Everything Australians Pay More For, And Why
We may be the land of plenty, but it comes at an increasingly stiff price.
What you need to know
- New online GST rules kick in from July 1
- Items bought from overseas websites will now carry a 10 percent tax
- In response, Amazon has cut off Australians' access to its global stores
- Why do Aussies pay more for everyday things, from alcohol to makeup to movie tickets?
The Government’s changes to online GST laws kick in on Sunday, meaning items bought from overseas websites and shipped to Australia will now burn a bigger hole in your pocket.
Until now, clothes, gadgets, books, DVDs, or anything else an Aussie desired but didn’t want to pay a premium for at a brick and mortar Australian shop was often available for deep discounts from US or UK websites -- and GST-free, as long as it cost less than $1000.
But now, those international retailers (as long as they produce an annual turnover of $75,000 or more) will be forced to slap a 10 percent tax on everything, just like Big W or Bunnings.
The change is meant to “level the playing field” for Aussie retailers, according Treasurer Scott Morrison, who “won’t apologise” for forcing multinationals to “pay their fair share of tax.”
The move has already meant e-commerce giant Amazon has ceased shipping its stock down under from its global stores, effectively cutting off Aussies’ access to millions of products. (Instead, the company is diverting all web traffic to its smaller Australian site.)
But just why is it so expensive to buy things in Australia in the first place? Why do Americans enjoy bargain-basement prices, while Australians always seem to pay hand-over-fist across the board?
Reasons may include the higher cost of doing business down under, companies paying workers a higher minimum wage, and our distance from the rest of the world, which incurs higher shipping costs.
The Economist's 2018 cost of living survey lists Sydney as 10th most expensive out of 133 global cities, beating New York, Tokyo, London, Chicago and Milan.
We may be the land of plenty, but it comes at an increasingly stiff price. Here are some of the everyday things you may be paying way more for than your cousins across the pond.
In Australia, a 24-pack of Corona sets you back $54.99.
In America, you can drop by your local bottlo and be sipping the same cerveza for just $32.13. Even with the exchange rate, you're well over $20 worse off as an Aussie.
And it's not just on imports. Even for domestic beer, you'll pay way more. In California, a six-pack of Coopers costs $11.99. In Australia, you'll fork over $18.99.
The answer is simple: tax, tax, tax.
On your average $47.99 case of beer, an incredible $16.49 is excise. On top of that, $4.36 is GST. So $20.85 of your purchase -- or a whopping 43 percent -- goes straight into the government's coffers.
And it's not getting any better either: the beer excise tax goes up every six months, which consequently increases the amount of GST you pay on top of it.
Compared to most of the world, Aussies are paying through the teeth.
Australian Brewers Association CEO Brett Heffernan told ten daily it's clear punters are "getting a raw deal."
"Australians pay over seven times more beer excise than Argentina, Belgium, Chile and Poland; over six times more than Austria, Hungary, the Netherlands and South Africa; almost five times more than Italy and Greece; double the beer excise paid in the US; and almost double that of New Zealand, "he said.
"The single most expensive ingredient in Australian beer is Australian Government tax."
Different taxation rates apply to wine, but it also carries a heavy markup, while liquor drinkers fare the worst, with spirits taxed at the highest rate. (In America, a 1L bottle of Jim Beam costs $25... in Australia, the same bottle sells for $47.90.)
The price of alcohol in Australia makes for a bitter brew to swallow.
The avocado smash truly became king of the cafe breakfast menu in about 2015, and it's been a hot and painful love affair, with hoards of toast-obsessed Aussies at the mercy of produce shortages and spiking fruit costs.
While prices have now stabalised at about $1.80 per fruit, the start of the year saw Australia plunged into the depths of a "Great Avocado Depression," with reports of avos costing up to $9 a pop, and cafes halving serving sizes or removing the trendy brekky from the menu altogether.
Meanwhile, in Sydney's Eastern suburbs, an avo smash averaged $18 a plate last year, and demographer Bernard Salt famously claimed he'd seen millennials happily cough up $22, possibly at the expense of a house deposit.
Avocado prices can swing dramatically, mainly due to supply and our ever increasing demand (Australians scarfed down 40,000 tonnes in 2007, today that number's more than doubled to 90,000 tonnes).
Australia's avos come almost entirely from Australian growers (only supplemented with crops from New Zealand) and not all domestic regions produce at the same time, with production gaps sometimes overlapping, helping to create an avocado shortfall. The summer holidays -- when the green treat is most coveted -- tend to be the lightest supply period, resulting in price spikes .
Through the first week of May this year, the average Hass avocado averaged $3.14 in Sydney and $2.76 across the country, according to data from Avocados Australia. Compared to data from Swiss firm UBS, which ranked the price of avocados across 11 global cities for 2018, Sydney's avos are the third most expensive, beaten only by Zurich and London, and cost more than those in New York, Paris, and Hong Kong.
"Avocado prices vary around the world, depending on supply, demand and production costs," Avocados Australia CEO John Tyas told ten daily.
"Here in Australia, we have high demand and our production costs are probably the highest in the world due to high labour costs that are based on a system that provides for a living wage. This is not always the case in some other markets," he said.
But there's good news on the horizon -- domestic production is expected to nearly double by 2025, and as more and more trees go into the ground, prices will inevitably be driven lower.
