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Wednesday, 15 July 2009
Productivity Commission recommends open market

As reported in a WBN special bulletin yesterday, the Productivity Commission's final report on Australia's book parallel importation laws has been released, recommending the government repeal Australia's parallel import restrictions (PIRs) for books.

The Commission recommended that such a repeal should ‘take effect three years after the date that it is announced'.

The report's other key recommendations were that the government should ‘as soon as possible, review the current subsidies aimed at encouraging Australian writing and publishing' with any revised arrangements to be ‘put in place before the repeal of the PIRs takes effect' and that the Australian Bureau of Statistics should ‘as soon as possible undertake a revised version of its 2003-04 surveys on the book industry and market, having regard to the information gaps and interpretation problems identified in [the Commission's] study and relevant data held by other agencies'.

The Commission also recommended the government monitor the outcome of its recommendations five years after they have been implemented.

Subsidy scheme
A key part of the Commission's recommendations is a suggested subsidy scheme to ‘offset the cultural externalities' of local publishing (see Appendix F). The Commission's preferred scheme is based on a Canadian model and proposes to reimburse publishers on the basis of reported sales.

The Commission suggests revising current funding arrangements including the Australia Council's Literature Board grants, the Education and Public Lending Rights, Books Alive and government-funded literary awards to create a funding pool, which it currently values at over $25 million per year. Publishers of books in certain subject categories deemed to have ‘cultural value' would be eligible to apply for subsidies estimated at approximately $1.40 for each copy sold.

For the scheme to work, the trade would need to agree on standardised and rigorous subject categories and be able to provide robust and complete sales figures.

However, controversially, the Commission suggests completely excluding educational publishing from this subsidies system. ‘We have severe concerns about the impacts that this will have on educational publishing in Australia and therefore on Kevin Rudd and Julia Gillard's education revolution,' Australian Publishers Association (APA) CEO Maree McCaskill told WBN.

Australian Booksellers Association (ABA) CEO Malcolm Neil said such a recommendation also ignored the role of booksellers. ‘There appears to be no acknowledgement of the--in quotation marks!--‘cultural externalities' that flow from bookshops,' he told WBN. ‘The fact that a store like Readings was acknowledged for the success of Nam Le at the recent ABIA awards demonstrates the contribution made by booksellers.'

APA, ABA, ASA, ALAA and Printing Industries reject report recommendations
Unsurprisingly, the ABA and APA, together with the Australian Society of Authors (ASA), the Australian Literary Agents Association (ALAA) and printing peak body Printing Industries have all attacked the Commission's recommendations.

The APA said the Commission's report was ‘a triumph of ideology over evidence'. Citing the objections of publishers, authors, printers, state governments and ‘over 90% of booksellers', that wished to see the current legislation retained, APA CEO McCaskill said the Commission had ignored the evidence put by these parties because ‘it doesn't fit the rigid free-market mindset of the Productivity Commission, which is determined to abolish [PIRs], evidence or no evidence'.

APA spokesperson Jose Borghino told WBN the APA would continue to lobby on the issue now that the final report had been made public. ‘From our point of view it's the same campaign we've been running for 12 months,' he said. ‘We've been running a campaign that dealt with [the Productivity Commission] and also with political relations. COAG and the chief ministers are against changing the system--it now goes to cabinet. We know there are some hard heads in cabinet,' he said, but added the APA was ‘also confident they are capable of listening to a range of arguments that go from economic through to cultural'.

Nonetheless, McCaskill warned that, even with state governments opposed and the Productivity Commission itself admitting that the abolition of PIRs would ‘of themselves cause some contraction or slowing in the growth in the book production industries', the federal government would not necessarily be swayed by the likelihood of job losses. ‘I came from the textiles industry,' she said, ‘and I don't reckon you can predict anything.'

The issue is likely to be a hot political topic, with the Sydney Morning Herald (SMH) reporting that both the minister responsible for any changes, the Attorney-General, Robert McClelland, and Arts Minister Peter Garrett are understood to support the current system. ‘There is, however, a competing view that publishers have been cosseted by the restrictions, likely to be advanced by ministers with economic portfolios, such as Craig Emerson,' SMH reports.

ABA CEO Neil said that the Commission had ignored the impact of its recommendations on small businesses--which he said made up 30% of the book retail industry--and that ‘the cursory examination of their concerns and the cavalier way in which they are dismissed stands at odds with government policy'. Like McCaskill, Neil said the Commission's recommendations were based on ideology rather than evidence.

‘Other than an ideological debate between various economic think-tanks, we see no evidence of a call from the rest of the community that justifies the introduction of yet more uncertainty into our industry,' he said.

The ASA's executive director Jeremy Fisher warned that if the changes were implemented by government Australia would ‘become an international laughing stock' and said the ASA's position was supported by the New Zealand Society of Authors, the UK Society of Authors and the Authors Guild in the US.

‘The Australian publishing industry is ... highly regarded internationally and it prospers without any support from the taxpayer, unlike most other creative industries,' said Fisher. ‘What sense is there in punishing success by removing territorial copyright? Only free market economists could be so pig-headed--but of course their deregulatory mantra caused the global financial crisis!'

Text publisher Michael Heyward also pointed to the success of the local industry, citing territorial copyright as ‘the very thing that underpins one of the most successful cultural industries we have'.

Arguing that the final report's recommendations, if implemented, would ‘make it harder for Australians to be published and paid fairly, and will provide a big free-kick to foreign-based publishers and wholesalers', Heyward said Australian taxpayers would end up paying the price for the damage done to the industry. ‘According to the Productivity Commission, the government must immediately review the subsidies it provides for writing and publishing,' he said. ‘In other words, it wants the government to mass

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