Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill — First Reading 
Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill — First Reading 
[Volume:607;Page:4648] 
Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill 
First Reading 
Hon JUDITH TIZARD (Associate Minister of Commerce) 
: 
 I move  
That the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill be now read a first time. 
 I give notice that I intend that this bill should be sent to the Commerce Committee. 
This bill will introduce a ban on the parallel importation of films and make changes to the onus of proof in civil proceedings concerning the importation of specified copyright works particularly films sound recordings and computer programs. This bill amends the Copyright Act 1994 and gives effect to the Government’s commitment signalled in the Speech from the Throne in 1999 to support strongly our creative industries particularly music publishing and film. 
The Labour-Progressive Government has a special interest in the promotion of arts and culture and we believe that New Zealand as a small country in a globalising world has to work hard to maintain and develop our own cultural identity. We also believe that our creative industries have much to contribute to our economy to job growth and to the promotion of our country. Worldwide the cultural and heritage sectors are amongst the key growth areas for the 21st century. Creativity is at the heart of innovation and creative industries have input into many other sectors. This is why we have made creative industries a target sector of our growth and innovation framework along with biotechnology and information and communications technology. Within the creative industries screen production design and music are key sectors with the potential to generate a great deal of further growth. 
Our commitment to nurture our creative industries has been realised through the cultural recovery package of May 2000 and many other measures. This is one of them. We established the Film Production Fund to fund the next level of New Zealand films and the benefits of this investment are already proven with the first Film Production Fund film  
Whale Rider 
 currently sitting at No. 1 at the New Zealand box office and second only in box office sales to another New Zealand film  
Once Were Warriors 
. We established the New Zealand Music Industry Commission and increased funding to New Zealand On Air and many other programmes. Our concern is to have a vibrant active creative industry where New Zealanders can tell hear and see their own stories and make a living from jobs doing that. We must have the environment in which New Zealanders can express themselves and pursue satisfying careers in the creative sector. 
This bill follows a very extensive review and consultation process which considered the impact of parallel importing on creative industries. We were very disappointed when the National-led Government in 1997 removed the ban on parallel importing under urgency and with no select committee process and after a New Zealand Institute of Economic Research report had stated there would be no effect on creative industries. The institute was wrong. As part of this Labour-led Government’s creative industries strategy we undertook an extensive review of the impact of parallel importing on creative industries. The objective of the review was to determine whether parallel importing was having an adverse effect on investment in New Zealand film music book-publishing and software industries. We carried out two rounds of consultation with those sectors. Some industry representatives made it clear that they did not like parallel importing and that their businesses were often marginal in New Zealand terms and in international terms. However we found no clear evidence that parallel importing was the central issue affecting investment in all creative industries. The consultation also made it clear that there were some benefits to consumers in the form of lower prices and greater availability. 
Our consultation did however show up specific problems in relation to film. It appears that parallel importing might be harming the orderly and cost-effective distribution of motion picture films. Not only do the people who put a huge investment of time and money into films need to be able to manage the release of those films for the best return but they are entitled to do so because it is their property. Parallel importing meant that copies of major film titles were becoming available for rental in advance of the films’ theatrical release. Cinema owners were also concerned that this was contributing to a decline in cinema audiences. This in turn could threaten the availability of movie theatres particularly in small and rural communities. The Government believes that it is important that these communities continue to enjoy access to film facilities. 
We therefore agreed to introduce a ban on parallel importing of films for a period of up to 9 months from the titles’ first release. The 9-month ban will provide the necessary window of opportunity for theatrical release in New Zealand before copies become available for rental. The ban is specifically targeted at films made primarily to be shown in public. This is consistent with the Government’s policy objective of ensuring that the widespread cinematic release of films is able to continue. The ban will apply regardless of the format of such films including videos and DVDs. The ban is intended to prevent the parallel importation of films for commercial purposes—that is importation for the purposes of showing to the public or sale or rental. It does not prohibit importation for a person’s private or domestic use. Private individuals who wish to import a copy of a film for their own use ahead of the New Zealand theatrical release will still be able to do so provided of course that they get it from a legal source overseas. 
The bill provides for the ban provision to remain in place for a period of 5 years. This will enable the effects of the ban to be assessed in a changing environment. The Government has also announced that it intends to keep the effects of parallel importing on creative industries under review in the near future. This will enable us to determine whether our policies are working as intended or whether they need to be expanded or changed. 
I also wish to describe the provisions of the bill that deal with the onus of proof. The theft of intellectual property is a matter of increasing international concern. The Government has on many occasions stressed the importance of measures to combat the theft of intellectual property. We have already introduced a number of measures to deal more effectively with this issue; for example in the Trade Marks Act 2002 new offences and increased penalties were introduced to deter the counterfeiting of trademarks and the pirating of copyright works. The bill I am introducing today contains further measures to constrain copyright infringement. It is targeted at those works that are most vulnerable to piracy—namely films computer programs and sound recordings. Digital technology is making it easier to produce perfect copies of these works very cheaply simply and in large quantities. 
