Electronic Conveyancing - An update from Mr Madden

29 May 2007 Public Accounts and Estimates Committee 13

Mr RICH-PHILLIPS - I would like to ask you about the funding for the electronic conveyancing system — firstly, about the contradiction in the information contained in the budget overview which refers to the funding being provided, $6 million over four years, and budget paper 3, which refers to the funding being provided in one year, being the 07–08 year.
The CHAIR — What page is this?
Mr RICH-PHILLIPS — That is page 333. Can you just clarify, please, which is correct — the overview or the budget paper? Is it one year or is it four years?
Mr MADDEN — I am informed that it is over one year.
Mr RICH-PHILLIPS — I understand that is $6 million in addition to $24 million that was provided for the land exchange program. Can you tell the committee how that existing money has been expended in setting up this electronic conveyancing system and how the additional $6 million was spent?
Mr MADDEN — I might ask Peter Harris, secretary of the department, to reply to that. I would ask, Chair, that if there are any supplementary questions that they come through me so that I can respond.
The CHAIR — That is fine. They always do, Minister; don’t worry.
Mr HARRIS — In answer to the basic question for the committee’s benefit, the electronic conveyancing project has proved to be very successful and has met its technical milestones for being deliverable. If I could just ensure that it is in everybody’s mind that this electronic exchange will effectively replace the exchange that might occur otherwise, which would be managed by conveyancers. So when cheques are handed over and titles are provided as a result of a property transaction, this will now be able to occur electronically, with a significant estimated saving for every property transaction of the order of $300 or $400 on average.
It is quite an important piece of technological development for the property industry. It has substantial application outside Victoria — it is potentially a national system — and it has generated quite a lot of interest from the kind of institutions that are involved in electronic conveyancing. In terms of the funding, the project was supplied with funding on an incremental basis, and it has built up by cost over time according to its success. So having met each of its individual technical milestones, this last segment of funding approved by the government budget for this year will ensure that in effect this system is available in Victoria. I believe — I might look across at my adviser at this point — it will be available in the early part of 2008, if not earlier than that.
Ms OVERELL — Yes; the middle of 2008.
Mr HARRIS — Certainly it will be completed in the coming year. Those savings will then flow on to institutions and obviously on behalf of purchasers who care to use the electronic system. The paper-based system will nevertheless remain available for those who do not want to take advantage of that, and there undoubtedly will be some reasons determined by the individual institutions — banks and the like — as to whether or not they choose to go down this path. But we think the savings are very attractive, and the project is therefore likely to be considered quite a success.
Mr RICH-PHILLIPS — I understand the project has been on trial since 2005 and that there have been a couple of trials. I am curious as to why the extra $6 million is required now, if the project is already to a trial stage.
Mr MADDEN — First of all, in terms of the development of this, I understand that it has been ongoing for some time. This is the sort of technology you do not just do on your own. I also understand that you have got to bring people along with you, particularly if you are relying on many of the large financial institutions. I understand that financial institutions such as Westpac, ANZ, Commonwealth Bank, National Australia Bank, Macquarie Bank and Bendigo Bank are already using the mortgage transaction as part of their electronic conveyancing systems, so it is important that those sorts of stakeholders have confidence in the product and that when the extension of that is fully operating, people can feel completely confident about that.
Mr RICH-PHILLIPS — Are there concerns now?
Mr MADDEN — Let us also appreciate that this puts Victoria at the forefront of other Australian states and that in actual fact it is a world leader in terms of financial property settlement and lodgement of land transfers and mortgages. This is groundbreaking, and in terms of the intellectual property that goes with this we will see countries from around the world wanting to replicate what we are doing here in this state. I am not sure whether you have any more comments, Peter, in relation to any of those matters.
Mr RICH-PHILLIPS — You mentioned the banks that are trialling the system now. Have there been any problems in the trial? Have they expressed any concerns with the system that is currently running?
Mr MADDEN — My understanding is that those financial institutions are currently using the system and at this point it appears that they are very supportive of it, so I think all the indications are very supportive, But, of course, I suppose you have to trial these things before you roll them out completely, and that is just the cautious nature of how you would manage something that could have quite profound change and significant implications for the operation of any organisation. As I said, one of the great elements of this is that what we will see — I do not know if you are aware of the way in which they exchange titles and mortgages and all sorts of things at the last minute. Everyone has to come together at the last minute and often you have four parties involved, sitting around the table, and they all have to find a place to meet, and what you do not want is a glitch at the last minute because not only does it stop that transaction, but because there are a lot of linked transactions often for similar times of the day, people sell one property, purchase, and try to combine the dates so that they are not having to use different forms of credit. So it is important that the operation of this is absolutely sound, and no doubt you would not have the banks supportive of it if they did not feel confident about it, and we would expect that when they take it on board fully, it will be a world leader.
The CHAIR — Our family had a transaction last week and it went through very smoothly. In fact it was a day or so ahead of what they originally expected, so I am very grateful for the new system. (BH - what new system is he referring to????? he's getting ahead of himself here)

PUBLIC ACCOUNTS AND ESTIMATES COMMITTEE
Inquiry into budget estimates 2007–08
Melbourne — 29 May 2007

Gordon Rich-Phillips
Party: Liberal Party
House: Legislative Council
Member Public Accounts and Estimates Cttee since 1999.

