The Productivity Commission’s recommendations concerning the parallel importation of books are a sad indictment on the state of public policy in this nation.

The Commission states:

Most of the benefits of (parallel import restriction) protection accrue to publishers and authors, with demand for local printing also increased.

Most of the costs are met by consumers, who fund these benefits in a non-transparent manner through higher book prices.

Some of the effects represent transfers from book purchasers to local copyright holders, but the restrictions also cause economic inefficiencies and a significant transfer of income from Australian consumers to overseas authors and publishers.

Yet one of the most significant effects of the Commission’s recommendations is the redistribution of wealth: not just away from investors (publishers) to another sector within the publishing industry (authors, printers), but out of the industry entirely (Big W, Woolworths, Coles, K Mart, Target and Dymocks — at least the latter has an interest in books).

The logic is simple:

1. Australian publishers derive nil local market revenue on imported books (they will/should derive licensing revenues).

2. Parallel importation can (and will) be used by local retailers to negotiate more favourable wholesale terms, which will exert pressure on publisher margins.

Outcome: all things being equal publishers will have less capital to invest, or, in order to release investment capital they will need to cut costs. That means any number of things, including job losses, reduced marketing spend, compromised editorial standards and so forth.

Our government should be particularly concerned about any policy that provides a disincentive to investment or that reduces the volume of investment capital in any industry.

It is ironic that the Commission, which I view as having an economic rationalist bias, would recommend policy that is effectively anti-capital investment; anti-capitalist if you like.

It would also be wonderfully ironic if a leftist government repudiated the Commission’s recommendations, leaving the free market to resolve any imbalances caused by legislatively imposed copyright territoriality. In any case that is exactly what the global/non-territorial distribution of digital content will do within the next 5-7 years.

I was rather excited to receive my latest Amazon acquisition a few days ago, which included hardback copies of Anthony Bourdain’s Les Halles Cookbook and Elizabeth David’s classic French Provincial Cooking. I purchased these excellent texts on French food from Amazon rather than a local retailer simply because I could land two hardback copies in Australia in roughly the same time and for the same cost as one hardback and one paperback from Dymocks’ online store. I got more for my money; had I gone for equivalent editions I would have paid less than I’d have to pay in Australia (and that includes $20 in freight charges).

On the same day I received my imported, American editions, the debate on the proposed relaxation of parallel importation rules on books got airtime on the ABC’s 7.30 Report. Quite a bit has been written about this issue lately, so rather than go over old ground I’d like to present two parallel thoughts of my own.

Firstly, the fundamental question is whether repealing parallel important restrictions is good public policy. Can the stated objectives of the policy – lower consumer prices for books – be guaranteed by changing the legislation?

I don’t believe that is the case. Public policy should provide quantifiable, absolute outcomes for Australian consumers rather than anticipated outcomes built upon ideologically biased hypotheses, which is what we’re seeing on both sides of the current debate.

The publishing industry claims Australian literary culture will be destroyed, while the Coalition for Cheaper Books (CCB) and free market ideologues say books will be cheaper – but (and this is the important question) for whom?

If either party is prepared to state categorically that their respective claims will be a consequence of the change then they should do so, and they should be very specific in their statements. Until then I believe the Australian public deserves better.

The simple fact is that there will always be Australian authors writing about Australian issues. As is currently the case, their literary output will not be their primary source of income. As to whether their works will be published, well, they can publish themselves or through businesses such as Red Hill.

Equally simply the CCB cannot guarantee that books will be cheaper at all, let alone quantify how much cheaper they would be. In fact to do so would be corporately irresponsible by every conceivable measure.

Secondly, the policy redistributes wealth from investors (publishers) to non-investing entities (retailers). Our government should be particularly concerned about any policy that provides a disincentive to investment or reduces the volume of investment capital.

So while publishers and retailers can speculate about Australian literary culture being damaged or books becoming cheaper, the one thing that is certain is that should the current import restrictions be ‘softened’, investors will have less money to invest – and that is not good for anyone.