The measures in the bill are intended to make it easier for copyright owners to uphold their rights through civil proceedings. The Copyright Act currently requires copyright owners taking civil proceedings for infringement to prove that the goods in question were pirated and to prove that the defendant knew or had reason to believe that the goods were pirated. Our consultations indicated that copyright owners felt it was difficult to establish this level of proof. They indicated that it can be expensive and time consuming to do so and as a result there is a risk that civil enforcement action will not be taken. 
The bill therefore shifts some of the burden of proof to the defendant. It establishes a presumption that specified imported copyright works are infringing copies and the defendant will be required to rebut that presumption. It is not usual practice to require a defendant to be a part of the onus of proof—it usually falls on the plaintiff. We considered that matter very carefully and agreed to the changes to the onus of proof as we believe that importers rather than the rights holders are more likely to have access to information about the goods that establishes whether they are pirated or legitimate copies. That information generally relates to such things as the origin of the goods and the lines of supply. Because importers are more likely to have this information as a matter of good business practice we believe that the bill will not impose undue additional costs on defendants nor require onerous changes to current parallel-importing practices. 
We have considered other risks—for example the risk that copyright owners might take legal action against legitimate parallel importers in order to identify then cut off lines of supply. The bill aims to prevent that type of harassing action. It provides that the court must not require any person to disclose any information concerning sources of supply if it appears to the court that it would be unreasonable to do so. That provision will protect commercial confidentiality of information required to prove a defendant’s goods are not infringing copies. This amendment provides for an objective knowledge test which aims to help address the problem of piracy. 
I will now turn briefly to the issue of rental rights. Under section 9 of the Copyright Act of 1994 the copyright owner has the right to issue to the public copies of sound recordings and films. That includes the rental of copies of those works in public. A recent court case  
Video Ezy New Zealand Ltd 
 v  
Roadshow Entertainment 
 confirmed the question of public rental rights for both films and sound recordings. This amendment confirms that. It also deals with trademarks. 
I look forward to this bill going to the Commerce Committee. I hope the committee will consider it carefully listen to the public and proceed quickly with it. 
Hon TONY RYALL (NZ National—Bay of Plenty) 
: 
 The National Party in Opposition strongly opposes this bill. That is because this Minister and this Government know that this bill will do absolutely nothing to fulfil the promise that the Prime Minister made to the people of New Zealand in her Speech from the Throne in 1999. This Minister and this Cabinet know that this bill is anti-business anti-competition and anti-choice. The National Party in Opposition says very clearly that we think consumers should have maximum choice. We are not going to be party to denying consumers the choice they would expect. 
I want to take the House back to the genesis of this bill. In the Speech from the Throne in 1999 only days after the Government had dished out tens of millions of dollars to the arts sector— 
Stephen Franks 
: $80 million. 
Hon TONY RYALL 
: —$89 million of taxpayers’ money—the Prime Minister stood in this House and made a promise to the arts community. Let us hear what the Prime Minister promised she would deliver the arts community. She said that she would prohibit for 2 years the parallel importing of CDs videos films books and software. Well let us look at this bill. Is the Prime Minister’s promise of a 2-year import ban on software in this bill? No. Is the Prime Minister’s 2-year ban on the importing of books in this bill? No. Is the Government’s 2-year ban on the importing of films in this bill? No. Is the Government’s 2-year ban on the parallel importing of CDs in this bill? No. Is the Government’s promise of a 2-year ban on the importing of videos in this bill? No. The only thing this Government wants to ban is DVDs. It wants to limit the choice of New Zealanders to have DVDs until 9 months after their release overseas. 
What we know is that this Government has been told time and time again in official documents that we have managed to prise out of the Government on this matter that the parallel-importing bans will not work and they will not achieve any of the Government’s goals. The Prime Minister stood up and said that banning parallel importing would expand job opportunities and wealth creation based upon the arts. That is what she said yet at the time her own Deputy Prime Minister’s department concluded that the parallel-importing bans would not achieve the Government’s goals and although they might increase the profits of local operators would have a negative effect on retailers and consumers arising from increased prices and reduced access to titles. That is what the department of the Deputy Prime Minister at the time told this Government. 
One of the reasons that the National Party is opposed to the bill is it just does not work. The evidence from Australia is absolutely clear that parallel-importing bans do not assist in the development of the arts industry. It has been estimated that as a result of the parallel-importing ban consumers in Australia pay A$6 more than American consumers for musical recordings. That means that A$1.15 billion more has had to be paid for those CDs than would have been the case if the ban had not been in place. It is clear that there has still been a significant lift in investment in Australian musical culture. One needs only to look at the New Zealand pop music charts to see that there is very strong representation of Australian performers and the CD ban there simply has not worked. 
