Few oppose the anti-Australia tax furore

Few oppose the anti-Australia tax furore

Summary: Amid a sea of consumer complaints submitted to the inquiry on price disparity of IT in Australia, only one retailer has thus far defended the higher prices for technology that Australians are forced to pay.

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Amid a sea of consumer complaints submitted to the inquiry on price disparity of IT in Australia, only one retailer has thus far defended the higher prices for technology that Australians are forced to pay.

The Parliamentary inquiry set up to examine the price disparity between hardware and software sold in Australia and that sold internationally, began accepting submissions in late May. So far, 31 of those submissions have been published online.

Most highlight specific examples of where customers believe they have been charged more for buying in Australia than they would have been charged overseas. For example, one submission highlights an Asus RT N66U wireless router that costs AU$186 to buy from Amazon, but an average of $275 to buy from Australian online retailers. Another submission compared a Crucial 256GB solid state drive (SSD), which cost $315.27 to buy from Amazon, but was said to have cost between $350 and $450 in Australia.

The submission, from Andrew Boisen, said he went to buy another drive from Amazon, but found that the company was no longer shipping to Australia.

"Although I have no direct proof, I think that the Australian distributors and sellers of these hard drives have requested that Amazon cease selling directly to Australian consumers, so that the Australian market on these items can be controlled," he said.

"I have personally noticed an increasing occurrence of IT related items that I used to purchase, no longer being able to be shipped to Australia, including laptops, graphics cards and memory."

Yet, one representative from Australian computer retailer Pioneer Computers, Molly Lai, said that there were a number of legitimate reasons behind why tech cost more in Australia.

"With a population of only 22 million, Australia is considered a small market with little returns. While large quantities contribute to economies of scale, the Australian market is so small that it requires a substantially higher profit margin to justify the effort," she said, adding that Australia's geographic isolation from the rest of the globe meant transport costs were also higher.

Lai also blamed the strong consumer protection laws and labour costs.

"Consumers see it as their rights to return for refund or replacement, even when it is not the manufacturers' fault," she said. "In light of the new Australian Consumer Law calling for compensation for consequential losses and the National Television and Computer Recycling Scheme making importers and manufacturers bear the burden of recycling, IT vendors are finding it very hard to do business in Australia."

She rejected suggestions that prices were artificially inflated, stating that it would be uncompetitive to do so.

Phil Best, manager of Applied PC Systems, suggested in his submission that Australian software companies faced difficulties operating online, because customers were forced to pay 10 per cent GST for software sold by Australian firms but not for international alternatives. He suggested that all software under $1000 should be exempt from GST, or consumers should be charged 10 per cent GST for all software downloaded from overseas.

The committee is accepting submissions until 6 July.

Topics: Government, Government AU

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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6 comments
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  • To Phil Best: It is not just 10% that makes the difference, but the rest. I think most expect some increase, but substantial is not on. Sometimes the price difference for hardware is so much that it would cost less to return it to the OS supplier for warranty, than buy it here and wait a rediculous amount of time while slow local distributors get round to repairing it.

    Assessories are the real ripoff, where goods that can be bought from China are many times more when bought from department stores here, even though they are of no better quality. Genuine Samsung assessories can be bought from Korea for 60% of what they are here, including postage.

    To me, the problem rests squarely with the DISTRIBUTORS that have had a long culture here of bad and slow service to customers and retailers, because they have considered themselves more important than they are. They should be trying to be as lean and responsive as OS retailers. Deliveries should be done quickly and every work day of the week, not just the days for their convenience. It is the DISTRIBUTORS killing sales here.

    The problem is so bad that retailers here would be better off buying from OS retailers than local distributors, and still get a better service!!

    The problem is with big, heavy items where though they are substantially cheaper from OS, the non-competative pricing from this end (for Fedex, DHL et al) for single items makes it prohibitive to make warranty returns OS.


    The next industry on the hit list should be cloths, where the prices here are twice what they are in the US. We buy only the first pair of shoes here to get the fitting, then all future ones from OS. Trouble is that local distributors don't import all colours.

    It will get so bad that retailers here will have to charge customers for fitting so that they can carry the range, but expect that people will buy from OS, unless the local stores hook up with OS resellers.
    Patanjali
  • With hardware, transport costs may well be a factor in partially explaining some of the price difference.

    However, with digital downloads e.g. online software purchases and subscriptions such as the Adobe Creative Cloud, there are no transport costs to explain the markup.
    johnw1965
  • Taiwan to Sydney: 7,200km; Taiwan to Los Angeles: 10,700km. I know that "volume" will be a transport factor but suggesting our isolation is contributory is stretching it...

    My experience has been that the distributors have been restricted by the supplier from shipping overseas ostensibly due to potential damage to local distributor's sales. I still doubt that the price difference is that great though.
    My prediction is that we're going to have less "take it now" and more "get it in 3-5 days" - it's the only way that Oz retailers will survive...
    jnolife
  • It's not just IT that's subject to price inflation & free trade restrictions.
    I recently attempted to purchase a Kubota part Listed at @ $14.99 USD from a US distributor but was informed their supplier contract prohibits sales to Australian buyers.
    Same part here cost me $48 here in OZ.
    grump3
  • One big argument torpedoing claims that prices are high because Australia is a small market is the generally significantly lower prices for the same products in New Zealand.

    This pretty much holds true for anything there that isn't handled by an Australian distributor along the way - but products which go into Australia via New Zealand generally only have tiny markups over USA/EU prices.
    anonymous
  • distributor to blame

    it sits on that greedy and slow distributors trying to maximise profit on small population. Local service is always worse in comparison to OS.

    If it is 10% more expensive, then is reasonable but on some of them is like 40%. Anyone with basic internet access and calculator can calculate immediately how much saving we can have from buying it directly overseas.

    What currency rate are these distributors using ? We are over parity against USD and the price still reflects like 1 AUD is 0.60 USD.
    simba-au