The IT Pricing Inquiry: One Year On, And Nothing Has Changed For Aussie Geeks

Editorial: One year ago today, the guns fell silent on the IT Pricing Inquiry. The Parliamentary Committee tasked with finding why we pays more for gadgets, software, music and movies fired the final shot in the form of a report to the government on how to solve the availability crisis Australia had found itself in. One year on, and nothing has happened. The Australia Tax is as bad as it ever was, and content piracy is now at epidemic levels. We're at a tipping point, and the government isn't doing a thing to help.

The Inquiry

It started small at first.

On indulgence the Federal MP for Chifley, Ed Husic, stood up in the Chamber one day to denounce big companies like Apple and Google for charging Aussies seemingly high prices compared to those paid by US counterparts.

He called it "The Australia Tax": a tax on Aussies paid due to the tyranny of distance.

In some cases the gouging was severe, with companies like Adobe bearing the brunt of the blame.

At that point, Adobe was still selling boxed copies in stores of software like Creative Suite 6 and its respective parts.

A quick price comparison at the time between Adobe’s US and Australian online stores showed a deplorable price disparity of $1735. Almost $2000 difference on a piece of software distributed through an online store. It was cheaper to fly from here in Sydney to Los Angeles, buy it there, and come home. By doing that you would have saved $601, and I’d get Virgin Australia frequent flyer points, too.

Soon, a formal inquiry was convened to call up the offending companies and quiz them on why they thought it appropriate to rip off Aussie consumers.

Eventually as a result of the inquiry, Adobe dropped the prices of its cloud suite and began shunting customers away from boxed copies and into the rights-managed cloud.

It looked like the government inquiry was working. The dream was alive and well.

The Dream

Eventually, a 150-page document detailing how the government could solve the problem for the Australian people was drawn up and tabled in Parliament.

The 150-page report contained a total of 10 recommendations to the Government, ranging from education campaigns through to law reform:

Price discrimination and consumer impacts

Recommendation 1 The Committee recommends that the ABS develop a comprehensive program to monitor and report expenditure on IT products, hardware and software, both domestically and overseas, as well as the size and volume of the online retail market.

Recommendation 2 Considering the importance of IT products to education, and in the interests of greater transparency in this area, the Committee recommends that the Australian Government, in consultation with Universities Australia and CAUDIT, conduct a comprehensive study of the future IT needs of and costs faced by Australian Universities, in order to provide clearer financial parameters for negotiations.

Recommendation 3 The Committee recommends that the Australian Government consider a whole-of-government accessible IT procurement policy, to be developed by relevant agencies including AGIMO, and in consultation with relevant stakeholder groups including ACCAN.

Copyright, circumvention, competition, and remedies

Recommendation 4 The Committee recommends that the parallel importation restrictions still found in the Copyright Act 1968 (Cth) be lifted, and that the parallel importation defence in the Trade Marks Act 1995 (Cth) be reviewed and broadened to ensure it is effective in allowing the importation of genuine goods.

Recommendation 5 The Committee recommends that the Australian Government amend the Copyright Act’s section 10(1) anti-circumvention provisions to clarify and secure consumers’ rights to circumvent technological protection measures that control geographic market segmentation.

Recommendation 6 The Committee further recommends that the Australian Government investigate options to educate Australian consumers and businesses as to: • the extent to which they may circumvent geoblocking mechanisms in order to access cheaper legitimate goods; • the tools and techniques which they may use to do so; and • the way in which their rights under the Australian Consumer Law may be affected should they choose to do so.

Recommendation 7 The Committee recommends that the Australian Government, in conjunction with relevant agencies, consider the creation of a ‘right of resale’ in relation to digitally distributed content, and clarification of ‘fair use’ rights for consumers, businesses, and educational institutions, including restrictions on vendors’ ability to ‘lock’ digital content into a particular ecosystem.

Recommendation 8 The Committee recommends the repeal of section 51(3) of the Competition and Consumer Act 2010.

