MP claims IT report falls short

THAT'S RICH: Clare Curran says government hasn't taken IT price gouging seriously.

THAT'S RICH: Clare Curran says government hasn't taken IT price gouging seriously.

Concerns that New Zealanders and Australians are paying over the odds for software, digital entertainment and computer gadgets are back under the spotlight.

Labour has accused the Ministry of Business, Innovation and Employment (Mobie) of failing to produce a report on IT pricing that was ordered by the Commerce select committee as multinationals and consumer groups traded fresh blows in Australia.

The Commerce select committee ordered the briefing paper last August, amid claims Kiwis were being ripped off for software, music downloads, games, other digital products and computer equipment.

Labour MP Clare Curran said the report, which was delivered on Thursday, amounted to a one-page letter from Commerce Minister Craig Foss and Communications Minister Amy Adams summarising discussions they had with Microsoft, Apple, IBM and Adobe late last year, rather than an independent report from officials.

"It appears the ministry has not done what it was asked to do," she said. "It shows there is either a disregard for the committee's wishes, or they are being given instructions from higher up."

The committee's interest was originally sparked by what was dubbed the "IT price gouging inquiry", ordered by Australia's previous Labor government. It found Australian consumers and businesses were commonly paying 50 per cent more than technology multinationals charged in the United States for the same products.

Outrage was stoked across the Tasman when executives from Apple, Microsoft and Adobe had to be subpoenaed before they would appear in front of the House of Representatives' standing committee which ran the inquiry.

Green MP Gareth Hughes claimed in August that 100 common hardware and software products cost, on average, 46 per cent more in New Zealand than in the US. Microsoft Office 365 cost $165, versus $124 in the US, and Apple iMac computers could be $500 more expensive, he said.

Foss said he believed pricing was heading in the right direction. "When you scratch away at some of the price comparisons you see, some are not as robust as they first appear. By and large with regard to ‘weightless' goods and services, we are seeing a convergence between New Zealand and international pricing."

The launch of all-you-can-eat streaming music services such as Spotify and Rdio, the announcement of subscription video-on-demand television services by Sky Television and Telecom, and the movement of software to the cloud were all positive developments, he said.

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US software-maker Adobe, which had been under the gun in Australia, said it brought the prices of its cloud-based software in Australia and New Zealand into line with its global pricing in February last year.

Curran questioned how the Government could know the problem was going away, given the ministry "had not done the work" she believed the committee had ordered. "If the ministers have only gone and spoken to the big players, how are they going to get a perspective on consumers' experiences?"

The row between consumer groups and technology multinationals in Australia flared up again after the Australian coalition government kicked off its first major review of competition law in 20 years.

An April consultation document drafted by the federal government drew attention to the findings of the IT price-gouging inquiry and questioned whether there might be a case to "regulate international price discrimination".

The Australian Information Industry Association (AIIA) said in response this month that such regulation would breach Australia's international treaty obligations and could cause foreign suppliers to abandon the Australian market.

The association said there were good reasons why firms charged different prices in different countries and even targeting "unjustified international price discrimination" would be a red-tape nightmare that could weaken rather than increase competition. "In a free market economy the ‘remedy' for unjustified or excessive pricing is competition, not regulation," it said.

The Australian Computer Society responded last week, saying the AIIA's claims didn't hold water.

"If we continue to be gouged compared to our overseas counterparts, innovation will be hindered, digital literacy will fall and we will be left behind in the march to a digital future," society president Alan Patterson said. "This will impact businesses large and small and could conceivably cost jobs, as digitally skilled workers become harder to find."

Foss said the society's concerns were valid and the New Zealand government was keeping a watching brief on the "very wide and far-reaching" review of competition law in Australia.

But he said New Zealand's software and gaming industries were performing well and queried whether regulation of price discrimination was realistic. "If you think about that, how on earth would you achieve it?"

Curran said Labour did not have the answers because it did not have the information. "I would have thought the ministry would be providing us with an independent report," she said.


The average mark-ups over US pricing reported by the Australian House of Representatives in July. Labour said it had expected Mobie to check whether similar mark-ups applied in New Zealand, but a report the ministry delivered on Thursday fell short. Professional software: 50 per cent. Computer hardware: 46 per cent. Digital music: 52 per cent. Computer games: 84 per cent. E-books: 16 per cent.

 - Sunday Star Times


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