Wednesday 4 August 2004
Australian Senate

Local Content, IT, Intellectual Property & the FTA

Senator LUNDY (Australian Capital Territory) (12.37 p.m.) 2nd Reading Debate: Free Trade Agreement Implementation Bill 2004 and the R2111US Free Trade Agreement Implementation (Customs Tariff) Bill 2004

I have been focusing primarily on two issues: culture and intellectual property as it relates to the IT sector. I am very pleased to say that, as part of the Labor Party’s announcement to support the free trade agreement with the two amendments that we are insisting upon, we also announced a series of policy initiatives that we believe will mitigate some of the worst affects of the free trade agreement in the areas of both intellectual property and culture.

Turning to the question of local content, the government’s forced acquiescence to one of Labor’s amendments relating to protecting local content quotas via legislation and permitting the parliament to have a say in any changes to those local content quotas means that the Howard government was absolutely vulnerable on this issue. Throughout this debate, Senator Kemp, on behalf of the Howard government, has stood up in this chamber and given bland and shallow assurances. If that were the case, they would not be supporting the amendment. They know that the local content quotas are vulnerable to being ratcheted down by the Australian Broadcasting Authority in the absence of any check and balance in the parliament.

The Howard’s government’s announcement yesterday that they are prepared to accept Labor’s amendment to the Australia-United States free trade agreement demonstrates just how vulnerable they were on retaining their ability to protect Australia’s local content on free-to-air television, pay television and radio. Labor is committed to ensuring that Australians continue to see and hear Australian faces and voices through their popular media. Labor will insist on the amendment to the enabling legislation in the Senate to ensure that the free trade agreement does not undermine our existing local content rules.

It is particularly pertinent to be discussing this issue in this place today because figures released today indicate that Australia’s film and television industry is in crisis. They show a dramatic decline in the number of local feature productions, which have dropped from an average of 28 per year in the second half of the 1990s to just 15 in 2003-04. Investment in Australian features from the local film and TV industry and private sources has been falling for the past three years—from $45.5 million in 2001-02 to just $17.2 million this year.

Without the production of just one high budget feature this year, Happy Feet, the total production value of Australian features would have been similar to the 2002-03 eight-year low of $49 million. Also disturbing is the decrease in TV drama production spending. It is down to its lowest level in 10 years with local TV drama hours having fallen from an average of 718 per year in the late 1990s to 574 hours in 2003-04. These figures are vindication of why Labor has insisted on an amendment to the FTA enabling legislation to enshrine the local content quotas to ensure that they cannot be ratcheted down under the agreement with the United States. Some time before the next election Labor will also be announcing a policy package to encourage further investment in Australia’s film and television industry.

I think it is important for the Senate to remember the crucial role that these local content quotas have played in keeping Australian stories before Australian people. The fact is that the economics of production these days determine that it is cheaper for networks to just buy overseas content—it is cheaper for them to do that. So, without these laws being firm and clear, the state of the situation is that we would not have as much Australian content on our TV screens or in our theatres.

For many people contemplating this free trade agreement, it is ironic that Australia has the most open market. It is not as though Australia blocks content from anywhere else. We have the most open market and, to that degree, it is not surprising that only 27 per cent of new content on Australian television is actually made here. Whereas in the UK and the US respectively, new TV content is in the 90 percentile area. That is a big difference and that tells us why we have to keep fighting to maintain those content quotas. We want to hear Australian stories, we want to reflect upon ourselves through our art and through our creativity. That is why Labor is putting such a high focus on these issues.

The other area I would like to address in my comments is that of intellectual property. A great deal of concern has been expressed through the Senate inquiry and in the public domain about the impact on the information technology sector in Australia and, more broadly in relation to chapter 17 of the free trade agreement, intellectual property. I refer to the Senate select committee report’s reference to intellectual property because it expresses some very disturbing facts about the way in which the whole issue of intellectual property was handled. At paragraph 3.124 of the Senate select committee’s summary report it states.

The Committee is also concerned about the general ability of DFAT, DoCITA and Attorney­General’s department officials to answer questions on the IP issues at the Committee’s public hearings. The officials had to take on notice many questions that the Committee believes they should have been able to answer on the day, and took significant amounts of time to provide answers. When answers were eventually provided, they frequently lacked sufficient detail, were dismissive and opaque, and often did not appropriately correspond to the questions asked.

