Impact of Parallel Import Restrictions on Book Prices

by on 26 April, 2013

Photo (6)Tom Murphy looks at the cost of paralell import restrictions 

In
2009 the Federal Labor Government commissioned a Productivity Commission report
into the ‘Regulatory Regime for Books’ specifically focusing on the parallel
importation restrictions on books. Effectively, the parallel importation
restriction (PIR) is found in the Copyright
Act (1968)
and prevents Australian bookshops importing cheap books to sell
onto the Australian market. To put it simply, the Government is artificially
increasing the price of books sold in Australia by having this PIR in place.

The
Productivity Commission (PC) found that the PIR on average increases book
prices by 35% and also found that on many occasions books were up to 50% dearer
as a result. The PC put it unambiguously when they concluded “PIRs place
upwards pressure on book prices and that, at times, the price effect is likely
to be substantial”. The PC has also said that the price impact for educational
books is substantially higher as a result of the PIR. Low-income students are
being unfairly peanilised by this Government in not accepting the PC’s
recommendations. It’s ludicrous for Australian consumers to be paying up to an
extra 50% for books as a direct result of arcane protectionist policies. It
begs the question; why has Australia embarked on decades of economic liberalism
and free trade yet the Government is forcing people to pay extra for books in
the name of protectionism?

When
Craig Emerson announced on the 11th of November 2009 he said that
the Government will not be repealing the PIR as it will increase competition to
an already competition heavy book market. Unfortunately for Dr Emerson, he did
not read the report correctly, or at all. The PC report said, “…The actual
external benefits dependent on the PIRs…are unlikely to be large”. The PC is
saying that PIRs don’t give that much of a benefit to publishers and that the
cost to consumers is un-proportionally large. The Government also failed to
read the part of the report that says, “The benefits to the local industry are
largely paid for by Australian consumers of books through higher prices and
restricted access to better value editions of the titles they wish to purchase.
There are also costs to other industries”. Why is the Government picking
winners in a free market when, if they pick one winner, the losers are directly
negatively impacted as a result?

The
Government also claims that the PIR on imported books will account for a
positive externality created by Australian made books and consumers are willing
to pay the extra price for that added benefit. False. The PC concluded, “…PIRs
do not target such benefits effectively or efficiently”. Alongside this blast
of PIRs they also said “They [PIRs] lessen the imperative for the local book
industry to operate at best practice”. The evidence concludes that PIRs are an economically
inefficient way to help the local book industry and actually do harm to the
Australian economy and unfairly target students.

PIRs
are not the only way the Government supports the book sectors, they also do it
by financial assistance through grants, literary prizes and tax concessions for
registered organisations. There is no rationale whatsoever behind having this
PIR in place as it provides little to no benefit for publishers and hits
consumers very hard.

The
PC’s first recommendation was that “The Government should repeal Australia’s
PIRs for books. The repeal should take effect three years after the date that
it is announced”. The reason why there would be a three-year lag is for the
book industry to adjust to the policy transition.  The Government’s official response, “The
Government has decided not to change the Australian regulatory regime for books
introduced by the previous Labor government”. The Government has commissioned a
report, the PC produced a 240 page document outlining the economic reasoning
behind why the PIR on books should be repealed and the Government’s response
was “no”. 

Thomas Murphy is an active WA Young Liberal that is studying a Bachelor of Commerce at the University of Western Australia. You can follow him on Twitter @TomMurphy1995

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