“The country’s most articulate lobby” they were called yesterday: the array of writers aligned against deregulation of Australia’s $2.5b book industry.

Well they might be high-profile Australian writers but articulate? Depends what you mean, especially when you’re talking about the Productivity Commission, which this afternoon will release its recommendations on the removal of parallel importation restrictions.

Rarely has there been a greater disconnection between what a Government agency has sought comments on, and what it received. Who knows what the Commission will make of some of the submissions they received.

For example, Peter Carey told them:

Perhaps the people who read Excel sheet are a different cast to those who read literature. They may not be aware that Australian writers for more column inches in the US than even the most craven of our Prime Ministers. These Australian writers, who naturally are not noticed by those who do not read literature, represent us as a sophisticated nation in every corner of the world. In the years when our French ambassador could not speak French our Australian writers were getting front page reviews in Figaro, Le Monde, Liberation.

According to Carey, only people who think “in a colonial way” would support the removal of PIRs, and it amounts to “cultural self-suicide” (in his defence, the tautology was deliberate).

This is Tim Winton, who at least lives in Australia:

In the late ‘80s I came to understand that there were more people interested in reading certain books than were purchasing them. Some of these readers were established buyers of mass market products who were stimulated by curiosity or regional interest or focussed publicity to seek out Australian literary novels. Anecdotally I discovered that some were discouraged by presentation or retail environments that felt foreign or unfriendly. Something about their encounter caused them to feel excluded…

 

But never mind readers who are just too damn sensitive to survive an unfriendly bookshop encounter. Kaz Cooke thought it might be a matter of life and death:

The introduction to the Australian market of foreign editions of my books would be unfair, if not totally disastrous for my readers, who rely on my books for important medical information – some of it including emergency telephone numbers relevant to the health of their newborn babies and small children, or in the case of pregnant women, to their own physical and mental health.

OK, I shouldn’t mock. These are only some of the many heartfelt views expressed by authors, many of them a great deal more sensible than those above, concerned about both their own livelihoods and Australian culture in the event PIRs are removed.

But, while not suggesting the PC is populated exclusively by Excel-sheet reading colonialists who don’t know their Figaro from their fungibility, little of this stuff would have been of the slightest use. For those who actually bothered to read the PC’s draft paper, the Commission considered some specific issues.

1. What are the costs and benefits of the PIRs.

2. Could the benefits be achieved in a way that involved less cost.

3. How could we accurately assess the costs and benefits.

The PC’s draft recommendation was to limit PIRs to twelve months; remove restrictions on importations when PIR-protected books become unavailable, and allowing booksellers to aggregate individual orders for imported books. And it urged the ABS to collect better data on the industry because accurate analysis was difficult.

Few of the writers making submissions tried to deal with the basic issues considered by the PC. And however much the likes of Carey might rail against Excel sheet readers, the ability to mount a rational, evidence-based argument, or at least not offer a complete non sequitur of a response, should not be considered the province of the illiterate and colonial-minded.

Of those who did try to argue rationally, the lines are familiar from other protectionist debates. As always, it is the industry associations — in this case, the publishers — who marshal the economic evidence for maintaining protection: the jobs saved, the value of the local industry, the need to safeguard copyright (where the similarities with arguments advanced by major studios for regional coding of DVDs is uncanny). The workers themselves — in this case, the authors — argue that their industry has some innate value that should make it an exception from normal economic analysis. This too is familiar, rather like unions arguing the innate value of having a car industry, because, well, just because.

The PC is actually sensitive to arguments about the cultural benefits.

“The dissemination of Australian culture can have a range of social and educational benefits,” it says.

“Although difficult to quantify, cultural externalities constitute a non-market benefit to the community that is currently derived from the PIRs…”

But, the Commission notes, there are also costs – foreign authors are protected in the same way as Australian authors by the PIRs, and the cost of books — particularly in less competitive sectors such as educational books — is higher than it should be (as most students could attest).

And the costs harm a group not represented at all in the 650-odd submissions to the PC: Australian consumers, who as usual in protectionist debates tend to be forgotten about.

The PC’s recommendations should, in its view, preserve the benefits of the PIRs while reducing the costs to consumers, but the lack of information makes its assessment a short-term one: it wants more to see more ABS data.

The lack of data is used by proponents of the status quo to argue, in the time-honoured way of demanding one’s opponents prove a negative, that there is no evidentiary basis to support removal of regulation.

But the Institute of Public Affairs’s Tim Wilson has done some digging and found some relevant data. The first is what happened to CD prices after parallel import restrictions were finally removed in 1998. For years the music companies and prominent bands like Midnight Oil had been warning that the local industry would collapse if PIRs were removed.

But the music industry’s own figures show that both the number of artists receiving royalties and the total amount of payments has increased significantly since the early part of this decade – even while the cost of CDs has fallen dramatically. And that was despite part of the local industry illegally attempting to prevent parallel imports.

What’s the connection between those outcomes and the removal of CD PIRs? And what’s the role of file-sharing in what happened to CD prices, rather than the removal of PIRs? Well, it’s not clear – but what is clear is that for an industry the collapse of which was confidently predicted by opponents of the removal of PIRs, it seems in tolerable health.

Wilson also examined key indicators from the New Zealand publishing industry after the Kiwis removed PIRs. Investment went up. The numbers of New Zealand book publishers, and New Zealand books published, went up. The rate of decline of printing industry jobs was slower than Australia’s. Quibble with the figures if you like, but again they belie the notion of an industry-wrecking reform.

The PC considered alternative measures that might generate the same “positive externalities” as PIRs: a subsidy for Australian authors, or confining PIRs to local authors; it even considered, and rejected, the abolition of PIRs, on the basis that there would be significant adjustment costs, and there was a lack of data about the industry.

There was speculation yesterday the PC would go further than the draft recommendations in its final report, but based on the logic of the draft, it won’t be urging the immediate removal of the PIRs.

In short, the PC has taken a careful and considered approach to PIRs and is likely to adopt a moderate position. The contrast with the hysterical response of authors is remarkable — and all the more so for a supposedly articulate lobby group.

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Peter Fray
Peter Fray
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