There was an interesting item in the news the other day which talked about the ‘Australia Tax’ which doesn’t technically exist, not officially anyway. It is used to describe the premium prices we sometimes have to pay for the same products or services simply because we are here in Australia.
This is Joe Hockey, our federal Treasurer…
“Australian consumers pay much higher prices compared to US customers when purchasing IT hardware, software, music, games, sporting equipment and fashion. And some companies selling these products pay little tax in Australia, despite their products selling for much higher prices in Australia than elsewhere.”
He then went on to tell the Australian Tax Office (ATO) to investigate these companies with renewed vigour.
Companies who charge more here for digitally delivered products than they do elsewhere, like Google, Adobe and Apple, are in his sights. The article goes on to say that Australians pay something like 33% more than US consumers for the top 10 movies in Apple’s iTunes store and 26% more for PlayStation 4 video games.
The suggestion is that if these companies have to start answering awkward tax questions from the ATO, they may just start lowering their prices to bring them in line with elsewhere around the world.
The price battle isn’t just online though; competition from real bricks and mortar stores is increasing here with the arrival of many overseas giants like Marks & Spencer, Topshop, H&M, and more.
Even our homegrown stores are turning the screw on pricing. Myer and David Jones, Australia’s two largest department store chains, are demanding lower prices from their suppliers to bring them in line with global levels.
One cosmetics item is now on sale here in Australia for $38, last year it would have cost $55 and three years ago $80. A real example of prices coming down. If you want to read the full article, please visit news.com.au.
It doesn’t end there either.
Digital subscription TV
In February of this year I surprised even myself when I cancelled my Foxtel subscription. I did have the full package with the IQ box, but for my money it just didn’t give me good value for the $126 per month it was costing me.
So I ditched them.
I clearly wasn’t the only one abandoning their service as this week Foxtel have announced that they are to slash the prices of their services from November of this year. From what I’ve seen, the main headline in their announcement is that the basic service, which will have more channels than before, will now cost $25 per month instead of $49.50.
Then there is an awful lot of PR talk with phrases like “a new error of growth“, “plans to provide existing residential customers with enhanced benefits” and “We intend to win in this space…”
The ‘space’ referred to here is also occupied by Netflix, the giant US streaming media service. It is not officially available here in Australia, but it is thought that something like 200,000 Australians subscribe to Netflix with the assistance of either a DNS or VPN geo-blocking busting service.
A Netflix streaming subscription is about $10 per month.
Then, of course, we also have Freeview, which is free, and FreeviewPlus which is so new nobody here really knows how to get it, but when we do work that out, I suspect it will also be free.
There is very little doubt in my mind that Australian prices are becoming more and more competitive with each year that passes. As the world becomes more like that global village, it’s now much easier to purchase products from other countries and have them sent to you direct. The only way to stop people wanting to do that is make Australia’s prices fairer.
It is now also easier than ever to make your computer appear to be located anywhere in the world to access cheaper downloads or streaming entertainment services. The only way to stop people wanting to do that is make Australia’s prices fairer.
And, by and large, I think that’s what’s happening now; Australia’s prices are getting fairer.
I remain to be convinced about the new Foxtel pricing though, I’ll believe that when (and if) I see it in a couple of months. My guess is they will still have installation fees, cancellation fees, locked in contracts, packages, rules to those packages and they will fiercely protect their premium content, for example, the English Premier League. Anyone wanting the full package will probably still have to pay in excess of $120 per month.
Foxtel will certainly have to prove me wrong if they want to win this subscriber back.