Australians are paying far more than overseas consumers for an extensive range of products, despite the Australian dollar surging past parity with the US dollar. A Crikey analysis shows consumers sometimes pay more than twice as much for identical products sold in the United States, the United Kingdom and elsewhere.
The high comparative costs of books sold locally and the inexplicably higher prices at Apple’s iTunes store for Australians are well known. But the price differential extends across a number of products. The results further discredit the campaign by Australian retailers to target online shopping by demanding the government lower the GST threshold on goods purchased overseas.
In response to a Crikey piece showing the flawed maths behind the retailers’ campaign and claims wholesalers were stifling local online retailers, a number of readers pointed out alarming disparities between local prices and prices available online:
- Pentax lenses costing nearly $850 locally are available for US$510 from a US site.
- High-end audio equipment costs three times as much here as overseas.
- Harley-Davidson rider Greg Bean sent extensive details of the remarkable lack of a price differential between Harleys sold in Australia and New Zealand, despite the different currency. Based on comparative dollar values, local Harley fans can expect to pay one-third more for the same bike here than in New Zealand, and for top-end models up to $9000-$11,000.
- Cycling equipment: tyres costing $50-70 locally available online for less than $30; bike chains costing $50-60 available for under $40 from UK sites; cassettes costing up to $100 here are available for under $50 overseas.
A comparison of other goods using local and overseas sites readily yields more examples.
The same LG refrigerator costing $2500 at Harvey Norman — billionaire Gerry Harvey was the initial face of the retailers’ campaign against the internet — is available to American consumers from Amazon for just under US$1500. A Sharp microwave costing $199 at Harvey Norman is at US$85 from Amazon and US$74 at Walmart. A $150 drill at Bunnings is available for under US$130 at Amazon.
Even some cars are substantially cheaper. The same model Mazda6 costs under US$28,000 on the road in America compared to $47,000 here, a difference far in excess of the tariff of 5% still imposed on Australian consumers to prop up local manufacturing.
The one product Crikey examined that was competitive was television sets: large plasma TV sets cost about the same at Harvey Norman here as they cost in the US, and in fact may become slightly cheaper as the dollar rises.
The standard line from Australian retailers is that these price differentials are driven by the high cost of operating retail outlets in Australia — that they face high rent costs not faced by online retailers overseas, and they have to pay higher wages than US retailers.
That, however, doesn’t explain the differential in prices in niche products with minimal retail footprint like high-end audio or brand-name motorbikes. And it certainly doesn’t explain why online prices are higher in Australia.
Apple’s charging of Australians more for the same stream of 0s and 1s compared to Americans continues — the new Beastie Boys album currently costs Americans US$9.99 but more than twice as much, $20.99, via iTunes in Australia. And users of the game purchasing site Steam have long complained about price differentials on the site between Australian and US games, reflecting the pricing policies of distributors, with some popular games titles costing more than twice as much here as when downloaded in the US.
This “international price differentiation” is one of the issues under investigation by the Productivity Commission in its review of the retail industry. Katrina Lee, strategic policy adviser for Choice, says they want to see the PC inquiry focus more on the problems faced by consumers.
“The question is why bricks and mortar retailers can’t keep up and compete with online competitors,” she said. “Australians do want to buy locally, and there are successful local online retailers, both bricks-and-mortar operations and pure-play online operations. But the large retailers have relied on bricks-and-mortar outlets and offer limited sites and consumers are sick of it.
“Retailers blame the appreciation of the dollar but it should be reducing their costs too and we’re not seeing that.”
*Know of more examples of big price differences between the same product sourced locally and overseas? Crikey is compiling a list — send your tips to [email protected].
Correction: this article originally said the comparative data for Harley-Davidson motorbikes was between Australia, the US and New Zealand; the data only relates to Australia and New Zealand. Price differences between Australia and the US are greater still than those between Australia and New Zealand.