Published February 11, 2013
Three tech giants have been told to appear before an Australian parliamentary inquiry to explain their “high prices.”
The demand for Apple, Microsoft and Adobe to appear comes as MPs seek to understand why local consumers pay so much for their products, despite the strong Australian dollar.
Apple’s inclusion furthers a row between the world’s most valuable IT company and Australian politicians over corporate taxes paid on Apple’s operations. Apple executives were formally informed on Monday and told to appear in front a parliamentary committee in the capital, Canberra, on March 22.
The inquiry increases international pressure on U.S. multinationals, and follows on from bosses of Amazon, Starbucks and Google being quizzed by MPs in London over corporate tax avoidance structures.
‘Consumers and businesses have been trying to work out why they are paying so much more, particularly for software.’
– Australian Labor Government MP Ed Husic
“In what’s probably the first time anywhere in the world, these IT firms are now being summonsed by the Australian parliament to explain why they price their products so much higher in Australia compared to the United States,” the ruling Labor Government MP Ed Husic, who helped set up the committee, said.
High local prices and soaring cost-of-living bills for basic services are hurting the popularity of the minority Labor government ahead of a September 14 election.
The Labor party is widely tipped to lose, giving political momentum to the inquiry.
All three companies have so far declined to appear before the special committee set up in May last year to investigate possible price gouging on Australian hardware and software buyers.
The Australian dollar is currently above parity with the U.S. currency, at around A$1.03.
The currency has also strengthened significantly against Sterling, with £1 only buying A$1.53. One pound once bought around $2.80.
A 16GB Wi-Fi iPad produced by Apple with Retina display sells in Australia for A$539, $40 above the price in the U.S., despite the stronger local currency.
Microsoft’s latest versions of Office 365 Home Premium cost A$119 in Australia versus $99.99 in America.
IT firms and other multinationals have blamed high operating costs in Australia including high local wages and conditions, as well as import costs and the relatively small size of the retail market in the $1.5 trillion economy.
Failure to appear before the committee as ordered could leave all three firms open to contempt of parliament charges, fines or even jail terms.
“For some time consumers and businesses have been trying to work out why they are paying so much more, particularly for software, where if it’s downloaded there is no shipping or handling, or much of a labor cost,” Husic said.
Adobe and Microsoft have previously provided separate written statements and submissions to the inquiry, but executives have been reluctant to explain their pricing before a public inquiry.
“The companies have blamed each other for not appearing. One will say ‘we’re not going to appear if the other is not going to appear’. So we’ve cut straight to the chase and said we’ll just summons you,” Mr Husic said.