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Wednesday, 27 June 2001
Page: 28675

Ms JULIE BISHOP (12:44 PM) —Over the past 25 years the Australian economy has undergone important structural changes. These changes have given Australian businesses the opportunity to compete aggressively with overseas based firms. We just have to look at the Howard government's taxation and workplace relations reforms to see the most recent examples of the coalition's commitment to managing and reforming the economy so that an environment can be created whereby Australian businesses can flourish and consumers can enjoy a higher standard of living.

The purpose of the Copyright Amendment (Parallel Importation) Bill 2001 is to prevent the price discrimination that exists under the present copyright arrangements. The proposed legislation will facilitate efficiency in the Australian book publishing industry while protecting their copyright interests. The original intention of the Copyright Act was to act as a means by which to balance the interests of creators and owners of reproducible goods with those of users. The intention was not to create economic rents for some creators in particular situations. In cases where rights to control the importation of copyrighted material impede or obstruct the effective achievement of these objectives, these rights should, quite rightly, be modified or removed altogether.

The parallel importation regime of the Copyright Act currently allows a copyright owner or exclusive licensee to control the importation into Australia of copyright material even if the products have been lawfully acquired overseas. The restrictions allow rights owners to separate the world market into self-contained segments to secure the greatest return on the protected subject matter. But the parallel imports prohibition has been relaxed for certain categories, and separate regimes exist to govern the book and sound recording industries.

The first part of the bill before the House makes amendments to the Copyright Act 1968 to allow the parallel importation of computer programs and electronic and literary items. At the heart of these amendments is the extension of the meaning of the term `non-infringing copy' to computer programs and electronic and literary items. By contrast, the second part of the bill extends parallel importation to electronic and printed books. The government recognises that the printing and publishing industries operate on a contract basis. Therefore, unlike the first part of the bill, those amendments dealing with printed material commence 12 months after royal assent. The government has deliberately delayed commencement in order to assist the publishing and printing industries and authors to make the necessary adjustments to their business practices and legal arrangements.

The bill before the House has grown out of numerous reports and inquiries, both within and without this place, into the Copyright Act. The differing views expressed in those fora regarding parallel importation reflect the tension that exists between competition policy and intellectual property rights. As I have observed in this House on other occasions, the laws of contract and property rights are, of course, at the very basis of our society. It is our goal, therefore, to ensure that the benefits from the material that we create flow only to those to whom it is appropriate that they flow.

It has been alleged that lifting restrictions on parallel importing will be a disincentive to copyright owners to invest in creative endeavour. That is ridiculous. It is important to recognise that legislative restrictions on parallel importing are simply not justified by traditional concerns relating to intellectual property, particularly those relating to plagiarism and piracy. As the ACCC noted in its report to the Intellectual Property and Competition Review Committee, these restrictions relate to production. I view the parallel importation restrictions as extending beyond production, to the distribution sphere, and I ask the House: how can we justify maintaining restrictions upon the importation of legally manufactured goods on the basis that they were produced overseas? Moreover, why should we restrict the importation of genuine articles which may be preferred by Australian consumers? In my view, such restriction can only be considered a great disservice to consumers and to the business sector.

The bill will move parallel import restrictions from computer software programs as well as books, periodical publications and sheet music in electronic and hard copy form. The small business sector will benefit from increased access to popular business tools relating to accounting functions, desktop publishing, database management, human resource tasks and information technology management. The bill will extend the application of a successful policy to key sectors of the information economy as well as enhancing competition in price availability and choice.

Increased competition between wholesale suppliers will mean that Australian business, government and households will have access to the products identified in this bill at prices comparable to the lowest in the world. Perhaps the most important benefit is that commerce and industry, especially small business, will be better able to compete in the global market. At present, the Copyright Act allows Australian copyright owners of a software program to prevent legal copies of that program being imported except through distribution channels approved by the local copyright owner. The nature of the Australian software market is that a small number of large multinational firms are dominant. Consequently, these firms are able to charge higher prices for their products in the Australian market in comparison to other markets. Furthermore, these firms may restrict the range of goods entering the Australian market.

The conclusions of the Prices Surveillance Authority, the Copyright Law Review Committee, the Industry Commission and the ACCC all suggest that present price differences in this regard better illustrate international price discrimination rather than underlying differences in industry cost structures or exchange rate effects. In my opinion, there is little doubt that the current nature of the Copyright Act is preventing Australian firms from taking advantage of lower prices for business software programs.

The importance of this bill for the business sector is underlined by the 1996 figure that 81 per cent of the $821.4 million in software expenditure by Australians was for business use, and I have no reason to suggest that that would be otherwise today. Since then, the information technology sector has witnessed mind-boggling growth, especially with the spread of Internet usage by households and businesses. Consequently, any savings would be of enormous benefit to business, especially small business. Every business seeks to minimise costs. Therefore, it is logical that, if cheaper alternatives are available overseas, the government encourages and nurtures the ability of firms to seek cost savings. Rapid changes to the software industry are taking place around the world. By removing parallel import restrictions, the government will allow firms to access new products quickly and readily at the lowest price.