Recommendation 9 The Committee recommends that the Australian Government consider enacting a ban on geoblocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report.

Recommendation 10 That the Australian Government investigate the feasibility of amending the Competition and Consumer Act so that contracts or terms of service which seek to enforce geoblocking are considered void.

The dream was that all Aussies would know how to dodge paywalls, geoblocks and unfair deals made by overseas retailers in a bid to get cheaper products here faster, and drop the rate of piracy for in lieu of services like Netflix, Hulu and HBO Go.

But ultimately, it wasn't meant to be.

The IT Pricing Inquiry, while noble in its mission, fell victim to the timeframe of politics. The report was submitted to the last Labor government for consideration towards the end of its term. The election saw the Parliament suspended from making new laws before the eventual rise of the Coalition government led by Prime Minister Tony Abbott.

The new Coalition government was too busy scrapping laws like the Carbon Tax, the Mining Tax and so-called "green tape" to care about what nerds were paying for their gadgets. The dream was dead.

The Stick

The IT Pricing Inquiry took big business to task and hauled them before an inquiry to be roasted for gouging a nation of 23 million people.

Apple, Microsoft and Adobe were all lambasted by the Inquiry and its headkicker in chief, Ed Husic, for charging the Australia tax. It gave no thought to the government's relationship with big business and tore some of the world's biggest and most profitable companies a proverbial new one.

But just as the Labor-led panel on IT Pricing took the content industry to task, the Coalition government appeared to backflip and cosy up to the content industry.

Private screenings of yet-to-be-released films were arranged for Ministers who would ultimately decide the fate of Australia's anti-piracy policy, and Village Roadshow — arguably the mouthpiece of the content industry when it came to anti-piracy policy — was caught pouring large amounts of money into the campaign of the Coalition.

This hand-in-glove relationship between the industry and the government reared its ugly head in a leaked discussion paper on piracy that favours the stick over the carrot.

In its leaked discussion paper, the government freely admits in the first sentence of its introduction that there’s a real content problem in Australia:

“There are a number of factors that contribute to online copyright infringement in Australia. These factors include the availability and affordability of lawful content, the case with which consumers can access unlawful material and consumer awareness of legitimate services,” the government wrote.

Translation? Aussies wait too long, pay too much, pirate too often and don’t know about decent legal streaming services.

In response to the issue, sites like The Pirate Bay will likely soon be blocked for Aussie consumers, while the landmark iiNet v Village Roadshow decision that found ISPs weren't liable for the piracy of their users, looks set to be overturned.

Nowhere in the discussion paper does it say that Australians will be allowed to circumvent geoblocks, nor does it say that companies offering content at higher prices in Australia will be compelled to justify their prices or drop them.

The problem isn't being solved: it's being exacerbated by bad policy.

The Glimmer

Not all is lost, however.

It had been thought that the Inquiry was conducted in vain until today, when the head of the Government’s “root-and-branch” review into competition signalled that IT Pricing would be in its scope.

The issues paper for the new competition inquiry asks how the government could regulate the market to ensure that tech and gadgets carry fairer prices.

Economist Ian Harper is running the review, and we’ll be watching it carefully as it plays out.

Ed Husic, former Champion of Australia's gadget-buying geeks, told the AFR today in an interview that we're no closer to a solution today than we were 12 months ago:

It’s been 12 months since the IT price inquiry report was released - but all we have from the Abbott government is inaction. As a result, Australian consumers and businesses are paying a high price for the Abbott government dragging its feet on IT price discrimination

You said it, Ed.


We had a chance to do something. A chance to fix it. A chance to create a tiny island utopia for where content of all sorts was cheap, readily available and was delivered onto our PCs via fast internet. Where did that Australia go?