What is more these Ministers were told by their Government’s own adviser—by the Deputy Prime Minister’s adviser—that there was a very real risk that no extra jobs would be created that the ban would not meet the Government’s goals and that it would just put up the prices for consumers. We have pages and pages of official information where the Government tried to meet the Prime Minister’s promise to the House but it just could not do it. The Government was in such a lather that at one stage we had the previous Minister of Commerce Mr Swain proposing that there would be a parallel-importing ban on all books excepting those for libraries and textbooks for universities and polytechs. So there was going to be a little group of exceptions there but everybody else would have to pay more for their books and their videos. 
What has the Government come up with now? In this bill it is proposing that there be a ban on the importation of DVDs and videos for 9 months after the titles’ first international release. The Government is so committed to the ban that it has a sunset clause. The Government thinks it is such good public policy that it is proposing that it will eventually be phased out in 5 years’ time. Well if it is such good public policy why will it be phased out? There is an internal contradiction there. 
Apparently the Government is proposing to have a ban to protect provincial cinemas from being put out of business as a result of people getting DVDs of the latest films. That is the logic of it. The Government will keep the picture theatre at Whakatane going because it will not let DVDs come in. I tell members that DVDs have been coming in for at least 4 or 5 years and the Whakatane Gisborne Tauranga and Rotorua picture theatres are still showing the films that are being shown in Auckland about a week after they are released in Auckland. There is absolutely no evidence that cinemas in the provinces are being put out of business by the fact that DVDs are coming into the country at the same time that the films are being released internationally. In fact the evidence is quite the contrary. Open up the back pages of the provincial newspapers and members will see the exact same movies being shown in the provincial areas that they can see in the main metropolitan centres. 
This is about protectionism for a very small group of cinema companies and it has absolutely nothing to do with consumers having a choice about where they watch films. This is a slippery slide that the Government has got itself on. Parallel importing has lowered the cost of software books videos DVDs and films in a way that New Zealand consumers want. This is another anti-business move by this Government that will do nothing to increase choice for consumers. All it will do is deny choice to consumers. It will deny the opportunity for New Zealanders to import or buy a DVD that they could whip across to some other country and bring into the country anyway. It will be like the days when people could not buy a cheap transistor radio in New Zealand but could go to Singapore and bring three of them back. That is the sort of protectionist anti-business nonsense being proposed in this bill. 
The Government knows—its own advisers have told its members—that this bill will not work. The Prime Minister was foolish to make her promise in the Speech from the Throne in 1999 to have a parallel-importing ban for 2 years on all these sorts of imports when in fact she has failed to deliver a 2-year ban on any of them—and I say “Thank goodness!”. New Zealanders should have the choice. This bill is opposed by the vast majority of business interests in New Zealand. It is opposed by the vast majority of consumers and when consumers have to pay more— 
Georgina Beyer 
: Where’s the evidence? 
Hon TONY RYALL 
: Read the official documents that we had to prise out of the Government. Read the official documents it did not want to release. We had to go trawling for these. Read the official documents from the Ministry of Economic Development and its consultation from Treasury and from the business community and the Government will know that its ban will not work. It is anti-business and anti-competitive. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future to support this bill. To a large extent this bill endeavours to ensure that those who have produced films sound recordings and with certain restrictions computer programs are able to receive a fair return on their investment. In many cases such as the film industry we are talking about substantial investment. 
With the removal of the restrictions on parallel importing in 1998 some ambiguity arose with regard to the application of rental rights. This led to the High Court case in November 2001 that confirmed that Parliament had never intended that the scope of the rental rights under the Act should not apply to parallel-imported copies of works protected under New Zealand copyright law. This court case confirmed that rental of the parallel-imported DVD copies of two recently released film titles infringed the rental rights of the owner of the copyright in those films. This bill will now amend the principal Act to make clear the intended meaning of this provision as confirmed by the High Court and remove any remaining uncertainty concerning rental rights. 
The purpose of this bill is therefore to introduce a ban on the parallel importation of films which includes DVDs and videos made primarily for public showing in cinemas for 9 months after a title’s first international release. It is important to note that this primarily affects those who import films for resale or hire. It will not affect the ability of individuals to import single copies for private use. 
United Future agrees that where people invest substantial amounts of money as in the film industry then plan a global release of their film they should have protection to enable them to release the film throughout the world in a manner that allows them to receive the due return on their investment. One reason for this ban is to address these concerns as the parallel importing of videos and DVDs could threaten the financial viability of widespread cinema release of films in cases where videos and DVDs of major films are imported from say the United States ahead of their New Zealand release date. United Future believes that this is a valid concern and this bills protects the intellectual property rights of the copyright owners of these films and their rights to market their product as they see fit. It is refreshing to see legislation that recognises that people who invest also have the right to protection of that investment. If we fail to do this investment would stop and the world would be a poorer place for us all. 
