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Parallel politics: Gerry Harvey, imports and taxes

Oligopoly screwing oligopoly redux ends 2011

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There’s a curious symmetry about how 2011 is ending: once again, retailer Gerry Harvey is complaining about GST inequities for online shopping, just as he was at the beginning of the year. Once again, Harvey is distracting attention away from vendor price-setting, just as he was at the beginning of the year.

However, as the year ends and the cozy cartels of "exclusive distribution" and "recommended retail price" unravel a little futher, Harvey is joining competitors Kogan and JB HiFi in the discount game, unveiling a direct import site that is taking orders for console games through Harvey Norman Ireland at prices that reflect a heavy discount compared to “official” Australian prices.

Curiously, Harvey seems to have some kind of special status among Australia’s press, with none of the metro news operations hanging the “grey market” tag on the retailer.

The Harvey Norman direct imports http://www.harveynormandirectimport.com/ site, a domain that was only registered on December 16, went live on Thursday December 22 (Sydney time) and, to pick a couple of titles, is offering Skyrim at $AU59, Assassins Creed: Revelations at $AU55, and Deus Ex: Human Revolution for $AU26.

Games are sold subject to a flat delivery fee of $3.95.

Harvey has been clear about the price differences, telling shoppers that if they buy in his stores, they will pay more – but attributing the difference to government tax policy.

He told the ABC Radio program AM that he has no choice: “I understand why consumers want to get a cheap deal – I do too. So if that’s the way [customers] want to play the game, I’ve got no choice.”

Harvey also notes that retail is a large employer, saying that if “three or four hundred thousand jobs drop out of retail, you drop a million people out of work” around the country.

However, in attributing the price gap solely to Australia’s GST (Goods and Services Tax) rules, Harvey seems once again to be indulging in political distraction. Harvey correctly notes that the GST is not collected on imports under $AU1,000 – not because the tax isn’t legally due on those purchases, but because Australia’s customs agency has determined an arbitrary cut-off below which it would cost more to collect than the GST would return.

But the GST’s impact on purchase price is limited.

Take Assassins Creed: Revelations, which sells at local competitor EB Games for $AU88: there is no way that the $AU8 GST component accounts for the gap between the local bricks-and-mortar price and the direct import price.

As The Register has repeatedly asserted during 2011, vendors’ pricing policies remain the turd in the teacup: with tightly-controlled local channels and an intransigent attitude, vendors milk those markets historically prepared to pay more, and are refusing to adjust to a new reality in which the Internet allows people not only to envy the prices offered to other territories – but to take advantage of them.

In turning his guns – again – on the government, Harvey is distracting attention from the vendors, which is a pity. The more the vendors are made to wear the odium for price-setting, anti-competitive behaviour and geographic price discrimination (many of which would be illegal if they were conducted on Australian shores), the better it would be for everyone, including local retailers.

And some of those local retailers are Gerry Harvey’s own franchisees. ®

Bootnote: If anyone likes finding potential “gotchas” in terms and conditions, the Harvey Norman Direct Imports T&Cs are worth a look. If any customs busybody does decide to inspect your package, it’s not subject only to Australian taxes – Ireland and the UK could also decide to take a slice.

Customs might also decide that the international version of the game needs to pop off to the classification board, to make sure you’re not trying to circumvent the censor. It’ll probably never happen, right? ®

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