ACCC, competition and costs

The first thing a Malaysian usually notices when he/she settles here is how expensive everything is except for cars, compared to Malaysia. One also tends to forget that the salary one earns here is also very "expensive" by International standards.

The two main reasons which I speculate for the high costs are:

i) Real estate prices
ii) Low volume due to small population size

Real estate prices determine a lot of costs in our lives. It determines our of our main cost to our household income; either in the form of rents or home mortgage repayments.

For businesses, it determines one of the main elements of its cost structure especially if the business is in retailing e.g. a shop lot in a shopping mall. This is probably a key reason why many top brands are only deciding to set foot in Australia after setting up shop in other parts of the world e.g. H&M only set up shop recently with UniQlo following very soon.

The low volume due to the size of Australia's population is also a major cause for how expensive things are here. Contrast this to the price of goods in USA which has nearly 15 times of Australia's population. Due to this, it is not uncommon for many international brands to price their goods much higher to compensate for the lower economies of scale. Just walk into Ikea and see the difference in prices for identical products in Malaysia.

However despite the high prices here, the Australian Competition and Consumer Commission (ACCC) enforces a law designed to ensure fair competition within the marketplace. Several examples of how the ACCC function can be seen as follows:

i) Car brands cannot compel or force new car buyers to service their cars with the authorised reseller; i.e. one can service their car anywhere without voiding their new car warranty (with certain conditions)
ii) One can cancel an insurance policy at anytime and obtain partial refund for unexpired period without significant or no penalties (there is also a cooling off  period of 30 days when buying a new policy)
iii) All phone numbers including land lines are portable i.e. subscribers can move phone carriers and keep their existing phone number

Which brings me to my recent experience with the world of switching.

I joined a free online campaign called "One Big Switch" who were looking for members to bring down prices of home and contents insurance policy. They attempt to bring collective buying power back to consumers by negotiating on behalf of its online members with major insurance underwriters.

The campaign eventually managed to secure the service of one insurance company, and then within a certain period of time, allows member subscribers the option to seek a quote and secure the new insurance policy if they feel that the savings is substantial and the insurance coverage is comparable. I was shocked to find out that I saved about 1/3 of my insurance premium by switching under this campaign.

The moral of the story, there is no longer customer nor brand loyalty...shop and swap around. It is the way how businesses are conducted and, the ACCC is here to ensure we are able to continuously seek and shop for the best deal.