ADJOURNMENT Chifley Electorate: Pricing Discrimination

Mr HUSIC (Chifley—Government Whip) (19:26): As the House is aware, I have been speaking regularly on the issue of price discrimination as it affects Australian businesses and consumers of IT hardware and software. This is the fourth time I have raised this matter, either here or in the Main Committee. I think Australian consumers, especially younger consumers, and businesses are shouldering an unfair pricing burden. And the tech company justification for this practice has either been non-existent or flaky. On top of this, with the huge investment we as a government are putting in to the National Broadband Network, I think IT pricing discrimination could act as a barrier to consumers, businesses and families wanting to access a new broadband platform.

There is good reason for maintaining a focus on this issue. Consumers and businesses tell me they are well and truly tired of paying artificially inflated prices for IT products—anywhere between 60 and 80 per cent for software, for example—and they feel their concerns are being well and truly ignored. There is another reason I am so interested in this issue. It is about the competitiveness of Australian businesses, especially small businesses. IT price discrimination is holding back businesses competing with counterparts in other countries as they are competing against rivals that get a massive head start because they get their hardware and software much cheaper than our businesses do.

I give a quick example. I was contacted by David Barrett from a Melbourne based business called Famous By Tuesday which is engaged in post-production audiovisual work. Bear in mind, many of these types of firms compete both here and overseas for work, and their opportunity to do this will expand phenomenally with the rollout of the NBN and its significant upload speeds. Mr Barrett tells me that he uses a high-end editing system called Smoke, sold by Autodesk Canada and distributed through Digistor Australia. Last year, Mr Barrett was told he could purchase an upgrade of this software to a higher specification. The advertising noted the upgrade could be purchased for $25,000 with the caveat that US pricing applies and that, 'International prices may apply.' When Mr Barrett got the bill he was stunned to see that the package did not cost $25,000; it cost $37,000. This was a $12,000 difference at a time when the Australian dollar was valued at US94c—simply breathtaking.

The big tech companies tend to blame retailers or distributors, but I actually got an email from an IT sales and repair business in Sydney, which said:

I agree with you about Australian companies charging more than the parent companies in overseas locations for the same goods.

This is a constant gripe ... We are constantly getting told by customers what their buy prices are for the same goods purchased overseas...

…   …   …


...we are constantly sending this information thru to the sales managers and product managers at say Canon and HP here in Australia—Bugger All response—or some waffle about company confidential and trade practices act.

Worse still, this person told me that companies like his do not speak up on this because they believe they are placed in a disadvantage if they speak out because 'they'—major companies—'start playing favourites amongst their distribution channel and giving priority to some and cut out others'. If this is true, it is an exceptionally serious claim.

I have raised the pricing discrimination issue with the Parliamentary Secretary to the Treasurer and his office. I have had productive discussions with him and I am grateful that he has considered my previous request for a more detailed investigation into this matter. He advises that Treasury officials have met with the Productivity Commission to discuss issues related to price discrimination. The commission is now further examining this issue as it prepares to bring down the final draft of its review into the economic structure and performance of the Australian retail industry and, most importantly, the commission will welcome further submissions from the public on the impact of IT price discrimination on them, which can be emailed to retail@pc.gov.au

I am obviously delighted that the commission is prepared to take a really close look at this issue and, as much as this provides consumers and businesses with the chance to feed their issues directly to the Productivity Commission, I would also urge tech companies—who to date have been notoriously slow or reluctant to deal with this issue transparently and publicly—to also make a submission. These firms need to explain why they charge Australian consumers and businesses in a way that they would never dream of doing in their home markets.

According to Deloitte Access Economics the economic value of the internet to the Australian economy is currently worth about $50 billion or 3.6 per cent of GDP. It provides jobs to nearly 200,000 Australians, almost as much as mining. It generates $27 billion in productivity increases alone to business and government in the form of improvements in the way they work and provide services. The IT sector is absolutely critical to this nation and our future. Tackling pricing discrimination will help ensure we can boost the value of IT to the broader economy, businesses and households.
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Ed Husic MP
Federal Labor Member for Chifley


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