The Productivity Commission has concluded that Parallel Import Restrictions for books are significantly more costly than previously considered, and this afternoon recommended in its final report that the restrictions be abolished after a three-year adjustment period, to be replaced with more direct forms of support for authors and publishers.
The PC’s move reflects more detailed analysis by the Commission about the costs of the PIRs. While still acknowledging the substantial cultural benefits of the restrictions, the Commission has decided they have significantly greater costs.
In particular, the Commission found that, remarkably, the bulk of the benefit of the PIRs was going to foreign authors. The Commission’s draft report had found that the benefits of the PIRs were about equally shared between Australian and foreign authors and publishers, but further analysis revealed that foreign companies and authors get approximately 50% more benefit from PIRs than Australians, amounting to a substantial leakage directly from Australian consumers overseas.
The Commission had considered trying to limit the PIRs to Australian authors (but found that would breach international treaties to which Australia was a party) or otherwise limit their operation, before deciding that restrictions could not be overhauled effectively to address their costs. Instead, the Commission wants an urgent review of forms of direct support for authors and publishers, with the goal of developing forms of assistance that will achieve the same levels of cultural benefit as PIRs, but without their costs and high levels of leakage overseas. The Commission recommends that the new forms of support be put in place before the PIRs are removed.
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Australia’s publishers also appear to have scored a spectacular own-goal by opposing the Commission’s draft recommendations, which centred on reducing the period in which the PIRs could operate to twelve months. On the basis of opposition not merely from those in favour of reform, such as booksellers, but from publishers and authors as well, the Commission concluded that any reform of the existing PIR framework was unviable, and that the restrictions needed to be entirely removed. In retrospect, authors and publishers might have been better accepting that some change was inevitable and trying to minimise it. Their obstinate opposition to any reform appears likely to contribute to the demise of the long-standing restrictions on book importation.