WATCH MORE: Tech News


Comments

    Neato robot vacuum from amazon $370 delivered to my door
    Inferior earlier outdated version neato robot at myer or Harvey Norman $1100

    My awesome philoshave shaver $320 from amazon delivered to my door
    Same shaver at shavershop $700

    All I had to do in both instances is go to jaycar and spend $7 on a Australian cord

    2 examples
    And it goes on and on and on

      Neato Chinese workers from China happy to work on $5.00 a hr with nothing more asked delivered to my door.
      Australian worker who wants minimum $15.00 a hour with benefits ie superannuation, more money to work on weekends and holidays, sick days when they're not sick, healthcare, unions and it goes on and on.

      Of course i cant have this because i would be front page news of the horror that i am not supporting locals and giving them the job.

      I agree with the software price being a bit much, especially with Adobe, downloading from Adobe in US and being charged double due to being in OZ. However what you are comparing to is something out of my control and any business control. I don't work for Myer or HN but it seems everyone throws us into the same boat when complaining of prices. I run a business, i've run this business for a long time, my prices are low as i can make them to still make a living and pay for the business, my staff, their wages, my wages and everything in between.

      The consumer thinks they know how business works but clearly don't, just focused on price and complain when its more here and don't actually wonder why. Just call it the Australia Tax and throw every business into the same boat that they are ripping off the public and make huge mark ups. They also call this place the lucky country and ask anyone who isn't local here and they will tell you why, because we have it so good here compared to elsewhere. Prices in US are pretty low, so are the conditions. You want low prices, fine, you get low conditions. I'm happy to make my prices same as the US if i am given the same playing field.

        EDIT: why after editing this comment it had to be moderated? See below for my response.

        Last edited 30/07/14 8:27 am

        There is still a gap between US markets and Australian Markets. For eg:

        Best Buy Sniper Elite III: $49.99
        http://www.bestbuy.com/site/sniper-elite-iii-afrika-playstation-4/4942005.p?id=1219105378431&skuId=4942005&st=categoryid$pcmcat296300050018&lp=15&cp=1

        and...

        Same game at big W: $88
        http://www.bigw.com.au/electronics/gaming/sniper-elite-3-ps4-122618.htm

        You could argue that the market is still not the same with different wages and government regulations etc. but that is still a $38 mark-up, surely it's not that much of a difference

        There is, however, no excuse for extreme mark ups on cables and generic branded gear. I have worked at Dick smith and some of their branded items had 100%+ mark-up. I can almost guarantee that $6 cable from above would of cost JayCar less than $1.

        I can't imagine how much profit Kmart now makes considering most of their products are generic branded items (With a faux name like "Audiosonic" that makes it sound like it's a real brand).

          The worst culprit is digital delivery.

          OK, so... $50 in the US, $90 in Aus for a physical copy. $40 seems a little extreme to cover the cost of higher retail and shipping, especially when you can get the thing shipped as a single item cheaper without any of the savings of bulk shipping, available to the big retails, but OK. Let's assume then that higher wages and shipping costs are responsible for almost fucking doubling the price. (Eyeroll.)

          Why is a digital copy also almost double the price? There's no shipping and no higher Australian retail wage. It's exactly the same as an American copy in every possible way.

          We know why, but the answer isn't good enough. It is, "Because you schmucks will pay it."

            "Because you schmucks will pay it."

            and there is the problem. We are use to paying the big bucks for software, so they will keep that cost for digitally distributed items "because they can"

              And when aggrieved pirates explain that they pirate, 'because they can', the content providers will hide behind the concepts of 'morality' which apparently only work one way.

                My moral compass is so skewed that's barely a blip, their tactics mean nothing...

          You just answered your own question, avg wage in America is ALOT less, even with the higher price we here in Australia are still far better off. People seriously need to Shut the hell up, actually go overseas and then maybe then they'd realize how good we have it here, stop whining!

            Being from North America I can say the only wage differences are in the entry level jobs (like Coles, Woolworths, cashiers, servers etc) EVERYONE else (such as white collar workers) make approx the same.

