ADJOURNMENT Apple Australia

ADJOURNMENT Apple Australia

Mr HUSIC (Chifley) (22:18): In February, during a debate on another matter in this place, I had reason to reflect on the Australian operations of Apple. At the time news reports revealed that after generating over $6 billion in revenue here, Apple paid only $40 million in tax—apparently because it racked up $5.5 billion in costs. Trying to get a breakdown of these costs is hard to track down and even harder to understand, considering it does no local product R&D or manufacture.

Following months of wrangling and the extraordinary issue of a summons, Apple Australia appeared before a hearing in March of the House of Representatives Standing Committee on Infrastructure and Communications which is inquiring into why there are major price differences in the cost of IT products compared to overseas. At the hearing I tried repeatedly to get answers as to how it sets prices. I quizzed Apple Australia’s Managing Director Tony King, for example, asking him:

So it would be an agreement between you and your Apple US parent in terms of obtaining hardware to sell here. iPads, iPhones, Macbooks are all purchased from your overseas parent?

He answered:

Correct. Apple Australia would purchase hardware and software from Apple overseas.

Just note the last few words and contrast those to the first concrete response to my question. He went on to say a number of other things including:

We have very robust and deep accounting systems in place to ensure that all of the revenues associated with doing business in Australia are fairly reported and all of the cost of sale in terms of the hardware, transformation costs and shipping costs are fairly reported …

And he went on:

Certainly at a global level we are setting consistent product costs for internal use around the world. Those are a function of a number of different things but I am not privy to the underlying details within the product costs.

Apple Australia also said:

We set our prices worldwide from Cupertino with input from the local team …

But the US Senate report says the price is determined by Apple Singapore, not the US. I am concerned the committee inquiry has been misled, either deliberately or accidently.

The corporate structure detailed in the US Senate report was never offered by Apple Australia and when pressed on its transfer pricing or price setting, I put it to the House that Apple deliberately avoided setting out the detail that became evident in the US Senate report. The only thing I agree with Apple Australia on is their statement that Apple:

… have very robust and deep accounting systems.

Given the global web of arrangements detailed in the US Senate report, that is the understatement of the year. I call on Apple Australia to either correct the record or provide further detail as to the way it actually prices its products for Australian consumers.