With IP law emerging as an important area of public policy, as well as being a key aspect of the AUSFTA, the Committee considers that greater technical expertise should have been demonstrated. Whether the difficulties answering questions result from lack of departmental cooperation and coordination or from insufficient expertise within relevant departments, the Committee is of the view that the Commonwealth Government must upgrade its IP expertise and ensure that any future changes to IP laws are based on a whole-of-government approach. The Committee considers that the performance of the relevant departments at hearings throughout the inquiry invites speculation that proper technical expertise may not have been brought to bear in the negotiation of the IP Chapter.

Those are serious words indeed, but the buck stops with the Howard government on this. The Howard government did not treat the intellectual property provisions of this agreement with the due respect they deserve. They will have a significant impact on Australia’s future economic and innovation prospects and will impact directly on our ability to ensure that we have appropriate protections against anticompetitive behaviour in Australia. It is worth looking at the big picture of the inclusion of intellectual property in a bilateral trade agreement of this type. It is unusual—the committee reflected upon that—to see such a strong emphasis. I have no doubt that it was at the insistence of the US.

The IP provisions are obviously the focus of Labor’s concern in relation to the patent system for pharmaceuticals and to the potential for shonky patents and patent applications preventing generic drugs from entering Australia—hence, our amendment relating to protecting Australia’s PBS that we will insist upon. Specific concerns which I would like to address include software patents, copyright of digital products, the treatment of circumvention devices and the impact generally on Australia’s open source environment.

Debate interrupted.

Lundy, Sen Kate7G6Australian Capital TerritoryALP00Senator LUNDY (Australian Capital Territory) (5.38 p.m.)

—I speak in continuation of remarks made earlier today. When I left off, I was talking about the other concerns that face the ICT sector in the area of copyright, the treatment of circumvention devices and software patents, and the potential for litigation. That is why Labor has specifically addressed these problems in our policy statement released yesterday by Labor leader Mark Latham. The policy statement was informed by the necessary and comprehensive inquiry Labor initiated through the Senate select committee chaired by Labor’s Senator Peter Cook. The Senate committee identified intellectual property as a major concern and has made 13 recommendations to address the problems and weaknesses identified. Three of those major concerns were copyright extension, circumvention devices and the potential for abuse of software patents.

I turn firstly to the issue of circumvention devices. These are technological protection measures used by copyright owners to prevent the copying or use of copyrighted material in ways that are not authorised. Generally, the claimed purpose is that these technological protection measures are an antipiracy device. However, it is important to note that the Australian Competition and Consumer Commission have previously formed a view that these so-called TPMs in some cases can serve another purpose; that is, they constitute an attempt to stifle competition. This is because the ACCC observed that large corporations—and the example used on numerous occasions is Sony—have sought to regionalise their DVDs and the hardware upon which they are played in order to extract greater profits and prevent parallel importation. Quite correctly, the ACCC concluded that, while piracy is a genuine concern, another effect of the TPMs is in fact anti competitive. However, the ACCC were not successful in their case against Sony and now the provisions of the free trade agreement seek to strengthen the ability of large corporations to protect their markets even more vociferously than is currently permitted under Australian law.

To ensure there remains a fair balance between innovation, consumers and owners of copyright in relation to technological protection measures, Labor will ensure it is permissible to sell, purchase and use legally manufactured video, DVD and related software items including components, equipment and hardware, regardless of the place of purchase. Further on this point, the free trade agreement provides that Australian law be expanded to create new criminal offences in relation to how Australians can create and use alternative technology to play DVDs and the terms by which Australians can copy purchased DVDs for their own private use. Arising from this is one of the major concerns relating to the lack of fair use provisions in Australian copyright law. Currently copying copyrighted material for private use is technically illegal. Fair use provisions would mean the private copying of CDs and DVDs et cetera for legitimate private uses, such as time shifting and space shifting—time shifting means taping something to watch later and space shifting means using it perhaps in the car or on a different device—would be legitimised under Australian law. As a result, to ensure there remains a fair balance between copyright owners and users, Labor will examine options for broadening, through the provisions of the Copyright Act 1968, the fair dealing exceptions to more closely reflect the fair use doctrine that exists in the US. In doing so, Labor will draw on the recommendations from the numerous government initiated reports addressing copyright issues that have not yet been acted upon.

I now turn to patents. The comprehensive Senate inquiry into the free trade agreement heard evidence that the free trade agreement was introducing elements of the US patents system into Australia. However, there were assurances provided by the Department of Foreign Affairs and Trade and the Department of Communications, Information Technology and the Arts that this was not the case. Notwithstanding this, the stated intent of the free trade agreement is to harmonise the US and Australian intellectual property regimes. This has caused serious concerns about the expansion of what are known as spurious business process patents that are a feature in the US as a result of much maligned US patent office decisions. As a result, many Australian software developers and companies are concerned that this system will gain ground in Australia, even in the absence of any specific changes to the Australian patents system as it relates to software.