            The median household income in Australia is approx $65K/yr The median USA household income is like $55K/yr or 59KAUD/yr...

            So how does the 'higher' wage of Austrlaians translate to some things costing 3-4X more (for something) and at least 2X more for 90% of things?

            Last edited 31/07/14 10:10 am

        Sorry, but how much of a bullcrap overinflated supply chain does it take to increase a price between 200% and 400%? These posts always bring up the poor retailer excuse, but they are the end of the line, Australians are being ripped off at every step of the supply chain, and it adds up.

        Last edited 30/07/14 9:07 am

        If you want to buy a song on itunes by an australian artist, expect to pay 83% more for it, because you are in Australia. If that ain't wrong, i don't know what is.

        Some places do have crazy mark ups, look at monster cables. But not all places are that high in mark ups. Obviously no one here has owned their own business, hence the down votes which is sad. Not the bad guy but get treated like one.

        Last edited 30/07/14 6:21 pm

        Would make a lot if sense if you were manufacturing the product. You're not.

          True i dont manufacture the product but the product i do sell can be imported cheaper than i can get it and i have no control over that. No help, all i ask is for a even playing field, the chance to compete.

    It's fairly obvious at this point that the Australian government that the people elected last year does not give a flying f*ck about consumer rights or individual rights. All they care about is their big business mates and the rich end of town. Their refusal to consult with consumer advocate groups with regards to devising an effective anti-piracy regime couldn't make this any more clear (to say nothing of the so-called "budget" they handed down a few months ago). And what about the Copyright Reform review that the Labor government commissioned, the one that said the one thing we absolutely should adopt is a "fair use" clause? George Brandis disregarded that with a wave of his hand and a statement of "I don't think that's the way to go."

    Under this goverment Australians are going to be far worse off on the internet than they are now. Your traffic is going to be logged and stored for 2 years, IT prices will remain unfair, websites will be blocked for encouraging piracy, and the NBN is going to be a rusted out husk to be sold off to Telstra at the earliest convenience.

      They have pills for you condition, or a tin foil hat.

      BTW, this story is about a pricing enquiry set up by the previous government.

        If you dont think the Liberal party is all about looking after its big buisness mates, you need to read their policies and have a look at their "donators".
        Isnt it bizzare that they're hell bent on getting rid of certain taxes. Cutting down on tax you say? That has to be a good thing! Well the taxes are essentially a tax on big buisness, like the Mining Tax and the Carbon Tax.
        What they essentially do is redistribute wealth from mega corporations into public coffers. Both taxes have been ineffect long enough us to realise they made next to no difference to the public, other than collecting revenue that can be spent on hospitals, roads, broadband networks etc

        The Liberals facinations with selling off national companies to their mates in the private sector is reminicant of what happened in Russia after the fall of the Soviet Union. Their line of thinking is that private enterprise drives competetion which leads to lower prices.
        I guess thats why Telstra (A former national company) offers some of the lowest prices in IT *cough cough*
        If Telstra was still a national entity the NBN would not be the farce it is now, and further, its pricing would become a political issue (and an election issue if the price gouging was to bad)

        It seems in capatislist societies such as ours, all the mega corporations seem to achieve is redistributing wealth from everyday people into the pockets of the few, who then hoard that money and dont let it recirculate through the economy. Or worse, take it offshore.
        Just look at the US, a capatilist country on steroids. Their wealth gap is immense, but the "American Dream" of one day becoming one of the rich elite keeps their citizens docile. Its so bad that you get people earning <$50,000 lobbying for the removal of the "Death Tax" which only applies to people with estates in value over $5mil, thats retarded. The tax will never apply to those people, and a reduction in that tax means a reduction in revenue for the Government.

        I dont particuarly like any of the parties currently running, each one I can find multiple policies that I firmly disagree with, and I have been offered no real alternative.

        I think moving to a Mixed-Member Proportional representation electoral system, like NZ, is a shake up the Government needs.