In contrast to the reforms of the coalition, the Labor Party proposes a `use it or lose it' parallel imports policy. Under this policy, Australians would have to wait over a month for products released elsewhere in the world and over three months for software, CDs, books or computer games that have been released in Australia but are not available for various reasons, including just being out of stock. Labor's typically anti-small-business and anticonsumer policy inhibits the ability of firms to respond speedily to technological changes. I know in my own seat of Curtin, with its multitude of technologically aware and progressive small businesses, the importance of easy and efficient access to new technologies and new products is vital to commercial success and community development.

In 1998 the government amended the Copyright Act to allow the lawful parallel importation and sale of sound recordings. Consumers have voiced very strong support for this policy, and the move has seen consumers enjoy significantly lower prices. I know this not only from personal experience but because I am fortunate to have a very bright and very energetic law student, Jeremy Sher, from the University of Western Australia doing volunteer work in my electorate, who in doing some of the research for this speech tells me that prices for sound recordings, especially top 40 CDs, have dropped markedly since 1998. He is quite a collector. For the first time, local retailers are able to advertise current CDs for prices as low as $20 or $21.

The ACCC released a report on 3 April 2001 that highlighted how the prices for CDs had been heading downwards since August 1998—since the amendments to the Copyright Act—yet Australians continue to pay higher prices for books and computer software than their overseas counterparts. Business management software can cost several hundreds of dollars. Any price difference therefore puts Australian small business at a significant competitive disadvantage. Disturbingly, ACCC monitoring in January this year showed that Australian businesses have had to pay an average of 27 per cent more for packaged business software than their overseas competitors.

Following on from the price benefits, there is a necessity for the government to recognise the increasing impact of online purchasing of software on the traditional wholesale and retail industry. As more and more businesses and consumers turn to this purchasing method, it seems logical that the government endorse imports of software products for sale by retail outlets. They may be copyrighted to another Australian company but they are cheaper. If the parliament is to remain relevant to contemporary Australia, it must recognise and adjust to a new climate where more and more people are accessing new ways of buying what they want. These goods remain the genuine article but they have a lower price. This forces Australian producers to adjust to the demands of the market. By introducing competition for domestically produced goods, Australian firms will adjust their own prices downwards.

When the coalition government first deregulated the sound industry, opponents of liberalisation reacted with apocalyptic predictions that were more reminiscent of a Greek tragedy than a serious policy debate. Their histrionics foretold the demise of the industry. Large rowdy demonstrations took place outside federal parliament and numerous celebrities loudly denounced the government for amending the Copyright Act. The opposition allege that this bill will cripple the printing industry, just as they predicted similar legislation would cripple the recording industry. Three years on and the recording industry is in an excellent position. The threatened job losses, estimated by the opposition at over 50,000, just did not eventuate. Nonetheless, the government does recognise that there will need to be a period of transition related to the reforms before the House. The Howard government is therefore providing $48 million of direct assistance to printers under the book industry assistance plan to ease the transition towards greater competition, efficiency and lower prices.

Industry interests have identified piracy as a principal reason for continuing parallel importation restrictions. In a 1992 submission to an inquiry by the Prices Surveillance Authority, diverse software companies, including Microsoft and Borland International, considered increased piracy as an important reason for why they were opposing an end to parallel importation restrictions. However, in its report Cracking down on copycats the House of Representatives Standing Committee on Legal and Constitutional Affairs found that the link between parallel importation and importation of pirate product is weak.

The Australian Institute of Criminology takes a similar view. It notes that there is `little evidence of the increase in CD piracy predicted by opponents of liberalisation'. The peak representative body of the recording industry in Western Australia, the Western Australian Music Industry Association, does not consider copyright infringement a problem amongst its membership. An important feature of the proposed legislation is that it does not affect infringements relating to hard copy disks and downloading illegal copies from the Internet. On this basis it would seem that industry opponents of parallel importation are trying to protect their own market share rather than being invigorated by the challenge of competition.

The Labor Party acknowledge that their policies are designed to thwart the ambitions of Australian consumers. Labor's former shadow minister for industry and technology noted that the Howard government's policy is `to try to just drive down the prices; it is entirely driven by consumer interest'. In contrast to Labor, our government is interested in consumers and in the education and business sectors which will benefit from these reforms. We are not proposing draconian neo-protectionist policies, monopoly distributions and import restrictions that can only be to the detriment of Australian businesses and consumers. Labor are not about promoting innovation and excellence in business; they are about imposing expenses, controls and regulation that can only damage the economy. The coalition is interested in innovation, excellence and competitive prices. As someone who respects and believes in the benefits of free enterprise, I commend this bill to House.