This is how a civilisation commits suicide these days: it invites sociopaths in suits to dismantle its culture.
With its recommendation that territorial copyright for books be abandoned, the Productivity Commission's final report is the apotheosis of neo-liberalism in Australia. Everything is to be sacrificed to the workings of the free market -- especially writers, independent booksellers, independent publishers, and the nation's cultural integrity. The community as a whole will benefit, the commission says, and that is all that matters.
This was always going to be the commission's stance, whatever the evidence. As I wrote at the time, the fix was in the moment that the commission was given its brief. Now, after many months of obfuscation and pretend-consultations, the commission has come clean: it's all about price. And the commission just knows, as it always has, that book prices are too high because of territorial copyright.
But getting from there to here has been unexpectedly difficult. The commission's draft report -- with its yawning gap between evidence and recommendations, and its ludicrous support for a 12-month limit to territorial copyright -- was universally and rightly derided. Its final report is better argued and more plausible, but it is a triumph of style over substance. Its tone is reasonable, its method and conclusions more internally consistent, but its stance exposes a brutal underlying ideology that still ignores any inconvenient evidence that cuts across its trust in the market.
You can get a flavour of this, strangely enough, in the commission's dismal attempts to discuss the cultural benefits of books. This is so pedestrian, so utilitarian a section, that it is painful to read. It represents a doffing of the cap by the commission to recognising the personal, intrinsic value of books, before it gets on to the main game of hitting the industry as hard as it can.
In its draft report, the commission acknowledged that allowing parallel imports on a cold-turkey basis would cause too much damage to the industry. Now, it's decided that the damage is tolerable, at least to it. What's changed in the meantime? It's hard to avoid the conclusion that the commission has been so stung by the virulence of the criticism of its draft report that it has decided to teach the industry a lesson.
The commission has now recommended the wreaking of havoc to the book industry on the sole ground that abandoning territorial copyright, and allowing the parallel importation of books, will lower the price of books. Its evidence for this claim comes from its studies of book prices, which show that -- as many of us said at the onset of the inquiry -- they fluctuate according to the exchange rates between the Australian and US & UK currencies. The lower the Australian dollar, the lower book prices are here, and vice versa.
The commission itself has previously acknowledged that the average price gap between local and overseas English-language editions is eliminated if exchange rates of GBP 0.41 and USD 0.67 are used (which is very close to the average of the last 10 years). In its most recent study, for the period July 2008 to May 2009, it finds that, in RRP terms, the price of the cheapest available edition of titles in Australia is, on average, 13 per cent higher than the lowest-cost UK edition, and 27 per cent higher than the US lowest-cost edition.
You might think, as the commission does, that this is an open-and-shut case. As it happens, it isn't. Even ignoring the fact that the commission can't be sure it has compared like-with-like editions -- so that a smaller-format, more cheaply produced US edition isn't being compared with a larger, higher-quality local edition -- there's a key cost-component missing.
In its study of comparative book prices, the commission has not included the cost of overseas freight. This crucial fact is hidden in the commission's language: it says that it 'has not sought to adjust retail prices to reflect differences in freight costs'. These are highly misleading weasel words, so close to a lie as to be indistinguishable from one. The commission hasn't excluded 'differences' in freight costs -- it has excluded them completely. And yet the cost of shipping books from the UK or US to Australia is significant, and would be a vital factor in the setting of book prices if the commission's recommendations were accepted. At average freight-costs and at current exchange rates, overseas books would be more expensive than locally produced ones -- not less.
This is why the commission has been forced to concede that its price comparisons, 'do not of themselves attempt to indicate the price at which the books sold in other countries could have been sold in Australia'.
So what is the point of them? The commission is free to assume a frictionless universe -- where books magically appear at no cost thousands of kilometres from their point of origin -- but nobody else can. Bookshops certainly couldn't and wouldn't.
This is a disgraceful sleight-of-hand by the commission. The whole basis of its assertion that Australian book prices are higher because of the operation of parallel-import restrictions -- and that they would drop with the abandonment of PIRs -- is phoney. This is typical of its whole approach. It knows it can't prove its case, so the best it can do is exclude vital evidence and continue to assert that that PIRs are responsible for a mystical 'upward pressure on prices'.
Even using its partial and pre-determined approach, the best argument it can come up with now is that abandoning PIRs would provide 'opportunities, from time to time, for the importation and sale of at least a subset of books at lower prices from abroad … [and that] movements in the currency would, in the absence of those restrictions, occasionally provide opportunities for Australian booksellers to source some stock quite cheaply from markets such as the US.'
This is what is behind its headline recommendations: a pathetic assertion that some of the time, in some circumstances, some booksellers might be able to import cheaper books. And to achieve this highly conditional benefit, argued on specious grounds, it has recommended a radical change that would devastate the publishing industry and its authors, and along with it an important component of Australian life and culture.
The sociopaths in suits have had their say. This is now a political problem for the federal government, as it deserves to be. It sent the brief to the commission, so the report is its child. How the Rudd government deals with the report will be a crucial test of its leader's disavowal of the anti-social ideology of neo-liberalism -- and of its connectedness to its own community.
Henry Rosenbloom