        Stendec hasn't pulled these out of thin air.. have you read Brandis' anti-piracy pronouncements?

      Has any gov in the past 30 years given a damn?
      They're all to blame

      I guarantee even if your party of choice was in power, nothing would change
      NOTHING

    The IT inquiry is unrelated to the Piracy debate... as far as I know. It relates to prices for products that exist in the Australian market. The Piracy debate is related to streaming media that is geoblocked and therefore unavailable in the Australian market?

      Actually, they are related. To a varying extent. IT product pricing and piracy is related. People nowadays only equate piracy to film and music piracy. Software and games piracy still exist and one of the major contributing factors to piracy in all its forms has to do with IT pricing.

    Indeed nothing has changed, in fact the new Macbook Pro's were released today and once again we're paying more, unlike the iPhone and iPad the new Macbook Pro's have a new $500 influx compared to the previous models which were the same price in the US and Australia.

    Another example is Chromecast, for us we pay $49 compared to $25 in the states, not a very fair world we live in technology wise.

    Last edited 29/07/14 11:10 pm

      Yeah, the price discrepancy is weird. I *think* that Australia is closer to China (where these items are made?), so shipping to Aus should be cheaper than to the US, yet the end price is more expensive.

        yeah but a lamborghini is also 50% more expensive in australia

        how the hell are my liberal fatcats going to afford it otherwise?

      Another example is Chromecast, for us we pay $49 compared to $25 in the states
      But you're doing a price comparison. You should also do a wage comparison. Im quite sure people in the USA on average probably earn less than what we do here in Oz. That $49 price also includes GST. If you look hard enough though, you can get the Chromecast for $39 *delivered* like I did through a recent DickSmith sale.

        That's the point, GST is the main excuse large companies use for the price increase, at this point in time $25 USD is $26.65 AUD plus $2.67 for GST and we get $29.31 AUD.

        It's simple to work out, we are been overcharged for the same technology.

          But how about the wage difference between the US and Australia?

            Our wage has nothing to do with the increase, at the end of the day it's our own personal decision how much of our own money we pour into the market, regardless of where you are from that market should be equalled out and modified against the markets exchange rate.

            In the end the product is designed and assembled the same way, therefore we shouldn't be charged excessive costs based on where we live and what local laws insinuate as that's not a fair market.

            I live a short 10 minute amble from the Apple store in Perth. On any given day I walk by that store I see a shockingly large number of employees. Consider they are all making Oz minimum wage, and one can see the costs to Apple are quite high. Compare to an Apple store in the US and you'll find maybe about 1/3 as many employees, most of which probably make about half of what their Aussie counterparts earn. Additionally, Apple is required to give a 2 year warranty on products sold in Australia. In the US Apple products only carry a 1 year warranty. Taken altogether it is understandable why an Apple computer would cost more in Oz than it does in the US.

            Last edited 31/07/14 12:07 am

            Not as major as everyone thinks...median household income in Australia is approx 65K/yr, median household income in USA is 55K USD or 59K AUD/yr. There is no justification for how much stuff in Australia costs.

            For example...Looking at just parts from a car dealership (assuming they also have the brand/make in USA) you can buy the EXACT same parts (inc express 2 day shipping) for 1/4th the price than it would cost to buy it here...somehow here a $200 sensor that is paid and bought from a dealership in the USA costs over $800 here from a dealership here.

            Last edited 31/07/14 10:09 am

    Typical Labor useless garbage anyway, chock full of weasel words ike "consider" this, "investigate" that, "recommend" something else. Not a single bloody specific action to be done with a target timeframe. Smoke and mirrors from a Labor government that was pretending to do something when they were really doing nothing, and now the same pretender (Husic) uses the useless 150 page doorstop to beat up the next govrenment for doing nothing? Rich.

      The next government (read: current LNP) is completely ignoring the recommendations and is taking steps to ensure that (digital, at least) content remains expensive and geoblocked.