United Future as a true centralist party recognises the importance of maintaining a good balance in the legislation for our nation of caring for those who are unable to care for themselves but also of appreciating where we receive the funding from to give the care and that is from the income producers. Profit and protection of profit centres for those who are prepared to take the risk to earn will always be appreciated supported and protected by United Future. 
This bill also amends the Copyright Act to clarify its meaning with regard to the scope of rental rights granted under the Act. The amendment makes it clear that Parliament never intended for the Copyright (Removal of Prohibition on Parallel Importing) Amendment Act to apply to parallel-imported copies of works protected under New Zealand copyright law. 
The ban on the importation of DVDs and videos for 9 months after their cinema release date in New Zealand has a 5-year sunset clause. This will provide an opportunity to assess whether the ban should be continued in the light of developments in the digital distribution of films and cinema projection technology. We all live in a rapidly changing world especially technology-wise so this is a sensible clause. 
Another important feature of this bill is that it shifts the evidentiary onus in respect of whether the goods—that is the films DVDs and computer software—in question are infringing copies from the plaintiff to the defendant in civil proceedings concerning the act of importation. This is to help reduce piracy in these areas. This reversal would ordinarily be considered a breach of the fundamental rule of civil procedure that the onus of proof for an action lies with the plaintiff. In this case however this very limited reversal of the onus of proof complete with consequential safeguards I might add is justifiable because amongst other things legitimate importers will almost always have ready access to information concerning lines of supply that can establish whether goods are infringing copies—for example receipts and proof of purchase certificates. 
Consequential amendments are also made to the Trade Marks Act 2002 to ensure that registered trademarks cannot be used to frustrate legitimate parallel importing in line with the Government’s parallel-importing policy. 
Therefore United Future is pleased to support this legislation going to the select committee. 
BARBARA STEWART (NZ First) 
: 
 New Zealand First will be supporting this bill’s referral to the Commerce Committee. We believe that this is a way of encouraging New Zealanders who may be affected to take an active interest in this matter and to have some input. The bottom line is that we must ensure that all New Zealand audiences continue to have access to a wide range of films videos and DVDs. This is the type of environment that we must have here in New Zealand. We do not want to see that we are facing a loss of entertainment choices. We believe that we should continue to benefit from a wide availability of major film titles. We believe too that the people of New Zealand must have a say in this legislation. New Zealand First will support this bill going to the select committee. 
RUSSELL FAIRBROTHER (NZ Labour—Napier) 
: 
 I am pleased to support this bill. It meets a commitment made by the Labour-led Government in 1999 and it follows a very extensive review and consultation process. The bill is in the hands of my very good friend the Hon Judith Tizard and I commend it to the House. 
MIKE WARD (Green) 
: 
 We are a country of movie-goers. I recall speaking to a friend of mine who started a cinema in Nelson. He said that Nelson was exceeded by only one other city in the world as far as attendance at movies is concerned and that was Singapore. So Nelson is probably reflective of much of New Zealand. We like going to the movies. In fact we are a particularly cultured country in all sorts of ways. We are great consumers and producers of culture and as such we should respect that and take all reasonable steps to protect the cultural property embodied in those cultural experiences. 
Most of the time we have little difficulty recognising that value and accepting that there is a reasonable expectation that copyright and ownership will be protected. Usually copying is less than straightforward for most of the arts and that in itself offers considerable protection from copying and it is a deterrent to copiers. Clearly with films and modern technology reproduction is possible by a range of means that is easily accessible to do-it-yourselfers and even more accessible to the sophisticated and the greedy. With most art forms the initial production—be it music the written word or fine art—is a relatively simple and inexpensive process. They are difficult to copy but easy to do. But movies are extraordinarily expensive to produce and extremely easy to copy. When it comes to movies even the most modest titles are likely to be costed in the millions or at least in the hundreds of thousands of dollars and making money on movies is a fraught business at the best of times. However pirating movies does not just deprive the investors and movie makers of the value of the pirated products. If those pirated products come on to the market before the movies have been released—and not just into the metropolitan cinemas but into the provincial and rural movie houses—then the viability of those provincial and rural operations is undermined and the opportunity for people outside the major cities is threatened. The likelihood of people making money out of their movies is undermined as well. 
Although many New Zealanders will still prefer to see their flicks on the big screen there is a minority who would given the chance hire the video take it home and skip the trip to the movies. They are likely to represent the difference between breaking even and making a loss. Does it matter? Well if it means that some films may not get made it matters. If it means that some New Zealanders are deprived of the cinema experience which is as much a part of the New Zealand culture as Saturday morning netball or meat pies in baches at the beach then it matters. 
