Big mark-up on IT goods 'not justified'

AUSTRALIANS are paying about 50 per cent more for IT products than customers in the US because of the high cost of doing business here, a parliamentary inquiry has heard.

In some cases the price difference can be almost double - with Nintendo Wii games costing 88 per cent more here.

Suzanne Campbell, the head of peak industry body the Australian Information Industry Association, told the IT pricing inquiry the cost of rent, wages and warranties were higher in Australia than other markets.

"Where operating costs are higher and the market is smaller, prices may need to be higher to get a reasonable return on investment," she said.

Ms Campbell, whose association represents companies such as Microsoft, IBM, Apple, Google, Canon and Adobe, also said IT products cost more because of research and development investment.

But consumer group Choice and members of the committee driving the inquiry did not accept this reasoning, with Federal Labor MP Ed Husic calling the mark-ups a “convenient” excuse.

"I think basically the vendors have the ability to set the price, but they argue the price itself gets set by resellers on the way through,” Mr Husic, a member of the Government's Standing Committee on Infrastructure and Communication, told news.com.au.

“I think it's a very convenient way for both the resellers and the major vendors to point fingers at each other." Mr Husic also said research and development costs could not justify higher prices because most IT products were not developed in Australia.

Choice head of campaigns Matt Levey told the inquiry the most likely cause of higher prices was international price discrimination - meaning the wholesalers were setting higher prices for the Australian market.

"We don't think rent, marketing, labour costs, GST, we don't think these factors amount to the 50 per cent price difference," Mr Levey said.

Choice compared prices on a number of products including iTunes, PC games, software, console games and hardware and found there was an average of 50 per cent difference between Australia and the US, the biggest being an 88 per cent different for Nintendo games.

"Some of the starkest figures coming out of that were I think finding that Australians pay around 52 per cent more on iTunes on the equivalent top 50 songs than US consumers,'' Mr Levey said.
"We pay 88 per cent more for Nintendo Wii console games.''

Australians also pay about 34 per cent more for popular home and business software titles and 41 per cent more for Dell computers, he said.

The Inquiry also heard from the Australian Publishers Association, the Australasian Performing Rights Association, the Australian Retail Association and the Communications Alliance.

The inquiry, which is still accepting submissions, aims to find out why Australian prices are so much higher, and find a solution to improve the position of local consumers.

heraldsun 30 Jul 2012

Whilst the article does hold merit, unfortunately the whole story is not always told.

Corpau has previously published prices of electronics goods from major retailers which are a blatant rip off to the consumers.

Mark-up on goods can be also from 300%-1000%, depending on the goods.

Certain cables manufactured in China can be brought into Australia in the magnitude of $2, sell in the mid $30's at the retailers.

Exploitation of the worker enables corporate giants to make millions from the 'suffering' of others, barely giving enough for survival.