So the ALP is to introduce a GST after all. What? Do not fear, it will be a very limited one: it will apply only to the sale of blank audio tapes.
The Government will be forced into imposing this limited GST because of a High Court ruling this week. For a long time, musicians and others have not been able to enforce their copyright. People have merrily copied CDs and vinyl on to blank audio tapes in their homes without fear of Jimmy Barnes, Eric Clapton or Sir George Solti knocking the door demanding a copyright fee. The technology of audio tapes leapt ahead of the copyright law.
After more than a decade of farnarkling, the Federal Parliament finally came up with a scheme in 1989 that would provide recording artists just rewards for their intellectual creation. (I hesitate to use the word “”music” to describe some of the more hideous outpourings of the recording industry.) The scheme was to hit the retailers of audio tape with a levy. The money raised would then go to various representatives of recording artists for distribution roughly according to the number of original CDs and vinyls sold.
In return, the copying in the home of CDs, vinyls and pre-recorded tapes became legal.
It was quite a fair scheme. Everyone knows that audio tape in Australia is bought almost exclusively for the purpose of copying. Only a tiny percentage is used by clergymen practising sermons or Rotarians sharpening their after-dinner skills. Indeed, many cassette recorders are made with two tape mechanisms: for what other purpose than copying pre-recorded tapes can these be? Surely, the tiny ornithologists’ societies creating a distributing copies of bird songs on tape would not justify the manufacture of so many of these dual-tape machines.
The justice of the scheme was to jack up the price of blank tape and give the money raised to the artists who work was being copied.
But this week a majority of the High Court _ the Chief Justice, Sir Anthony Mason and Justices Brennan, Deane and Gaudron _ ruled the levy unconstitutional. Clearly, Their Honours have no appreciation for Eric Clapton and Jimmy Barnes, and only the droning of QCs is music to their ears.
Their decision comes just as digital compact cassette technology is coming on to the market. For those who do not read the acronymphomanic Duratone advertisement on the front of the TV Guide with its CD-ROMPs and Tweeters and WOOFers and the like, digital compact cassettes will make audio-tape recording cackle-proof and almost flawless. Without the imposition of a levy on this technology, recording artists will be further disadvantaged.
The combination of the lasting clarity of CD technology in the original recordings and a cheap copying technology to make flawless copies will be like myxamatosis among the rabbits of the rock industry _ a major exporter and employer.
However, the High Court is not to blame. It was on solid ground. The blame lies with Parliament, if anywhere, and it will certainly be up to Parliament to fix it, and fix it quickly. Before 1989 recording artists were treated poorly by impracticably and unenforceable copyright laws. They are now back to those days.
The High Court ruled the levy invalid because Section 55 of the Constitution says: “”Laws imposing taxation shall deal only with taxation, and any provision therein dealing with any other matter shall be of no effect.”
It said the levy on the tapes was a tax, not a payment of a royalty. This was because the retailers who paid the levy got no benefit; they got no right to copy. The buyers of blank tapes got that right. And it was a tax because it was applied to a general public purpose (compensating Australia’s artists for home copying).
Tax laws can only deal with tax, and nothing else. The Copyright Amendment Act 1989, which imposed the levy, deals with all sorts of other things. Among other things it deals with a very important scheme to permit educational institutions to copy literary and other works. It also deals with legalising audio-tape copying in the home.
At first blush, it seems the court got the conclusion from this the wrong way around. It said that the sections levying the tax were invalid and that the rest of the Act was valid.
However, when you read Section 55 of the Constitution it says “”any provision therein dealing with üany other matter shall be of no effect”. Surely, it the tax should remain valid and all the üother provisions be of no effect.
No, the court reasoned, this was an amending Act. Section 55 provided a restriction on Parliament’s legislative ability. That restriction could not be overcome by invalidating all of the existing Copyright Act bar the new tax. It made better sense to leave the existing Copyright Act intact and invalidate those parts of the amending Act which raised an offending tax.
Further, all parts of the legislative scheme that came with the tax were also invalid. This means it is now and always has been illegal to make copies of CDs, vinyls and pre-recorded audio tape, even for private use.
The Founding Fathers had sound reasons for insisting taxation Bills deal only with taxation. They were conscious of the American Revolutionaries’ cry of “”no taxation without representation” and thought that the people should be able to see taxation provisions with clarity. Of greater importance was the prevention of “”tacking”.
“”Tacking” is where the House of Representatives has a tax Bill with several other provisions “”tacked on”. The Constitution prohibits the Senate from amending money Bills, therefore the Senate could not amend the “”tacked-on” bits either. Without the Section 55 prohibition, the “”tacked on” bits would get through a Senate otherwise hostile to them.
This was good constitutional theory when it was thought that the Senate could not block money or Supply Bills altogether. The events of 1975 have made Section 55 less compelling.
Anyway, they have now defeated a sensible and just scheme to protect and reward intellectual and artistic output. It is impractical for the artists to protect their own copyright. The Government will have to fix it. Its seems the easiest, and perhaps only, way to restore the framework of the former scheme is to introduce a single law imposing a tax on the sale of blank audio tape _ a GST on audio tape, if you like.
A further question arises. What of the several other legislative schemes to collect copyright fees? There are schemes to collect fees for photocopying by educational institutions, by the government and by private clipping companies.
It would seem these schemes are valid, however. The levy they impose for photocopying is imposed directly upon the people and organisations who get the benefit of legal copying. The levy therefore is a royalty, not a tax.
Video tape is not affected. Private copying has not been seen as such a problem for copyright owners in movies. Unlike music which is listened to over and over again, people see a movie once, and therefore few people keep private libraries of illegally copied movies. Moreover, few people have the two VCRs necessary to record movies from video hire stores and even if they did they would have to pay the hire fee for the original anyway, defeating the purpose of copying it in the first place. People tend to copy a movie from television and view it at leisure. It is more a convenient postponement of viewing time than theft of intellectual property. And so there has been no need to impose a levy on video tapes.
You can go to the video store without having to worry about having Dr Hewson’s hand in your pocket. But don’t be surprised if the levy on audio tape is reimposed as a tax. In that case, it will be one type of GST the Labor Party, with its interest in supporting the arts, should have no qualms in imposing.