Is it reasonable that the onus is on the importer to prove that the imports are legit? I think so. The legislation is thin on detail as to what form the proof should take but I do not imagine that copyright holders will have too much difficulty devising appropriate documentation and authentication procedures. The alternative runs the risk of yet another layer of bureaucracy. We Greens will be supporting the bill because a trip to the movies can be a magic experience and a magic experience cannot be replicated on the box in the corner of the living room. It needs the space the crowds the popcorn and the ice cream. It is an experience that the folk in Motueka and Masterton are as deserving of as the folk in Queen Street and Courtenay Place. It is an experience in an industry that ought not to be threatened by the greedy and the dishonest who would seek to steal and profit from the creative endeavours and experiences of others. 
JILL PETTIS (NZ Labour—Whanganui) 
: 
 Like my Labour colleagues before me I too rise to speak in support of this bill. It is a good bill that addresses issues that have needed attention for some time. Indeed the bill does meet a commitment made by the Labour-led Government in 1999 and I am pleased to support its hopefully rapid passage through Parliament. 
DEBORAH CODDINGTON (ACT NZ) 
: 
 I rise on behalf of the ACT party to oppose this bill. It is important that we define what we are talking about because we are not talking about movies and breach of copyright or things that are pirated and imported illegally. We are talking about the banning of parallel imports. The United States hated our open policy on parallel importing and in 1999—[ 
Interruption 
] Yes this Government did offer that up to the United States as a sort of suck-up to it. Well this Government may as well not bother now because the Government has made our relationship with the United States totally irrelevant. Nevertheless the United States wanted a ban reinstated and that is what this Government has come out with. 
There is absolutely no doubt that parallel importing has served New Zealand consumers really well. It has lowered prices for the New Zealand consumer for everything from underwear to cars. When the Government came out with its media release I think in June 2000 Mr Anderton said that he thought the parallel importing ban would make New Zealanders pay more for creative industry goods thus allowing Kiwi artists to charge more for their work. When has it been the Government’s role to make New Zealanders pay more for creative industry goods? That is a typical example of going back down the road of bestowing privilege on certain sectors of the community that effectively lobby Cabinet Ministers and are good at employing public relations consultants and lobbyists to visit Cabinet Ministers’ offices and argue for the protection of their various industries. 
The explanatory note states: “The availability of parallel imported copies of new release films for rental before or during the release of those titles in New Zealand threatens the viability of cinemas and the ability of local distributors … ”. I do not know whether people in this Government have noticed but all around the country in the last 5 to 10 years cinema complexes have been growing rapidly. Cinema owners have responded very swiftly and effectively to demands from consumers in supplying smaller and more consumer-friendly customer-friendly cinemas. There is one in Auckland that I go to all the time where one can buy wine book in advance and have a big wide seat. It is a great place to go. Having said that why should consumers not have choice? Why should people not be able to rent a DVD if that is what they want to do and watch a movie in the comfort of their own home? That is what this bill is all about. It is about removing choice for the consumer. 
Parallel importing goes something like this: a producer or manufacturer of a DVD or a video will produce that product so that it can be sold in Australia for $40 in New Zealand for $30 and in China for $10. So a parallel importer can go to China buy the product quite legitimately for $10 bring it back to New Zealand and pass on those savings to the consumer. There is absolutely nothing illegal or wrong with that. In fact it benefits consumers because they have the choice to buy something. 
Hon Judith Tizard 
: Who cares about property rights? Not ACT. 
DEBORAH CODDINGTON 
: There is no propery right breached in that. 
Hon Judith Tizard 
: Are you serious? 
DEBORAH CODDINGTON 
: The Minister is terribly confused as is the speaker from United Future because a rental right is not the same as a copyright. The owner of the copyright is quite different from the owner of the rental right. I own the copyright on several books. Libraries have the right to rent out those books. Libraries do not own the copyright. Libraries cannot republish those books. There is a difference between rental rights and copyrights—[ 
Interruption 
] I might be a new member but I thought that running commentaries were out of order. 
As the Hon Tony Ryall pointed out quite correctly when the Government came in it said that it would reintroduce parallel importing on books videos CDs and DVDs. Now we have this bill that deals only with DVDs and videos and introduces a ban that applies for 9 months after a film’s international release. Why has the Government restricted this ban to only DVDs and videos? We would have to ask that question of ourselves would we not? If we look at certain rumblings that are happening out there we see that this legislation gives an opportunity for this Government to have plenty of lovely photo opportunities with its friends in the film industry. The Minister might laugh but why has she not applied this ban to books? Will books be next? I think people who go to the Warehouse to buy books at $10 when they would otherwise have to buy them from somewhere else at $35 or $40 should be very worried that although this legislation applies to DVDs in the future we could see it applied to books. 
I come back to my point that this Government is anti-business. It has brought in this legislation as Jim Anderton said to force New Zealanders to pay more for creative industry goods—and that will do absolutely nothing for the economy. But I suppose this Government does not care about that anyway because it has already signalled that it is abandoning the goal of getting back up to the top half of the OECD. Parallel importing was one of the good things done in the last few years and here we see us going down the old road. 
