It's not easy being Kiwi

JOSH FAGAN
Last updated 05:00 24/08/2014
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Sales signs seem permanent fixtures in malls and high streets around New Zealand - but it seems the deals don't tell the whole story and we're still being ripped off.

From everyday items like bread and milk, to luxuries like running shoes and electronics - even building materials - price comparisons with other countries seem to demonstrate that Kiwis are being gouged at the checkout.

That's the claim of crusading new website Front Up, which checks products against overseas prices, adjusts them for exchange rates and GST, and then asks the company to front up by outlining the factors responsible for the price gap.

And it's a claim backed up by outgoing Fletcher Building and Woolworths chairman Ralph Waters who today tells the Sunday Star-Times Business section: "Let me say that you people pay in New Zealand prices that would not be tolerated in Australia."

Comparisons on Front Up show we are paying twice as much as Americans for the exact same pair of Nike runners and $180 more than the US for the latest Samsung Galaxy phone. Milk was available in the UK at $0.86 per litre compared to $1.70 per litre here; according to a 2012 report, plasterboard is 33 per cent cheaper in Australia; gaming fans fork out $100 more for their PlayStation 4 than their online buddies in the US; even a Starbucks grande latte costing $US3.55 in San Francisco and Detroit, or even for $4.30 in New York shows on their website as the equivalent of $US4.51 in Wellington.

"Why do we get shafted in New Zealand? Pretty much everything is considerably more expensive here than overseas," Front Up founder and manager of internet provider Slingshot Taryn Hamilton said.

"You don't kind of realise it until you start to analyse the price differences. Some of them are ridiculous.

"We're trying to give companies the benefit of the doubt - there may be a good reason for [the higher prices].

"It could be some sort of shipping charges, or government import duties or whatever, but it gives them the chance to be honest and open about it.

"If the consequence of that is that there is no good reason, hopefully that would force the companies to change their ways."

Price comparison research released by Victoria University earlier this year concluded Kiwis paid more than other OECD countries for a wide range of products.

Tradeable services, such as groceries, were higher than average, while construction and investment costs were noticeably more expensive than overseas, public finance professor Norman Gemmel said.

This was partly due to "on the border costs" - where foreign companies paid taxes and imports - and the scale of our economy, he said.

"Shipping costs might not be that important, because if you look at where lots of European goods and American goods come from - they're produced in Asia. The cost of moving it is not that different to sending it to New Zealand."

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Christchurch stock brokers Hamilton Hindin Greene director Grant Williamson suspected a range of explanations for the price discrepancies, but the most unpalatable was that companies felt they could charge Kiwis whatever they liked.

"We're a high-margin country because they know they can get away with it because we'll put up with it. People have wised up to the fact … I think there's a huge ill-sentiment that we think we're getting shafted by these huge companies."

Samsung has already responded to the request to Front Up over its Galaxy phone, noting in a statement its wholesale prices were comparable to those in other markets.

However, it said: "local retailers then need to factor in other costs. These include things like import duties, goods and services taxes, as well as installation and service policies, marketing promotions, competitiveness, retail channels and logistics."

- Sunday Star Times

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