GST Wall of Shame

Spotted any price increases "hidden" by the rise in GST? We want to know.

We’re compiling a GST Wall of Shame featuring companies which seem to have taken the opportunity to increase their prices while we are all distracted by the GST change.

If you have noticed any increases that you think go above and beyond the October 1 tax hike – we’d like to hear from you.

If you can supply evidence, like a letter from a company, it would be a big help.

We will publish the significant increases on our Wall of Shame below.

Email your discoveries to feedback@consumer.org.nz.

Note: We are not putting the increased NZ Post or Wellington public transport charges on the GST wall as both were announced earlier in the year and subject to public debate at the time. Read more.

The Wall

What? A misleading price increase.

Who? A Curves Gym

Comment: Our member was given a guarantee when she joined Curves that prices would not increase, and asked if an increase from 1 October was legal. Yes it is. The GST law says even if there is a guarantee not to increase prices, contracts with a fixed price can be increased by the amount of any rise in GST.

The Curves newsletter our member received said "We are NOT increasing our membership prices but will charge $2.00 extra for the Government additional charges". We think this is misleading. The $2 extra is more than the GST increase required. 15% GST would increase the $59 monthly fees by $1.31, and a $69 "Curves Smart" membership by $1.53. 

As far as we know, only one Curves franchise put up its prices following the GST increase.

Curves response
Colin Truman, President, NZ Curves Owners Co-Op told us:
Curves businesses are independently owned and operated. Curves’ owners take their corporate and community responsibilities seriously. At the June 2010 meeting of the NZ Curves Owners Co-op it was accepted by owners that we were not going to raise our fees to reflect the change in GST.  Curves businesses also contribute to their communities with the Curves Food Drive and the current Breast Cancer Awareness promotion. The Curves business in question acted independently in reflecting the change in GST and does not represent the position of the rest of the Curves Owners. It is our understanding  the "$2.00 charge for the Government additional charges" has been stopped and members have been refunded.

Who? Woosh

How much? 1.3%

Comment: We've had a few emails regarding the price increases at Woosh. Like a few other companies on the wall Woosh have increased their prices for the new GST rates and then rounded up to "keep the pricing of our entire range of plans simple to understand". So a $59.95 plan has gone to $61.95, when the "unrounded" GST increase would be $61.25. We asked Woosh why it thinks $61.95 is a simpler number than $61.25 or even $61.30 but it has yet to reply.

Who? The Dominion Post

Comment: On Friday 1st October 2010 the Dominion Post published the following item on the front page.

"Dominion Post price rise.
We regret to advise that the GST increase from today has forced a rise in the price of The Dominion Post. The price of the weekday edition increases by 10c to $1.60. The cost of Saturday's paper, which includes the new-look Your Weekend magazine, rises by 10c to $2.60."

The Dominion Post can't raise the news-stand price by the three or seven cents that would be the real GST increase because we no longer have coins smaller than a 10c piece. However, the statement that it was “forced” to add ten cents by the rise in GST is misleading.

In a response to the Commerce Commission's formal warning on the matter Fairfax New Zealand Limited, owners of the Dompost, accepted the notice was "incorrectly worded". The ten cent increase of both editions also included the paper's annual price increase that had been delayed since June 2010.

Just like us, the Commerce Commission is on the lookout for businesses that are putting the blame for their price increases solely on GST rises.

"Consumers are entitled to expect accurate information when they buy goods and services. The Commission had earlier issued advice to businesses not to misrepresent the GST increase and it appears that message either did not get through or was ignored by some" said Graham Gill, Enforcement Manager for the Commission.

A number of members complained about the Dominion Post and also the Press and the Manawatu Standard, which are owned by Fairfax.

Who? Lotto

How much? 6.9%

Comment: James says his Lotto Powerball lucky dip tickets have gone up an extra 6.9%. Tickets that usually cost $11.00, $16.50 and $22.00 are now $12.00, $18.00 and $24.00.

The Lotteries Commission website says the increase in GST would have a significant impact on their profit and they have chosen to absorb all the increase into one game – Powerball – but they are increasing the jackpot prize pool by $1 million per draw to compensate. However - the odds of winning remain as long as ever. Good luck!

Prices for the first division pool tickets remain the same – so a $6 lucky dip stays at $6. The major prize is now capped at $1 million though it can jackpot. This is the ticket to buy to dodge the price increase, but you’ll still need lots of luck.

http://www.mylotto.co.nz/wps/wcm/myconnect/lotteries2/nzlotteries/Home/GSTchanges/

Who? Coffee places up and down the country

Comment: Dozens of you have sent us submissions dobbing in your local cafes for upping their prices more than they should on October 1.

The increases ran from an extra 2.8% (on top of the actual GST rise) for a latte, to 23% for a cup of tea. The average increase was 31c or 8.7% on top of the 15% rise. For some consumers, the increase is a bit on the nose as the price of coffee is being raised to subsidise the price of food staying the same.

However, there are other factors at play. For a while now a number of cafés have been absorbing the increase in world coffee prices (up almost 35% on last year)as well as the increase in milk costs, so they’ve used October 1st as the date to raise their prices accordingly.

The NZ Coffee Roasting Association has been advertising this change in prices since May and many cafes have literature instore to inform customers.

If your local coffee house has kept their prices to just the GST increase (no more than 10c a cup) or even the same, we'd love to hear about that too.

Who? Telecom Homeline rentals

How much? Up to $1.5 million

Comment: Ian complained that Telecom has rounded up the Homeline rental for Auckland customers by 25c a month. That might not sound like much of an increase (just 0.6% on top of the GST increase), but there are a lot of households in Auckland. If all 433,647 households (2006 Census) were Telecom Homeline customers, paying an extra 25c a month, that’s a pot worth $1,295,159.04 a year.

