The Australian government is looking at the vexing issue of international companies charging more for products in Australia than they elsewhere in the world.
It has become apparent in recent years that in our corner of the world we pay well above the average for all manner of products. While there’s some justification for charging more for large items because of shipping costs, there seems little justification for charging more for software or smaller consumer items.
The big corporates will tell us it’s all about price points, about what the local market can bear and what is deemed acceptable in each geographic location.
The price for calling on a mobile in India is a fraction of the cost of calling on a mobile in New Zealand but the downside is you have to live in a country with a billion citizens and all that goes with it.
So do we get charged more here? Should we enact laws to change this?
Who knows. Certainly our government has said nothing on the matter, despite the Australian inquiry. We’re remarkably silent on the issue of what is being described in Australia as “price gouging” by the electronics industry in particular.
Indeed, when Adidas decided we should pay more for World Cup jerseys simply because we’re New Zealanders and are likely to be more willing to pay more, we didn’t make too much of a fuss, we simply voted with our wallets and bought online. Until they decided not to sell online to anyone with a New Zealand based IP address.
I know of at least one major corporate in New Zealand that buys all its software via a US subsidiary because it saves around 30% on the asking price. CHOICE Australia’s submission to the government hearing on the matter paints a darker picture – price differentials of up to 50% on software, content and electronic goods.
That software prices can vary by that much puts the lie to the idea that corporates simply try to hit local currency sweet spots and reveals the truth of the matter: they will charge what the market can bear, and without legislative support, we apparently can bear to pay more.
When you combine this pricing structure concept with the corporates’ cavalier attitude towards taking part in these kinds of inquiries and also their unwillingness to pay tax to support local jurisdictions, we start to paint a picture of a world where the corporates increasingly control the ebb and flow of commerce and the governmental structure is increasingly irrelevant.
I can only presume our own government isn’t interested in pursuing these corporates out of fear they’ll simply stop selling products to New Zealand altogether. That somehow the corporates are willing and able to take their ball and go home.
Corporates, of course, are coin-operated; they will go where the money is and so long as we show we’re willing to shop, they’ll be willing to sell. Already we see NZ Post offering a US address to shoppers so we can buy online and import directly from those companies that decline to sell outside the US itself. That NZ Post, a government-owned agency, is willing to do that speaks volumes about the issue.
But there is another issue at stake – tax revenue. New Zealand, like most western countries, now gathers a significant proportion of its tax take from GST. Shoppers who buy goods online often end up paying less tax locally than shoppers who buy from a New Zealand-based vendor.
That will have huge ramifications for governments in the months and years ahead.
Meanwhile the best advice would be if you want to pay less for exactly the same product, you’ll do well to lie about where you live and if you want a government that will stand up to corporates, you might want to consider Australia.