In 2012, after years of price gouging by the big tech companies on consumer electronics, the Australian government launched an inquiry into IT pricing, to find out why Aussies were being slugged an average of 50 percent more on phones, computers, games and gadgets than customers overseas.
After a comparing some 500 products, the year-long inquiry found an average 66 percent markup on Microsoft software, a 42 percent markup on Adobe software, an 84 percent markup on games, a 52 percent markup on music, a 46 percent markup on computer hardware, and a 16 percent markup on ebooks, simply by virtue of the goods being sold in Australia.
The sky-high prices could not be explained by the higher cost of doing business down under, the committee found, particularly when it came to digital downloads. It seemed companies were slugging Australians extra, simply because they could.
"Consumers are clearly perplexed, frustrated and angered by the experience of paying higher prices for IT products than consumers in comparable countries," committee chair MP Nick Champion said in the report, adding tech lovers even refer to the price gouge as "the Australia tax."
The inquiry recognised companies have a right to set their own prices as they see fit, but it did make several recommendations about what government could do to ease Aussies' pocket pain.
So has anything really changed?
Today, a quick online price comparison reveals a Microsoft Office 365 yearly software subscription costs $129 for the Home edition. In America, the same download costs -- gasp --$135.22.
An Adobe Creative Cloud 'All Apps' yearly software subscription costs $871.07. In America, the same download costs $811.40, a difference of just seven percent.
Apple fans are slightly worse off -- your basic MacBook straight from the company will set you back $1899, while in America, the same model is $1751, a difference of eight percent.
Games may be having a bit more trouble bridging the gap -- a hard copy of Legend of Zelda: Breath of the Wild for the Nintendo Switch at EB Games is $89.95, while at Walmart it's $74.35, or 15.6 percent less.
But listing off a number of products, including the Microsoft Surface Pro and the Xbox One console which can actually be found more cheaply in Australia than in the US, Harvey Norman Executive Chairman Gerry Harvey said Australians are much better off now than they were six years ago, and on an even keel with tech lovers in America.
He puts much of the 2012 price differences down to factors in currency.
"The US dollar and our dollar at the time were around parity, now it's nothing like that," he told ten daily. "
"There's been a lot of work done with the Australian arms of these companies, and with Australians generally, to be as competitive as possible. Over the last 50 years, companies, when they're exporting, take advantage of the currency. With our dollar right now [worth less], products are cheaper."
But former editor of CNET, Seamus Byrne, doesn't think the overall change has been significant, and said the new changes to online GST don't help.
"I don't think things have gotten much better, overall, but I would say that the recent government decisions to start enforcing GST on all overseas purchases is a step backward," he told ten daily.
"One of the major recommendations of [the 2012] pricing inquiry was to reduce artificial barriers to consumer imports to ensure consumers could always get the best price possible. That would force improved local pricing.
"With the shutdown of global Amazon over GST (as vindictive as the move may be), it's a big lose for consumers," he said.
Looking good may be hard work, but in Australia, it also takes cold hard cash. Cosmetics have some of the highest markups of any goods on Australian store shelves, and consumers often pay twice as much or more than they would overseas.
A quick online price comparison of Maybelline 'Lash Sensational' mascara shows Australians pay 133 percent more ($21.95 vs $9.41) for the exact same product at a US store.
Good thing it's waterproof.
From foundations to concealers, eye pencils to eye shadows, blush to bronzers, it's the same story, as well as with high-end department store makeup.
MAC's 'Studio Fix Powder Plus Foundation' at Myer will set you back $54.00, at America's Macy's, it's $40.69 or 24 percent less.
Myer declined to comment on the price difference, saying it would be best for suppliers to speak about their recommended retail prices and how they differ from global pricing. As of publication, Estee Lauder Companies Australia, of which MAC Cosmetics is a brand, has not replied to request for comment.
Import duties, shipping costs, higher staff wages, retailer margins, difference in competition across global markets, and international price discrimination may be factors at play -- but when it comes down to it, Australians are copping it in the hip pocket.
These days, you're no longer a cheap date if you take your guy or gal to the movies. Two tickets (plus popcorn, drinks and Choc-tops) will set you back a pretty penny... then add in Imax, 3D and Gold Class, and you're pushing a couple of Pineapples.
Meanwhile in America, the average movie ticket price comes in at $12.13, according to the National Association of Theatre Owners. Comparatively, in Australia last year, the average price was $14.13.
It's not a massive gap, but that's still two extra dollars you could be spending on Maltesers. And for your typical evening session in a capital city, the ticket price is much higher, averaging more than $20.50.
In fact ticket prices have been steadily increasing over the past 10 years, up an incredible 26 percent from 2007.
But President of Independent Cinemas Australia Scott Seddon said the rise in price is almost entirely due to a corresponding rise in inflation, also up 26 percent since 2007. Additionally, he said, the roll-out of premium class cinemas has also caused ticket prices to climb.
On the other hand, he said, in some areas, movie ticket prices have actually dropped due to industry competition.
"There are a number of markets where major exhibitors [cinemas] have set up price wars making tickets artificially lower," Seddon said.
"South East Queensland is one such area. Where my cinema is located in the Newcastle area, when I took over the cinema in 2007 tickets were $12.50. Now, 11 years later, they are $10."
Even so, several global cost of living surveys list Australia in the top-10 most expensive places to go see a movie.
Forget Hereditary, the bite taken out of your wallet is its own horror show.