Telecom said it "may be rounding up or down to the nearest dollar. This will keep our pricing simple and easy to understand." So the old price of $42.80 was simple to understand, but a new price of $43.75 (adjusted for 15% GST) is difficult to understand and has to be rounded to an even $44.00?

Homeline prices in Wellington (04 calling areas) and Christchurch are also rounded up by 8c to $40. All up, at stake is a possible $1,562,864.40 annual bonus from line rentals. Telecom do round down a number of prices on smaller items, but not its broadband or home package charges.

Ian said "Overall, I expect this is stacked in Telecom's favour…"

Company response: Telecom is not increasing revenues through the October changes. While the GST increase obviously applies to all customers’ products and services, it is necessary for us to look at how it affects our pricing.
 
The result is that across our products, where it makes sense for current customers and for people thinking about joining Telecom and comparing our products with others, we are holding the price points for a large number of products, applying the GST increase directly or rounding up or down to simple price points.
 
We have put a lot of effort into explaining to our customers exactly how they are affected through public notices which ran in daily newspapers nationwide, letters and SMS messages – our communications began more than one month ago.
 
All our changes can also be able to be found online at www.telecom.co.nz/gstchanges.
 
The wall of shame reference does not align with what we have worked very hard to achieve for our customers across our range of products and services. Our teams are happy to provide any clarity or answer any questions regarding the changes.

Who? TelstraClear for pay per view programmes.

How much? 14.6%

View the TelstraClear letter

Comment: An increase from $5.95 to $6.95 for pay per view cable TV programmes appears in a letter that we think gives a long and confusing explanation of many prices that will change, and some that won't. TelstraClear says in the letter the pay-per-view increase is separate from GST, and that it is absorbing GST increases for some products, such as a TV magazine and additional TV decoder rental. Two price changes for PhoneLine and TV packages that increase by 9% are clearly shown in a small table. 

Company response: We take issue with Consumer NZ on this matter. TelstraClear has been open and upfront with our customers about any price increases that we have made separate to the GST changes. All of our customers were sent individual letters and updated rate sheets outlining how they would be affected.

To minimise the impact of the GST increase we have actually reduced the base price of a number of our services. For a few products, there have been price increases, as part of our standard ongoing market pricing review. Where this is the case, this has been clearly specified and set out separately in our customer communications.

Who? Wishbone in Wellington

How much? 12.1%

Comment: Ngaringa tells us yesterday a V energy drink cost $3.50. Today, it’s $4.00!

Who? Wilson Parking, Pipitea Marae

How much? 11.1%

Comment: Jo says Early Bird all day parking at a Wilson Parking Wellington car park has gone up from $15 to $17. The GST increase is on $15 is 33c.

View the Early Bird parking notice 

Company response: We have become aware of the above entry on your GST Wall of Shame website and are writing to set the record straight.
Wilson Parking frequently increase and decrease Earlybird Rates across NZ on a commercial basis and the abovementioned rate change was not a GST prompted change.

Although the change took place today at this one car park, the change was put through to discourage Earlybrid Parking since the Car Park was reaching capacity (and other Parkers within the facility were complaining at not being able to find a car park space on several occasions). 

No other Early Bird Rate increases have been put through across our car parks. In fact no GST related price increases are being put through any of our car parks for Casual Parking (Earlybird, Hourly, Night, and Weekend Parking) rather they are being absorbed.

Who? Subway

How much? 8%

Comment: Tom says the 'sub of the day' is up from $3.90 to $4.30. 

Company response: SUBWAY® NZ has implemented a new recommended price structure which has dropped the price of some products, increased others and maintained many at the same price. 

Examples of these changes from our menu include:

• Meatball SUBWAY Footlong® sub has decreased from $8.40 to $7.90
• Roast Beef SUBWAY 6-inch® sub has remained the same at $4.90
• Turkey & Ham SUBWAY 6-inch® sub has increased from $5.90 to $6.10

While our new recommended pricing structure coincides with the introduction of increased GST, the pricing changes are not solely related to the GST adjustment.  We intentionally delayed making any price adjustments for several months until October 1st to ensure a single change for our customers rather than multiple changes over many months. It was never our intention to use the GST rise as the sole explanation for price increases. This has been clearly communicated to customers in SUBWAY® stores.  Where our recommended prices have increased this reflects many factors relating to the cost of business including the GST increase. 

The Sub of the Day™ promotional price has increased by 40 cents on a SUBWAY 6-inch® sub and 10 cents on the SUBWAY Footlong® sub. This is the first price increase on this promotional product in almost three years.  The Sub of The Day still offers customers great value for money as it has always done.

Over the entire menu, the average SUBWAY 6-inch® sub price has roughly increased by 2.1% and SUBWAY Footlong® sub prices have increased by approximately 0.4%, excluding the promotional Sub of the Day™.

SUBWAY® restaurants appreciate our customers business and ongoing support.

 Notes

NZ Post announced a wide range of price increases for postage in July 2010. The increases included the GST increase and were set to take effect on October 1.

Metlink announced increases for all subsidised public transport in the Wellington region on 28 June. This included bus and train services in the Hutt Valley, Wellington, Kapiti and Wairarapa and Wellington harbour ferries. We see no attempt to hide the increases within the GST increase by NZ Post or Metlink, as these increases were announced three months in advance, and widely debated in the media at the time.

Consumer does not like these increases, but wishes to point out that there’s no law preventing  companies putting up prices at any time they choose.