    MUHAHA Profits!!!! Oh and remember Australia, don't pirate anything, that makes you an evil person and us corporations not like you... You just keep paying though the nose little sheep

      I am paying through the nose - I just do so via Amazon instead of the local distributors here because I can get more content for the same amount.

      Last edited 30/07/14 9:27 am

    I fixed the digital pricing issue on my Xbox, I now switch regions and buy from the US which is usually cheaper than AU retail! Meanwhile the yanks think their digital pricing is overpriced because their retail I'd 30% cheaper, just like here!

    To me it looks like the government will intervene where there is money to be made for them. IT pricing that results in a reduction will also reduce the GST they collect, so I dont expect them to do anything about it except get consumers hopes up.

    But how about local digital content prices and illegal downloading? They want to get their hands in that because they probably see a potential to make money (but lets wait and see as to what comes of that).

      grey import time

      how you like me now mr gst

      You don't collect much GST when the majority of your populace is sending their money into other economies. Governments collection of money has need been a driving force. If it was, it's incentive to fix the problem.

    I have a feeling it may have something to do with the TPP:

    http://www.choice.com.au/reviews-and-tests/money/shopping-and-legal/legal/trans-pacific-partnership-secretly-trading-away-rights.aspx

    What better way to enforce and justify internet censorship - use the "people are pirating" excuse.
    I can hear the rhetoric now "Australia - one of the signatories to the treaty - has one of the highest illegal downloads per capita, and is a prime example of the need for this treaty blah blah, smoke screen for further information control etc"

    Potentially the very few who control the majority of broadcast and newsprint media in Australia would also be very keen to continue their 'directed' information delivery and control.

    It's a stretch, and I am quite cynical...but nothing surprises me with the current federal govt.

    And of course, the price gouging of other imported products such as cars and clothing are ignored as they would be inconvenient to the argument against content distributors.

    Your "utopia" is naive. How do you expect people to live on Australian wages with American prices?

    This is just the cost of doing business in Australia. we have higher wages and higher associated seller taxes (import tax, GST ect... ect...) that drives up the cost of products.

    What I don't agree with however is when you see these same increases attached to digital content since there is no increased costs associated to the seller.

    little story: I have been looking into purchasing an aston martin DB7 second hand from the UK and importing it. The cost of this car is roughly $40k Australian however after all the taxes, duties and all the rest are added it comes to almost $80k (almost 100% of the cost of the car just in taxes!!!)

    Also a little tip to save some money: if you are purchasing an expensing item that is not vary heavy look at the costs of purchasing it in the USA and having it shipped. I recently purchased 2 GTX780 graphics cards in this manner and saved almost 50% of the cost of purchasing them here.

    OZGameShop ALLLL DAYYYY LONGGGG.

    Anyone who buys into any excuse that the Gov or big corporations give you on piracy and massive price mark ups needs to wake up to the world.

    The above organisations are there to take as much money as possible to line their pockets and their mates' pockets with. Why do you think pollies earn so much money for doing fuck all? They sit in a room pushing bullshit around all day, every day, like dung beetles. Why do you think the PM get's like $180k for life plus all the benefits even if they only spend one day in the High Chair?

    They are in it for themselves and their friends. They don't care about you. Nazi Germany/Communism is coming back around, and not just in the over-pricing of products. Police get more and more power and get away with more and more things. The world is closing in on a tipping point on a lot of things.

    What about the Luxury car tax? What a joke. A car is a car. And because you've got enough to buy a luxury car they slug you for an extra massive amount.

    Look at the government like any other business. They need to make money. The only difference between them and your corner shop is that your corner shop guy wouldn't stick a knife in your back and steal your wallet when you turned to leave the store.

    Last edited 30/07/14 1:52 pm

    "One Year On, And Nothing Has Changed For Aussie Geeks"

    Yet, the value on smoke and mirrors has fallen sharply.

Join the discussion!

Trending Stories Right Now