Australia; a consumer paradise?

Since I came to Australia in January 2009, I make a point to chat to cab drivers and check where they’re originally from. So it happened that I spoke to Afghan, Pakistan, Indian and Russian cab drivers who came to the island for different reasons, but all had one thing in common: they loved Australia and thought it was a very good country to live in. I can only agree. If you have a job it is probably one of the best places to live in the world – a paradise island.

Getting my life started in Australia, I wondered though if the laid back attitude, the nice weather, the lattés on the numerous terraces and all the great facilities available were numbing the Australian consumer to the high prices they pay for basic goods. I realised that although many companies on this island where monopolies, duopolies or something close to not ideal for the consumer, nobody was complaining about it. Now I don’t dislike monopolies for the sake of it, but I hate not having a choice and being ripped off on top of that. Furthermore, my background as an Operations Researcher and Supply Chain professional gives me goose bumps for the wrong reasons on a lack of efficiency and innovation.

It all started with getting a phone line. Living in an inner Melbourne suburb I could choose from exactly one option: Telstra. The biggest competitor Optus could not deliver this very basic service in my area, probably because of the massive network fee Telstra charges their competitors. Lazy as I am, to make things easy, I wanted my internet connection through the same provider. The shock came a month later when my first monthly internet bill was AUD$500. It seemed Telstra charges for both downloads and uploads, and my frequent usage of Skype didn’t help there! In their monopolist minds it had not appeared yet to Telstra that internet is more or less like a toilet. If you have a need you use it. 24-7, no exceptions, it’s just there waiting to be used. The service should be for the connection and the speed, not how often I use it.

Going shopping it makes you realise that Australia is the third densest retailing country in the world, Switzerland being number one. Coles and Woolworths control 70% of the packaged grocery market and that’s highly felt by your wallet once you pay your weekly shopping at the cashier. In walking distance in a densely populated suburb I have two major retail locations. In terms of supermarkets, I can choose between Coles and Coles! The Australians I see there don’t seem to wonder if they’re overcharged.

Now I’m looking to buy a house it appears to me that the big four banks, which are all backed by the government, can get away with interest rates up to 3% above the national Reserve Bank rate. The Australian public does not rebel at all. They finish their latté and cross the road to one of the nearest big four. Currently 90% of the new mortgages are now dealt through the four big banks. Some estimates say that it’s indirectly closer to 100%. Guess who’s laughing?

But change is coming. In telecommunications Telstra is being forced by the government to split its activities in wholesale and retail, preventing it from charging competitors unfair prices just because they can. It is widely expected and proven in many countries that this will increase competition and be a major benefit for the Australian consumer. In retail land Aldi just opened their 200th store and the American giant Costco just opened the doors in Melbourne. The Australian Competition and Consumer Commission struck a deal with Coles and Woolworths to end restrictive leases in shopping locations. This will open the door for other retailers like Aldi, who will aggressively expand. Hallelujah, we will have choice! And the big four banks? Well they probable stay the big four for a long time, but as consumer I start to see positive signs and look forward to Australia as a consumer paradise island.

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