I come back to this matter of changes to the onus of proof. The Minister has actually admitted that that is a bad precedent. She stood up and said the Government was advised against that. Official information papers show that the Government was cautioned about going down that road. None the less it has decided to go down the road anyway—where the onus of proof is now placed on the defendant not the plaintiff. We saw yesterday in the provision for the seizure of cars under the boy racer legislation that the onus of proof is now on the defendant not the prosecutor. If this Government was really interested in protecting copyright which it professes to be and which the Minister was giggling about why does it not look at its National Library legislation which I see on the Order Paper? Why does the Government not consult newspaper owners about what that will do to their copyright in terms of their websites? I see the Minister reading her newspaper but she is not interested in the copyright rights of the owners of those newspapers. 
I support what the Hon Tony Ryall said. This bill reduces choice for consumers. It will raise the price of DVDs and videos. It will not allow people who want to see a movie at the same time that it is released in the cinema to rent a video and take it home for viewing. It will not allow them to do that. The bill seeks to protect one sector of strong lobbyists and we are opposed to it. 
DAVID CUNLIFFE (NZ Labour—New Lynn) 
: 
 That was a particularly disappointing speech even by ACT standards. It dealt firstly with some absolute contradictions of fact. Let me demonstrate several of them. The member who has resumed her seat said that this bill is anti-business. It is not. It upholds intellectual property rights. The member tried to squirm out of that contention by drawing a distinction between a rental right and a copyright. That is splitting hairs. No members of the public really care about that particular definition or term; they care about the big point. The big point is this: an intellectual property right rewards the producer of the intellectual property for his or her labour in producing that property. In that it creates an incentive for the production of further intellectual property just as this Government has successfully done through the film fund that produced the smash hit  
Whale Rider. 
The second point the Opposition got wrong was that a 9-month parallel importing ban would somehow restrain the ability of the public to access parallel-imported films or DVDs. Plainly it would not. The whole point of that ban is to allow an orderly dissemination of products through the industry through retail chains and through cinema chains in a way that is compatible with the legitimate interests of the producers of those films and the orderly management of the industry itself. 
Thirdly that member suggested the Government has been too far-reaching in this bill in direct contradiction to other members of the Opposition who say we have not gone far enough. Well the Opposition cannot have it both ways. We have either gone too far or not far enough. We cannot have done both. The fact is that we consulted widely on this bill. We took soundings and commissioned independent economic research and it suggested a very moderate and incremental approach to this protection measure. It is only a 9-month parallel importing ban which just allows the industry the time it needs to get itself in order. This is a moderate sensible pro-business pro-growth pro - creative industries pro - New Zealand bill and it is time this House passed it. 
JOHN KEY (NZ National—Helensville) 
: 
 I rise on behalf of the National Party to oppose this bill. I am absolutely delighted that David Cunliffe used the words he did at the end of his speech about pro-growth pro-business and all the rest of it. Those are the sorts of words that come out of the Labour Party—certainly not the National Party or the ACT party. They are fundamentally wrong—just plain wrong. I find the logic of Labour supporting this legislation quite perverse. When I look at this legislation I find that it smacks of one thing and one thing alone. 
David Cunliffe 
: Common sense! 
JOHN KEY 
: It is not common sense as Mr Cunliffe said. I look to United Future for that and unfortunately I look away pretty quickly when I look there as well. So no it is not about common sense. It is about looking after the fat cats—a couple of fat cats who own the movie theatres around the country. It is about a couple of cronies up in Whakatane or somewhere who somehow got into the ear of the Prime Minister. She must have been up there opening a bird bath or something. They had a chat to her and said: “Could you just slap a ban on this for a while. Don’t worry about the 4 million consumers in New Zealand. They really won’t mind. It’s OK.” Well it is very interesting. Who benefits when one puts a quota a subsidy a tariff or a ban on anything? It is the fat cats—the people who own the quotas. They are the people who benefit not the consumers of New Zealand. The consumers of New Zealand currently as we speak are probably rushing down to the local Blockbuster outlet to get their parallel-imported video or DVD because they know that “Time is up!” as Betty Boothroyd used to say so vigorously in the British Parliament. Time is up for them to have choice and reduced prices. 
Let me talk for a moment about why this legislation is so fundamentally flawed. Under this system choice will diminish. Prices will go up and product availability to the consumers of New Zealand will go down but not to all consumers. There is a group of consumers who are less likely to be affected when a ban is put in place. I put it to this House that that group comprises the wealthy young New Zealanders. They are the New Zealanders who shop on the Internet quite comfortably and happily and who are happy to bring in a parallel import. But far more important they are the consumers who are quite happy to buy a DVD. The people who will be really affected by this legislation are the consumers of New Zealand who like to rent a video at the same time as a movie comes out in their local movie theatre. They are the people who will be affected. They are the people who will not be able to get their rental. The fat cats who own the cinemas will be able to watch it. They will not be affected; nor will the wealthier people around New Zealand who are happy to pay $49.99 to import a DVD over the Internet. No it will be the poorer people who will be affected. 
