounting, desktop publishing and graphical analysis.

The government has carefully assessed the impact of parallel importation provisions in the Copyright Act by examining each affected industry separately.

The introduction of this bill follows a rigorous assessment of the potential impacts of parallel importation on the Australian book publishing and printing industry, and on the local software industry.

Despite claims to the contrary from the Labor Party and large multinational publishing and software interests, only the complete removal of copyright importation restrictions for printed material and software products will enable competitive access to these products, provide consumer benefit and promote the overall effective functioning of the economy.

Unlike the Labor Party's `use it or lose it' policy, the government's policy is not about benefiting foreign rights holders by reimposing restrictions on CDs, and maintaining import restrictions and monopoly distributions on books, software and computer games at the expense of Australian businesses and consumers.

As with the CD reforms, no doubt we will see spirited resistance to this bill from opponents of liberalisation.

This time around, however, we have the benefit of experience to date, as well as developments in foreign markets, such as New Zealand, to address many of the concerns and debunk many of the claims.

Many argued in 1998 that the relaxation of parallel importation restrictions for sound recordings would devastate the Australian music industry.

Dire predictions made during the CD debate that 50,000 jobs would be lost and that the Australian record industry would have to close up shop have proved groundless.

The industry is in good shape and no evidence of job losses has materialised.

Indeed the recording industry has grown since the 1998 reforms, with recent reports of around 2.9 per cent growth in 1999 alone.

In the Australian Record Industry Association end of year charts in 1997, prior to the government's reforms, there were 23 Australian albums in the top 100 albums sold; in 2000, by contrast, there were 28 Australian albums in the end of year top 100.

The ARIA singles charts tell a similar story: in 1997, there were 14 Australian singles in the end of year top 100; by 2000, that number had climbed to 19.

These figures hardly paint a picture of an industry in decline, where the production of local talent has been stymied or destroyed.

In fact, the Australian music industry appears to be in better shape now than prior to parallel importation.

The parallel importation restrictions in the Copyright Act are of course not the only factors that affect the retail price of products.

Nevertheless, in 1998, prior to parallel importation of music, CD prices were around $31.00 for new releases and rising.

In January this year, Big W and Target were selling top 30 CDs for around $21.43.

Clearly it is now possible for consumers to access top selling CDs that are over 30 per cent cheaper than prior to parallel importation.

And this is despite the impact of the GST and unfavourable exchange rates relative to the US, a major source of popular music.

Claims were also made that piracy rates would soar as a result of the CD reforms, and no doubt similar claims will be made in relation to books and particularly software. Whilst copyright piracy is a serious and real problem in many countries, it is primarily a problem in countries where the enforcement of intellectual property laws is weak, and there are large informal retail sectors. By contrast, Australia provides a strong intellectual property regime backed by an effective court and general legal system, and has a very strong formal retail sector comprising large retailers, chains and independent outlets. The Australian Institute of Criminology recently reported that since the 1998 amendments there is `little or no evidence of the increase in CD piracy predicted by opponents of liberalisation'. Australia is also recognised by the International Intellectual Property Alliance as having one of the lowest piracy rates in the world.

Evidence on the impact of the CD reforms proves the government's position that this is not an attack on copyright as an appropriate means of compensating, rewarding and encouraging creators and owners. Copyright owners will continue to be remunerated through their contractual arrangements regardless of where their product is published or manufactured, or how it is imported.


Turning specifically to the reforms as they apply to books, a 1999 review by the Australian Competition and Consumer Commission found that for best selling paperback fiction, the price difference with the USA had exceeded 30 per cent on average over the previous four years.

Five reports to the government have dealt with the book industry: those by the Copyright Law Review Committee (CLRC), the Prices Surveillance Authority, the Industry Commission (now the Productivity Commission), the ACCC and, most recently, the Intellectual Property and Competition Review Committee, or Ergas Committee.

The earliest report, by the CLRC, recommended a relaxation of some of the importation controls exercisable by copyright owners in relation to books. All subsequent reports have recommended the complete removal of copyright owners' control over book importation on the basis that current restrictions are inappropriate and their removal would deliver lower prices and a more efficient industry. Importantly, the majority in the Ergas Committee concluded that the removal of importation restrictions in the publishing industry was unlikely to lead to any wider losses in the Australian economy.

To enable maximum community access to competitively priced products, the bill provides that parallel importation is to encompass all major forms of printed material.

In accordance with the June 2000 recommendation of a majority of the Ergas Committee, the implementation of the printed material provisions in schedule 2 to the bill will be delayed for 12 months to allow for contractual adjustments. This recognises the fact that the book industry is more reliant on contract than other copyright based industries. The government is confident that the extra time will allow the industry to adjust effectively and positively to the changes.

The government is well aware of concerns, particularly in the printing industry, that a change from the current law, to remove the so-called 30-day rule, might reduce growth in the printing industry in areas such as Maryborough in Victoria and Netley in South Australia. Under the 30-day rule the right to control importation of books is lost if the book is not published in Australia within 30 days of publication anywhere.

