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
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
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
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