We have heard some very contradictory things in the debate on this bill. The member for the Greens Mike Ward got up and said: “New Zealanders like going to the movies. It is all about the popcorn and the ice cream.” I like going to the movies and I thoroughly enjoy taking my family with me—my two young children and my wife. If it is raining on a Sunday afternoon in Auckland there is nothing nicer than to wander down to the movie theatre and watch a movie. 
Gerry Brownlee 
: It rains up there most Sundays. 
JOHN KEY 
: The member for Ilam is quite wrong. It does not rain on most Sundays in Auckland. It rains on a lot of Sundays but not on most Sundays. Parallel importation has been in place in New Zealand since 1998. It has not stopped me from going to the movies or from taking my two children to the movies. But it has allowed two markets to develop. There is the market for people who like to rent a movie on a Saturday night because their kids are aged 2 and 1 and they cannot afford a babysitter or to go out to the movies. They want to enjoy a movie that is current and not wait to see it in 9 months’ time when it has gone from being fashionable to unfashionable. They are not interested in watching a movie that has already been bagged by movie critics on radio stations and television. Who wants to see  
The Lord of the Rings 
 2 years after it has come out? People know the punchline by then. It is like  
King Kong 
—who wants to see it 2 months after it comes out? People want to see movies when they are fresh. 
I will touch on another argument that Mr Cunliffe raised in his blistering speech in the House in defence of this bill. He talked about the idea of more money going back into the local industry. I will quote from a Treasury document which we virtually had to remove with a crowbar from the Government’s large filing cabinet. Through the Official Information Act and the diligent work of the Hon Tony Ryall we have obtained that document. I feel like Chamberlain because I have in my hand a piece of paper that signifies why this is a very bad idea. I will relay for members Australia’s experience of parallel importing. It is estimated that Australians paid $1.15 billion more to listen to music than they would have paid if parallel importing had not been in place. Yet there is no evidence that the Australian industry benefited from that at all. What Mr Cunliffe is talking about is a very interesting argument called cross-subsidisation. The argument goes a little bit along these lines: if multinational copyright-holders are able to catch a higher return—let us say they can charge $5 more for the importation of the Harry Potter books—they will use those funds to cross-subsidise the local development of creative arts in New Zealand. 
Apart from holding the Treasury document—fortunately I have two hands—I also have a document from the Ministry of Economic Development which is scathing about this legislation. It states that there is absolutely no evidence at all that more money will go back into cross-subsidisation. If the Labour Party thinks the way to develop the creative industry in New Zealand is to slap on a quota or a ban or to have parallel importing and to go back to the old days when one had to know a Cabinet Minister before being able to bring in anything then I would like it to explain just one thing to me: in the 4 years since the parallel importing legislation has been in place in this country why have we seen a continued growth in our creative industry? 
Why is it that Peter Jackson and those wonderful people down at Weta will now have the opportunity to turn  
King Kong 
 into a major movie? Is it because when the Prime Minister was opening the bird bath in Whakatane a local movie theatre owner came to her and said: “Excuse me Prime Minister could you possibly slam a 9-month ban on parallel importing so that I can carry on?” Is that the reason? No. The reason that Peter Jackson the producer of the  
The Lord of the Rings 
 trilogy and Weta are able to produce  
King Kong 
 is because they are very very good at what they do. They are world-class at what they do. Make no mistake about it: more money will flow into the creative industry in New Zealand if we are very good at what we do. That will not happen if we slap some arbitrary ban on things and decide that there is one set of rules for one person and one set of rules for another. It will not happen if we have legislation that protects the fat cats at the cost of the consumers. 
Before I finish my speech I will just touch on one other issue relating to the argument on pirated products. One of the arguments put up by the industry is that parallel importing will make it more difficult to stop those who pirate goods and that it will actually help such people. As I read the report issued by the Ministry of Economic Development I found no evidence that that has any impact at all. Nor was there any evidence that rental rights were diminished as a result of parallel importing. 
The basis of my speech is simply this: I believe there are two forms of markets opening up in New Zealand. There is a market for those who wish to go the movies and who enjoy doing so because the movie theatres are tailored around their expectations—maybe the theatres are local or have bigger seats or maybe it is just a day out for those people. That is an industry that has carried on and flourished ever since National was wise enough to reform this legislation some years ago under the stewardship of John Luxton. That has done wonderfully. Equally an industry has grown up around those who wish to watch a movie on DVD the Internet or video as soon as it is available—not when the movie is 9 months old or when the fat-cat owner of the local picture theatre in Whakatane determines it is the right time to watch it. I favour the free-market choice and the development of all industries. I oppose this legislation. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I rise to support this bill. It meets the commitment made by the Labour-led Government in 1999. It follows a very extensive review and consultation process which considered the impact of parallel importing on the creative industries. It is an excellent bill and I support it. 