However, such concerns are misplaced and largely unsubstantiated.

The Ergas Committee noted that it had not been provided with any evidence to substantiate claims in relation to the beneficial effects of keeping the 30/90-day rule restrictions. The committee queried whether changes in the level of printing activity in Australia in recent years were due to the 30-day rule or to changes in competitiveness, including as a result of exchange rate movements.

Further, the removal of restrictions should be seen within the context of special Commonwealth adjustment assistance through the Book Industry Assistance Plan (BIAP). This program, which also provides assistance for indirect tax reform, will provide up to $240 million over four years, including up to $48 million specifically for the printing industry.

Software products

In January 1999 the Australian Consumers' Association published the results of a survey of current retail prices of a range of overseas manufactured packaged software products across six countries.

It found that while Australian household consumers and businesses were paying competitive prices for home/office crossover software like Microsoft Windows 98 and Word 97, this was not the case for cutting edge products, such as publishing products QuarkXPress and Adobe PageMill 3.0.

A report to government by the ACCC showed that over the past 10 years, Australian businesses have had to pay an average of 27 per cent more for packaged business software than their US counterparts.

The Ergas Committee recognised that the benefits from these higher prices flow primarily to foreign rightsholders while the corresponding costs are borne in Australia, by Australian consumers and by industries—such as the domestic software industry—that use protected imports as inputs.

Of the top selling computer games analysed, Australian purchasers of popular PC computer games paid on average 33 per cent more during 1998 than those in the United States.

Other reports to government dealing with the software industry have been made by the same bodies that considered the issue of book importation, namely, the Copyright Law Review Committee, the Prices Surveillance Authority, and the Ergas Committee.

To enable maximum community access to competitively priced products, all types of software products are included within the coverage of the bill, whether used in business, education or the home, or in home computer games or pay-per-play video arcade machines.

Removing parallel importation restrictions will enable local distributors to choose suppliers on the basis of price, availability, service and reliability and to pass these benefits on to consumers.

The parallel importation of software will not interfere with the rights of copyright owners to be compensated according to their contracts. As the Ergas Committee indicated, `supporters of retaining restrictions assert that prices in Australia are as low as they are elsewhere, so there is no basis for opposing a change which will make it clearer and more certain that market forces are at work.' The removal of these parallel importation restrictions is expected to reduce some prices and remove the potential for price discrimination against Australian consumers.


Technology convergence allows different types of works and subject matter to be included on the same article. Multimedia CD-ROMs are one example. By their very nature such products contain a mixture of copyright materials, and each may have a different status in relation to parallel importation. In many cases, such materials are secondary to the product. However, some Australian rightsholders have attempted to prevent parallel importation of sound recordings by relying on the copyright in material used to `enhance' CDs.

Provisions in this bill will close this loophole resulting from the CD reforms by allowing the parallel importation of these `secondary' materials which will be defined as `accessories'. An accessory, in this limited context, includes any copyright work or subject matter other than `feature' films irrespective of how it is incorporated into the product.

The government has not fully assessed the impacts of allowing the full parallel importation of `cinematograph film' on the Australian film and television industry. For this reason, feature films, as defined in the bill, are excluded from this extended operation. The government considers that it would not be appropriate to alter the arrangements for imported film products without a cost-benefit analysis specific to the industry, along with careful analysis of the likely effects on consumers.

The bill therefore does not lift restrictions on the importation of that class of film that is the industry's most economically significant product, namely, entire movies intended for cinema release, film intended for broadcast on television in commercial half-hour format or longer (for the mass market including free-to-air or pay television). Importation of the main products derived from these types of film, such as DVDs, will also remain restricted.

Enforcement Provisions

Allowing parallel importation does not mean that it will be legal to import pirate product.

On the contrary, this bill gives very substantial procedural assistance to copyright owners in civil actions by shifting to the defendant the onus of establishing that a parallel imported copy is not an infringing copy.

In addition, where a criminal action is brought for copyright piracy, the penalties for infringement of copyright are severe: the maximum liability for importation and sale of pirate goods is $60,500 and/or imprisonment of five years for each offence, while the maximum liability for a corporation is $302,500.

Any infringing articles are also subject to forfeiture and destruction.


This bill will remove an impediment to accessing competitively priced non-pirate printed material and software products.

It will open up new business opportunities, in particular for consumers, small businesses, the education sector, parents, professional associations and community groups satisfying their specialist needs.

It will also enable Australian retailers and distributors to enter new markets and better compete with overseas-based e-tailers in the emerging Internet market for directly downloaded software, including e-books.

Copyright owners will continue to be fairly remunerated, but in the context of a global marketplace.

Australian consumers and businesses will be able to get the best deal on legitimate copyright material.

I commend the bill to the House. I present the explanatory memorandum to the bill.

Debate (on motion by Mr Horne) adjourned.