Choice says Australians paying 50 per cent more for digital downloads

Consumer advocacy group Choice has made a submission to a parliamentary inquiry into IT prices, stating there are barriers to low income earners and remote Australians entering the digital economy

Australian consumers are paying around 50 per cent more than US consumers for music downloads, computer software, hardware and games and console games, according to Choice.

The consumer advocacy group has made a submission to the parliamentary inquiry into IT pricing, stating the situation disadvantages Australian consumers and creates barriers to low income earners and remote Australians entering the digital economy.

Despite retailers asserting higher IT prices in Australia are a result of higher labour and distribution costs, Choice stated it is “international price discrimination” which is resulting in higher prices for Australian consumers.

“In Australia you pay, on average, 52 per cent more than an American consumer will for the same 50 top iTunes songs. A selection of 44 popular home and business software products were, on average, 34 per cent more expensive in Australia than the US,” Matt Levey, head of campaigns at Choice, said in a statement.

“We found that with one Microsoft software development product, it would be cheaper to pay someone’s wage and fly them to the US and back twice, getting them to buy the software while they’re there.”

Research by Choice also found when it comes to PC games, Australian consumers are paying an average of 232 per cent more for the top 10 games on steam.com.

Choice has also rejected the claim by retailers that the GST significantly adds to IT prices in Australia.

“The GST simply cannot account for the price differences in IT hardware and software, and lowering the threshold [from $1000] would significantly disadvantage Australian consumers shopping online,” Levey said.

Choice also strongly rejected the claim by retailers that costs such as rent, distribution and labour result in higher prices.

In the case of Australian consumers paying more for music downloads on iTunes, Choice said in its submission: “It is important to note that these products are identical and are delivered directly to consumers through a means which bypasses many production and overhead costs, such as rent, distribution and labour.

“Furthermore, as the songs are sold online from foreign servers, GST does not apply. Therefore, Choice does not believe that a price difference of 50 per cent is justifiable.”

Choice said in its submission that Australian consumers can avoid international price discrimination and access cheaper overseas products through parallel imports.

“This exposes copyright holders to competition and can put pressure on them to lower their Australian prices to global parity,” it said in its submission.

In its submission, Choice has recommended the low-value threshold exemption for GST and duty on imported products should not be reduced from $1000; the government should educate the public about their rights with online shopping; and the government should look into whether measures such as region-coding and IP address identification should be allowed to continue.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

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