The Federal Government has received harsh criticism from the Business Software Association of Australia (BSAA) for its proposed loosening up of software importation restrictions.
According to Jim Macnamara, chairman of the privately funded industry group, intensified competition likely to arise from reforms to importation legislation will see lower levels of available local support resulting from "cut to the bone" profit margins.
Reforms to parallel imporation restrictions, previously carried out on sales of compact discs, will see Australians more easily able to purchase wholesale software and books directly from overseas vendors, rather than through a controlled network of designated local distributors.
The Australian Competition and Consumer Commission (ACCC) maintains the reforms will see a long-term benefit to Australian purchasers of software due to increased competition.
It is believed that discussions surrounding the lifting of restrictions will kick off in parliament today, following a submission to cabinet from the Attorney-General Darryl Williams and Communications Minister Richard Alston.
Under current importation legislation, Macnamara argued, Australians are paying "the same if not less" for most software than their US counterparts.
He acknowledged that some CAD (computer aided design) software products cost more in Australia than in the US. However, only minimal savings could be made on the resale of these products as a result of the restriction lift because such low volumes of these products were sold in Australia, he said.
Furthermore, those CAD products typically required extensive support and customisation to comply with local standards, so would be rendered virtually useless if used directly as sold in the US, he said.
"Software requires local infrastructure and support, which music doesn't. If you further erode the margins available in the software industry, then large software companies are not necessarily going to be able to fund the development of local offices and local support.
"You'll have the Australian having to ring a US number for support." he warned.
"In two years' time, there's going to be a price war. And when you get a price war, you get no profit margin, therefore the weak ones collapse. Once the weak ones are gone, there's only usually a monopoly or a duopoly in the market so the consumer loses."
Macnamara believes the ACCC quoted only a few "selected" pricing figures to support its argument that Australians pay too much for software.
The BSAA conducted its own research, based on advertised pricing for the twenty highest selling software products, which showed Australians on average were paying the same, if not less than, Americans for software, Macnamara said.
"(The impending reform) suggests a lack of understanding of how software is different to other industries. I think the government is using out of date, or incorrect figures," Macnamara said.
The ACCC's director of public relations, Lin Enright, defended the commission, claiming the pricing figures it used to support its argument were gleaned from undisclosed "reputable industry sources."
The offices of Darryl Williams and Richard Alston would not return IDG's calls.