GERRY BROWNLEE (NZ National—Ilam) 
: 
 This bill does none of the things that Mr Carter has just claimed it does. However it is the crowning glory of the “Ministry of Judith Tizard”. To prevent people from seeing videos in a timely fashion is the summit of her achievements so far. It is a draconian bill of the worst kind and it typifies what this Government is all about. This is a Government that wants to send New Zealand back to somewhere into the mid-1960s when New Zealand was heavily regulated and controlled and lulled into some sort of docile sense that the Government knew better than anybody else. 
We should not underestimate the signal that this bill sends about the way this Government wants to operate. How can it be fair to anybody in this country to say that we need to be locked off from the rest of the world being unable to access the sort of at-home entertainment that we would like to choose for ourselves? 
I think back to those times when New Zealand was a heavily regulated country and when that sort of thing was commonplace. At that time anybody who had a bit of a business idea simply got to know his or her local member of Parliament and then got to know the member’s colleagues. The person would build up a bit of a lobby and sooner or later he or she would get some little sinecure somewhere because of the high level of Government-initiated protection around his or her business. Those days in this country were not good. I can remember an example that I think some people here might find strange. There was a time when children in this country could not get felt pens unless they were brought in from Australia. Mr Key will remember this. Felt pens were amazing things and the only way to get hold of them was if a person was lucky enough to know someone who was travelling overseas who could buy those things in the duty-free store when leaving another country. We are going back to that. 
Simon Power 
: Bread was like that too. 
GERRY BROWNLEE 
: No it has never been quite like that. There was a time when bread was rationed in New Zealand—there is no doubt about that—but that was certainly not in Mr Power’s lifetime. 
Hon Pete Hodgson 
: When was bread rationed in New Zealand? 
GERRY BROWNLEE 
: In asking such a simple and silly question the Minister is showing what a vacuum of knowledge he works in. I am not giving the Minister an answer to something like that because I know that what he is really doing is sitting there thinking “Perhaps that can be my idea of the week.” 
In the Labour caucus we first had Annette King coming along and saying: “Right I can really annoy New Zealanders by saying I’m not going to let them smoke in public bars Returned Services Association bars casinos or working men’s clubs—that will brass them off. That is a good bit of regulation that I can bring in.” Then she got outdone by Judith Tizard who has come along and said: “I’m going to stop New Zealanders seeing videos and listening to DVDs and other recordings for the first 9 months that they are available—that will really brass them off.” Then we see Pete Hodgson sitting there thinking: “I’ve got one that’s even better. Not only am I going to turn out the lights on this country—not only am I going to enhance my reputation as ‘blackout Pete’—but I’m now going to bring in a bread-rationing measure.”  
[Interruption]  
The Minister of Conservation is going to save bread in New Zealand! 
The whole point about the bill is that it is typical of what this Government likes to do—control control control. I do not doubt that once the Smoke-free Environments (Enhanced Protection) Amendment Bill is passed we will see a return to 6 o’clock closing for all hotels and other hostelries around the country. I was going to say “hostilities” but that would be too reflective of the Government. Not only will we see that sort of thing happen but I make a prediction that if that particular bill goes through this House in 10 years’ time we will see a move to have alcohol-free bars. Members laugh but 10 years ago no one would have said we would have smoke-free bars. They would have said: “No that will never happen. You’ll get cigarette smoking out of all sorts of places in New Zealand but you’ll always be able to have a smoke at the RSA and the working men’s club.” But the Labour Government has said: “No we’re going to get rid of that.” Members should not doubt that in 10 years’ time the Labour caucus will have whipped themselves into such a stupor—of course they will be in Opposition by then and they will have been there for a long time—as to say that they want to have alcohol-free days. That is the sort of thing that comes out of this type of legislation. 
One of the most interesting things I have noted here is that some of the provisions we have around parallel importing annoy the United States. It does not like us having parallel importing available on many things. It does not like the protections we have around Pharmac. Those are things that we can discuss and work our way through. It seems to me that this bill is a pathetic little attempt to say: “We don’t support you in international relations. We don’t think you’re doing a good job on behalf of the world. We will however try to get a free-trade agreement with you by bringing in pathetic little bits of legislation that limit New Zealanders’ rights to freely choose the entertainment they wish to see—films videos and DVDs—in a timely fashion.” This is a terrible bill and I am very proud that the National Party is not supporting it. 
A party vote was called for on the question  
That the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill be now read a first time. 
Ayes 83 
Noes 35 
Bill read a first time and referred to the Commerce Committee. referred to the Commerce Committee 
Labour 52; New Zealand First 12; Green Party 9; United Future 8; Progressive 2. 
New Zealand National 27; ACT New Zealand 8.