It’s never been a better time to be a consumer. Inflation is at its lowest in a decade. The unprecedented Australian dollar has increased our purchasing power. And the economy is holding steady amidst all the commotion in Europe and America.
Australians even seem to agree—retail sales over the year to June hit 5.4 per cent.
But consumer watchdog Choice has found that Australians are paying more for products than they would in other countries. Australians are paying around 50 per cent more for IT hardware and software than customers in the US, says Choice.
In a submission to an IT parliamentary price inquiry last month, Choice outlined the substantial price differences Australians face when purchasing the latest gadgets. International price discrimination from producers was found to be most likely cause for the great chasm in prices.
The report investigated price differences from a vast array of IT products including iTunes music, PC games, Computer hardware and Wii console games. The findings were clear–Australians are paying more than the average American, by a lot.
Take the iTunes top 50 music downloads, for example. To simply download your favourite music in Australia it'll cost an average of 52 per cent more than in the U.S (and the median was even higher at 67 per cent). These songs are delivered conveniently straight to customers’ computers and involve few, if any, additional costs.
“These products are identical and are delivered directly to consumers through a means which bypasses many production and overhead costs … [and] as the songs are sold online from foreign servers, GST does not apply,” said Matthew Levey, Choice’s head of campaigns, in the submission.
“CHOICE does not believe that a price difference of 50 per cent is justifiable.”
Digital music downloads aren’t the only IT sector where we are being short-changed. According to Choice’s submission, we are paying on average 51 per cent more (and up to a whopping 342 per cent more) on PC games, 34 per cent more on software products, 88 per cent more on Nintendo Wii console games, and 12 per cent more on Apple products.
With the recent surge in the Australian dollar the price differences on the IT market that we used to accept should be smaller. So why is the divide in prices still so high?
A Productivity Commission report has rejected retailers’ traditional claims that GST, logistics, higher labour costs, and retail rents accumulate to mean higher prices for consumers.
“In most cases [the reasons] are not persuasive, especially in the case of downloaded music, software and videos, for example, where the costs of delivery to the customer are practically zero and uniform around the world,” the Productivity Commission reported.
In response to what seems to be price discrimination, Choice has recommended that the “Federal Government investigate whether technological measures that allow suppliers to discriminate against Australian consumers … should continue to be allowed”.
These are all issues that will be on the table during the parliamentary inquiry signed off earlier this year by Stephen Conroy, Minister for Communications. In the interim, however, Australians will have to dig deep for their IT goods.
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