Thanks to Michael Gerard Bauer, popular children’s author and former economics teacher for providing this insightful post.
Whenever someone asks me to explain why I think removing Parallel Import Restrictions (PIRs) on books is a bad thing, I must admit that I feel a bit overwhelmed. It’s not because I can’t think of a reply, quite the opposite in fact. It’s because there are so many ways I could respond to that question and so many arguments I could present that I just find it difficult to know where to begin.
How can you give a simple, concise answer that will do justice to the myriad of legitimate concerns surrounding the proposed removal of PIRs? Concerns such as the damage it would cause to Australian publishers and the Australian book industry in general; the loss of jobs that would result in the printing and distribution industries; the reduction in opportunities for new Australian writers and illustrators; the removal of Australian words, culture and content in the books we, and more crucially our children read; the erosion of writers’ already modest incomes; the dumping of cheaper, lower quality, overseas books on our market, and so on?
Fortunately all these and many other concerns have already been argued passionately and eloquently by other wonderful contributors on this Blog so I’d just like to add a couple of examples from my experience.
I’m a relatively new writer. My first book was published in 2004 by Omnibus Books in South Australia. That company along with Scholastic Australia took a big risk in investing in me. I was an inexperienced author with no track record and well into my forties when I sent in that first manuscript. Not exactly a ‘marketing dream’.
Nevertheless Omnibus/Scholastic invested their money, their time and their expertise in getting my book published. Largely due to their professionalism, skill, dedication and care, particularly in the editing process, that book and the ones that followed have been successfully sold in Australia and then marketed to a number of overseas countries including America.
If PIRs are removed those US copies of my books (with American spelling and some Australian content edited out) could be imported back into this country in direct competition with the original local edition. This would drastically cut into the sales of my Australian publishers and reduce the return on their investment. How can this possibly be fair and right when Omnibus/Scholastic Australia are the ones who have taken the initial risk, made by far the biggest financial investment and spent the most time nurturing my development as a writer? Why should they in fact be penalised for successfully marketing my book overseas? PIRs are not protecting or propping up an inefficient company here. They are protecting the legitimate territorial rights of a successful and highly skilled Australian publisher – a protection they deserve.
Recently, (I’d assume because the case against removing PIRs has been shown to be so strong) the Productivity Commission has proposed that PIRs be removed a year after publication. This is a ridiculous notion and would still unfairly disadvantage Australian publishers. For example my book Don’t Call Me Ishmael! was released in Australia and NZ in 2006 and was very successful selling around 9000 copies in its first year. However it has sold close to 30,000 more copies since then. If PIRs were removed after only a year, those additional sales could have been undermined by the imported US editions (featuring by the way an American Football match substituted for a Rugby match). The situation would be even worse if the imported books happened to be US or UK remainders dumped on our market. I should point out here that authors would also lose income because higher royalties are paid by Australian publishers than by overseas publishers.
As I said at the start, the arguments for retaining PIRs are many and varied but if you look at the case put forward by those who oppose PIRs, people like the so-called Coalition for Cheaper Books – Woolworths, Coles, Kmart and (shame on you) Dymocks, they have a much easier task in explaining their side of the debate. Their entire case is right there in their name. Remove PIRs and you get cheaper books. Who wouldn’t want that, right?
Of course I guess it would just cloud the issue for Dymocks and friends to mention that the Productivity Commission’s own report admitted that removing PIRs would actually not guarantee cheaper books and that a major contributor to any difference in our book prices compared to overseas prices is merely the exchange rate and that depending on exchange rate fluctuations, the difference in prices could decline or in fact reverse. Also for simplicity sake they choose not to point out that the Productivity Commission made it equally clear that the removal of PIRs would have little or no effect on literacy rates and that neither the UK nor the USA were silly enough to even consider removing their own PIRs.
But sadly it doesn’t seem to even matter that the Coalition for Cheaper Books has only one argument (and a dubious and flimsy one at that) because according to the Productivity Commission ‘a finding that PIRs have no impact on book prices would not be sufficient to justify their retention’. But wait, there’s more! They go on to say that ‘even if repeal of the PIRs were to cause the cost of books to booksellers to fall but these savings were not passed on to consumers … the repeal of the PIRs would still provide benefits’. Come again? So the Commission thinks PIRs should still be removed even if they don’t make books cheaper (but isn’t that the whole point?) and they also believe that PIRs should still be removed if they do make books cheaper, but booksellers don’t pass that saving on to consumers! What the?
The only conclusion you can draw from the above statements is that the Productivity Commission had already made up its mind about the findings of its report regardless of the overwhelming arguments and evidence put forward by supporters of the status quo. This is because the Productivity Commission just sees this whole issue as a simple case of Protection and according to their firmly held economic ideology, Protection is always bad and the free Market is always good.
Now, I’m not an expert on Economics but I do at least have an Economics major from my Uni days and I did teach Economics for about 20 years (including the topic of Protection) and I can tell you that PIRs on books is not a simple case of Protection – which is what the avalanche of arguments presented to the Commission and their own research should have clearly indicated to them. And another thing, the unfettered Market is not always the perfect solution (see current GFC for proof). Or as Canadian singer-songwriter Bruce Cockburn so neatly puts it, “The market has no brain. It doesn’t love. It’s not God. All it knows is the price of lunch.” Now who does that remind me of?
There’s one final thing I recall from my days as an Economics teacher that I think is very relevant to this discussion. It’s the concept of Real or Opportunity Cost. Economists say that the Real or Opportunity Cost of something is not the price you pay for it in dollars and cents, it’s what you have to give up to get it – the opportunity you sacrifice. So for example the Real Cost of buying a car might be the family holiday that you can now no longer afford.
If you apply that concept to the debate over PIRs, then the Real cost of what is still only the possibility of cheaper books, is what we have to sacrifice to get them – things like a vibrant, world class publishing industry, hundreds of jobs in printing and distribution, the careers of present and future Australian writers and illustrators, and our cultural heritage and identity.
‘Cheaper’ books? Who in their right mind would be willing to pay such a price?
Michael Gerard Bauer