What will be the impact of the Kindle, and its GST loophole, on the local industry and what about funding for writers for the years ahead? Readings Managing Director Mark Rubbo breaks down the Book Industry Strategy Group’s report to the Federal Government.

I wandered into Dick Smith (part of Woolworths) the other day and noticed a big display of Amazon Kindles. The Kindle is not just a device on which to read and purchase ebooks; it’s a way of avoiding GST on those purchases. It reminded me a bit of the 80s bottom-of-the-harbour tax schemes. Woolworths appears to have gone into the tax avoidance business, selling a device that is designed to compel people to purchase books tax-free. Now, lots of people buy things over the net tax-free, but that is their individual choice – Kindle and Woolworths doesn’t give them that choice.

This, of course, is one of the issues indirectly addressed in the Book Industry Strategy Group’s (BISG) very sensible report to the Federal Government. The BISG was set up by Minister Kim Carr to examine how emerging digital technologies might impact on the way books are produced and delivered. The BISG acknowledged that publishing is Australia’s most successful cultural industry. It sees the industry’s primary role as developing Australian creators and creative works. The BISG made 23 recommendations to government under six broad headings (go here for a copy of the full report).

The aspects that interested me most were those that addressed the issues of Australian publishers and retailers competing in a global marketplace, and support for Australian culture. To me, the two seem joined. If Australian retailers and publishers can’t compete globally and are replaced by external retailers and publishers, then the scope for Australian creators to find readers and to be effectively published is much more limited. On the face of it, offshore retailers have no interest in promoting Australian works above others – and it’s hard to see why they ever would. The BISG tried to address the Woolworths/Kindle issue by recommending that books be made GST exempt, or that overseas retailers be compelled to collect GST on purchases by Australian residents. With other retailers complaining about the tax exempt status of purchases below $1000, I imagine they wouldn’t be too happy about books getting special treatment. However, the unique characteristics of ebooks, in addition to their cultural importance, do seem to warrant it. Why does the same ebook file purchased from Woolworths/Amazon have no GST – whereas, if purchased from Readings ebooks it does? No logic there!

Another key recommendation was that Australia Council Grants to authors be increased to a minimum of $3.5 million per annum and that a National Book Council be established, a principal function of which would be to provide funds to writers to create new works. A good report ... and best wishes for the holiday season.

Mark Rubbo is the Managing Director of Readings