news Federal Labor backbencher Ed Husic has revealed that he is planning to write to Communications Minister Stephen Conroy requesting that an inquiry be held into the practice of technology vendors unfairly hiking prices for the Australian market.
Determined that there should be an inquiry, since he said that IT vendors have been so dismissive of consumers, businesses and government, Husic stated in Federal Parliament last week: “I’d like to inform the House that I am now writing to the Minister for Broadband, Communications and the Digital Economy, requesting that a parliamentary inquiry be held into IT price discrimination.”
The inquiry would focus on: Whether there is a differential in prices, and the extent of it; Why households and small businesses have to suffer these differentials; The impact of these differentials on businesses, households and also the government, especially given the billions in government funding spent on IT procurement.
As to why this inquiry was necessary, Husic said the obvious reason was: Fairness. It was not fair to price the product up to 80 per cent more in one country than in another without a good reason, even conceding recovery of costs, he said. It was also unfair for companies to price their products to benefit their home country, simply because there were vested interests, and it was not fair that Australian businesses would have to pay more than their rivals for the same hardware while competing in the global market, thus putting themselves at a competitive disadvantage.
Husic has warned technology vendors hiking prices for the Australian market that criticism and examination of their pricing strategies would continue untill Australians were satisfied they were not being discriminated against.
Husic has been attempting, since the beginning of 2011, to get answers from technology giants about why they felt it was appropriate to price products significantly higher in Australia (even after taking into consideration factors such as exchange rates and shipping), than in the United States. The MP had raised the issue with the vendors themselves, in the House of Representatives several times, and directly with senior figures such as David Bradbury, Parliamentary Secretary to the Treasurer, but few answers have so far been forthcoming.
Late October 2011, Treasurer and Deputy Prime Minister Wayne Swan had indicated that the report from the Productivity Commission due in November would detail the extent to which price hikes on imported technology goods and services were hurting Australian consumers.
While Adobe and Microsoft stated that pricing was set by the local distribution channel, some international suppliers used the argument that consumers in some regions could tolerate higher prices than others, and still others defended the price hike by attributing it to the cost of supplying to ‘a remote and relatively small market like Australia.’ Many in the industry, however, believe that these arguments could not hold, as music, software and videos had a much smaller delivery cost in the online environment compared with legacy distribution through physical retailers.
In his parliamentary speech last week Husic brought up the topic of pricing with respect to specific vendors, mentioning that Adobe, Apple, Canon, Lenovo, Microsoft, the big players, had failed to substantially address the Australians’ concerns over pricing. He said: “The general approach of the vendors on this issue is that if they close their eyes, perhaps the complaints will simply dissolve away.”
A tweet Husic got from web developer Daniel Myles last week said: “Photoshop CS5 Extended digital download is currently US$999 for US. Exact same download costs AU$1671 when buying from Australia.” Husic remarked: “In this day and age, where the internet has opened the eyes of consumers to what’s on offer worldwide, IT vendors should be much more upfront about the way they set their prices.”
Husic also appeared on Sky News this week to discuss the issue. The clip can be found on YouTube here. In addition, it is embedded in this article below:
Image credit: Office of Ed Husic
Totally agree we get ripped off and have for ages but what is the point of an inquiry we know the problem we can see it everywhere but we need action not another committee
An inquiry would have the power to force vendors to bring themselves to parliament and explain what’s going on, publicly — justify their actions. That in itself brings a level of transparency and accountability to the process, which would improve things.
Example: Logitech Squeezebox Touch.
RRP in USA: $US299
Adjusted for GST & exchange rate: $330 approx.
RRP in Australia: $499.
These are just recommended retail prices. You can get them for even less in the US.
Oh Hi, I got another mention :)
the video of Ed Husic’s speech in parliament on IT Price Discrimination can also be downloaded from:
ftp://broadcastingftp:broad.acc.ftp@ftpbroadcasting.aph.gov.au
FYI I am tweeting devices, software and hardware daily where I feel there is clearly price discrimination happening. I think at this rate, if I was to tweet two example each day I’d have enough material for around 2 years.
Given that parallel importation of software has been legal since 1998, I think Husic is wasting his breath. Savvy consumers will buy from overseas suppliers wherever possible. With software, there are plenty of online options in that regard. If you’re silly enough to pay the AUD asking price of Adobe CS5, you can only blame yourself.
Doing business in Australia is much more expensive than the US. Taxes and wages are higher, as is rent. As a result, local businesses are entitled to charge more. It’s not as simple as doing a basic currency conversion + sales tax calculation. That said, the online market keeps them honest – witness Gerry Harvey’s constant absurd despair.
I’m sure Ed Husic will also complain the next time some other company offshores a large proportion of staff. He can’t have it both ways.
Doing business in Australia is much more expensive than the US. Taxes and wages are higher, as is rent.