In particular, the practice of selective enforcement by teams of patent lawyers employed by large multinational companies may increase in activity in Australia. This could potentially make small Australian software companies and individual open source developers more vulnerable to this style of anticompetitive bullying through the threat of litigation, although not necessarily litigation per se. We have heard that in some cases the threat of litigation is enough to turn our innovators away. In this scenario small companies do not stand a chance. Labor will monitor any activity of this nature through the proposed Senate Select Committee on Intellectual Property. In particular, Labor has a big problem, as would any responsible government, with this type of litigious bullying that is anti competitive in its effect. The Senate select committee on IP will also address how Labor could enshrine in the Copyright Act 1968 the rights of universities, libraries and education and research institutions to readily and cost effectively access material for academic research and related purposes, including whether or not they should be exempt from paying royalties after 50 years. In addition, the committee will review the standard of originality applied in Australia.

There are a number of other checks and balances that have been identified both in Labor’s policy statement and in the body of the recommendations in the Senate report. They are all incredibly important issues because they go to the heart of how Australia will operate in the new environment under the free trade agreement. Labor recognises many of these legitimate concerns and has moved to put in place policies and a course of action that I believe will give us the capacity to set an appropriate IP agenda for the future of Australian law with the good use of a Senate select committee on intellectual property. It is a very important focus because, as I said at the start of my presentation earlier today, intellectual property is absolutely critical in ensuring that our innovators, entrepreneurs and businesses in this country do have the best opportunity to create knowledge and to create jobs.

Intellectual property in itself, as has been reflected in the Senate report and in other places, has not been a high priority for the Howard government. One of the observations that was made continually throughout the inquiry is that many of the recommendations contained in the review of our digital agenda legislation seemed to stand contrary to the proposals in the free trade agreement—hence Labor’s focus on this issue in an attempt to address the more problematic issues that have arisen and to try to set Australia on a responsible path, paying due attention to this critical area of public policy.

Going back to the broader issue that I started off with and the areas affecting my portfolio, the Howard government has shown itself to be highly negligent in the area of protecting Australian local content and it has been highly negligent in putting forward a strong case to protect Australian intellectual property interests both in Australian law and in how that affects Australian companies. On both of these fronts, I would like to acknowledge the work of the Senate Select Committee on the Free Trade Agreement between Australia and the United States of America for comprehensively investigating all of these matters and producing a report which demonstrates very clearly the complexity contained in the agreement. It certainly provided Labor with some strong clues and some strong direction as to how we can proceed.

I urge the government to accept both of Labor’s amendments. We have heard that they have accepted our amendment with respect to local content. It is now really incumbent upon the Howard government to accept also the point in relation to pharmaceutical patents. Unless they do so, the Howard government will truly be exposed for not having shored up the necessary safeguards to allow this free trade agreement to pass.

I suppose it comes as no surprise to many who have been observing this debate that the Howard government is so vulnerable on all of these issues. I am yet to hear from Senator Kemp after his outburst in the chamber yesterday. He had a go at Labor’s attempt to insist upon amendments, only to find out one hour later that the Prime Minister himself agreed with Labor’s amendments—or at least on local content. I think Senator Kemp has to eat his words and wipe a bit of egg off his face with respect to that and come back in here and acknowledge the fact that that amendment was a worthy initiative. Without it, of course, local content provisions would not be protected.

I would like to conclude my remarks by going to another area of concern for Labor in relation to the cultural aspects, and that is in relation to new media. One of the criticisms expressed all the way through was the ambiguity surrounding new media. That is why Labor, as part of our policy statement, have identified the areas of new media that we do believe need to be formalised and formally recognised so as to preserve our right as the government claims to actually legislate for local content into these areas of new media in the future. This is a very important element. All the way through the debate we have heard very loud assurances from the government that this in fact would be possible. Labor—in government soon, I hope—will give the then Howard opposition the opportunity to actually put its commitment to the test, because we will be seeking to make those necessary amendments to preserve our ability, once and for all, to make local content provisions apply to new media.

That is really a summing up of many of the issues in relation to the free trade agreement with respect to my portfolio. I think Labor has managed to resolve the outstanding issues of grave concern to both the cultural sector and the ICT sector. I think it is only with Labor’s diligence and effort in taking the time to inquire into the free trade agreement that we have actually come to this conclusion, and I would be absolutely astounded if the Howard government does not take up Labor’s very sensible recommendations and ultimately support the two amendments that we will be insisting upon.