– I don’t see how this quote relates to a digital download from the Adobe US store and AU Store where those considerations do not apply.
As a result, local businesses are entitled to charge more.
– Assuming we’re talking bricks and mortar and a non digital download service I’d like to see some numbers that confirm that the increased Prices ONLY cover those added costs you mention. You could understand I am skeptical about some of the % increases. Last night I tweeted an example of a Canon SLR camera, its advertised at around $3000 in the US, the same camera is almost $7000 in AU. Are you suggesting that these taxes, rent, shipping, wages etc seriously equate to the $4000 per camera difference?
“Doing business in Australia is much more expensive than the US. Taxes and wages are higher, as is rent.
– I don’t see how this quote relates to a digital download from the Adobe US store and AU Store where those considerations do not apply.”
The issue is that the local publisher / distributor / sales agent supply chain is being protected. It is an outdated, broken and flawed business model, but if they were to match the USD price on online downloads….the brick and mortar stores would be out of business in no time at all.
This is already happening to an extent as the buying public become more savvy…Expect to see more and more bookstores go out of business, as parallel imports make it untenable. Notice how the shopping malls don’t have “Record stores” anymore? About the only chain still doing that is JB…and they only survive by bolstering income with other electrical products. There will be more and more pain in the Aussie retail sector in the coming years…
But are the big online publishers keeping their prices artificially high just to look after Aussie retailers? No…they also like the fact that they can make mega-profits for digital products.
As for the bricks and mortar side of things…
The minimum wage in the US is something like $10 per hour. As far as I understand there is no super contribution.
The minimum wage here in Oz is close to $20 per hour when you factor in super, payroll tax, workcover etc. (More if you have casual employees).
So close to double the cost…which needs to be recouped on each item sold.
As for retail rent…I have no idea, but considering that the price of property in the US is cheaper than here, one can only assume that rent is cheaper too.
As for tax…in the US it is somewhat dependant on state…but my own small business would pay ~20% tax in a lot of the US, whereas here in Oz I think I am paying 30%.
If you look at cost of living comparators, almost everything in Australia is 50% more expensive. So I can’t justify the 100% mark-ups, but then I have no idea about importation costs/distribution costs/marketing costs comparisons.
“- I don’t see how this quote relates to a digital download from the Adobe US store and AU Store where those considerations do not apply.”
Well, as I said, parallel importation (online or otherwise) of software has been legal since 1998 – if you’re silly enough to pay the local price, good for you. I.e. Nothing stopping you from evading the geoblock and downloading from the US store.
“- Assuming we’re talking bricks and mortar and a non digital download service I’d like to see some numbers that confirm that the increased Prices ONLY cover those added costs you mention.”
Well of course it’s more complex than just taxes, wages and rent – but the fact that Australia is a small market means that there is likely to be much smaller volume in the US, hence the higher price for the Canon camera. Think about it: it costs money to get relatively small product across the widely dispersed shopping markets in Australia, then you’ve got to spend money to market it which isn’t cheap either.
Yes, more than double the US price does appear rather strange, but then again plenty of savvy photographers buy their equipment direct from the US via online stores or through mail forwarders like Price USA. If you want to pay $7000, all power to you. Of course, there are certain risks in regards to warranty by buying overseas, but that’s pretty much balanced out by the 57% saving on the cost of the unit.
Sure, I’m not saying the big market players couldn’t exert a little more pressure on their distributors/wholesalers to reduce the price, particularly the likes of Harvey Norman, who’s happy to sell $400 HDMI cables to unsuspecting customers.
Hi Robert, can you point me to how to avoid geoblocking preventing me from downloading from USA site. It seems email registration to a foreign country or VISA registered to a non-USA bank trip the “wont sell” to you in USA but can download the exact product with no benefit to the country of domicile (Australia) via a USA and actually take more money from the economy.
Amazon Kindle is another example. Buying in Australia at prices set by Amazon is at least 75% more expensive. Even buying via mail order from the US attracts a huge price hike, before mail costs are added.
It’s the government. If the government didn’t guarantee monopolies on distribution then we would have no risk in paying geographically arbitrarily higher prices.
Now they need to ask why we’re paying almost double for cars compared to the UK and US. Nothing to do with massive price fixing and profiteering by dealerships or protecting inefficient local manufacturing? Hmmmm
Do you reckon they might be charging what the market will bear? That is, they keep charging, because we keep buying.
I’d like to know why some software is almost double the price in Australia versus the USA price.
Shipping doesn’t come into it when all you buy is a licence key which is emailed to you.
Microsoft Visual Studio Premium with 1 year MSDN. (Pricing from Microsoft Web Stores).
USA Store Price: 1162 AUD (Converted using XE.COM)
AUS Store Price: 2084 AUD
$922 more for Aussies.
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