Justin Madden
Party: Australian Labor Party
House: Legislative Council
Portfolio/Position: Minister for Planning

Ms Genevieve Overell,
General Manager, Office of Planning and Urban Design, Department of Sustainability and Environment

Mr Peter Harris,
Secretary of the Department of Sustainability and Environment;

Mr Bob. Stensholt
Party: Australian Labor Party
Chair, Public Accounts and Estimates Cttee since 2007.

Commsec - 1 million clients

Thirteen years ago, CommSec — or Commonwealth Securities to give it its full name — was a dream in the minds of a clutch of the bank's executives. What would have been the odds of the lumbering Commonwealth Bank launching a stockbroking business that, little more than a decade later, would book more trades on the stock exchange than anyone else?

But a bunch of bankers, used to the bureaucratic ways of the Commonwealth, slipped under the guard of the stockbroking establishment and built a business that now boasts close to 1.5 million accounts, or about a million customers. Its clients have either deserted high-charging established firms or they're new investors who feel comfortable doing their own transactions at a fraction of the rates charged by the big broking firms.

CommSec general manager Matthew Comyn says his full-service broking rivals "tend to look after their most valuable clients but if you're not getting much service and you're paying $100 a trade, and research is more or less freely available from a lot of different sources, then paying $19.95 a trade with us is a fairly easy decision for a lot of people."

Source The Age - Christopher Webb

Full Article Link

seek.com.au 2007 results

Online job advertiser Seek has reported 62.8 per cent net profit increase and remains confident of future employment conditions and growth prospects.

For the year ended June 30, 2007, net profit increased to $55.5 million from $34.1 million.

Sales revenue jumped to $157 million from $106.2 million.

Earnings before interest, tax, depreciation and amortisation were up to $80.3 million from $49 million.

"We have continued to enjoy strong growth over the past 12 months and have increased our market leadership position," joint chief executive Paul Bassat said.

"SEEK continues to lead the market in unaided awareness, ad volumes, unique browsers and market reach."

Mr Bassat said a "structural shift" was taking place in the Australian classifieds market, and it was likely to follow the US, where 38 per cent of employment advertising is online.

That compared with Australia's 23 per cent and underpinned the rosy outlook.

"Growth opportunities are still evident in the SME (small and medium enterprise) market and a focus on customer acquisition and retention is central to our growth strategy for the year ahead," he said.

"Increasing our market penetration in QLD, SA and WA as well as the Government and Healthcare sectors are also high on our agenda.

Source The Age

realestate.com.au 2007 results

Online company Real.estate.com.au Ltd has booked an 83.2 per cent increase annual profit and says it is looking for opportunities to enter new markets.

The property search website operator made a net profit of $15.06 million for fiscal 2007, up from $8.2 million in the previous year.

Revenue rose 77.4 per cent to $107.97 million, on the back of organic growth.

"In the coming year we will continue to improve our existing operations while looking for opportunities to enter new markets," chief executive and managing director Simon Baker said.

The main Australian operations delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of $39.13 million, up from $21.14 million, as the margin improved to 45 per cent from 38 per cent.

The United Kingdom operation made an EBITDA loss of $8.18 million in the year ended June 30, compared to a loss of $2.96 million.

But the company's new businesses in Italy and Luxembourg were profitable with EBITDA margins of seven per cent and nine per cent, respectively.

Mr Baker said the company's flagship Australian site, realestate.com.au, continued to gain market share.

In June, it had 100 per cent more unique browsers than the country's second site, domain.com.au, according to Nielsen/NetRatings.

Overall, 7.14 million people visited the websites owned and operated by the group, which was up 44 per cent than in June 2006.

In July, that number rose to 7.6 million.

The number of real estate agent subscribers increased by 59 per cent over the year to 17,011, from 10,713.

Agents are the company's core customers and agent subscriptions are a key performance and revenue driver.

Property listings rose 84 per cent to 1.083 million in June, from a year ago.

In February, Mr Baker said real estate agents were beginning to question the value of traditional media for property listings.

He said that realestate.com.au was significantly cheaper than print media alternatives and had an average revenue per listing per month of between $15 and $20.

The company did not declare a final dividend.

The group operates a stable of global websites including realestate.com.au, property.com.au, homesite.com.au, realcommercial.com.au and propertylook.com.au.

Source The Age

Living in the 70s

In the mid 80s I worked for a merchant bank that traded bills and bonds. Screen trading was relatively new. Before screen trading, the market for bills, bonds and cash was traders ringing around the market place with their peers to conduct a trade, are you a seller or a buyer, and at what price and quantity? It was less than perfect market. It was also conducted in a certain time frame. All day trading was halted around 11am or it was a case of forward trading. The primary reason for the limited time frame for trading was the necessity to physically settle all trades same day. Settlements were done in the afternoon after bank cheques were drawn (for tens of millions) and you had drawn up your round for physically exchanging bank cheques and securities. Then you got on your bike (or tram) and went from one bank to another settling the trades.

Two changes to the market took place in the mid to late eighties. One, the introduction of screen trading. Two, Austraclear introduced electronic settlements of fixed interest products. In 2006, SFE Austraclear has an inventory of over $600 Billion in securities and trades over $30B daily. The new ASX Austraclear System simplifies settlement complexities and enhances straight-through-processing (STP), office integration and cross border opportunities to facilitate the registering, bookkeeping, clearing and settlement of a broader range of derivative, security and cash asset classes. (source ASX)



The property market - in a nutshell "we" seem to be stuck in the 1970s.

It is an obvious thing to say that "we" need to emulate systems like Austraclear and CHESS. Our current settlement systems for property conveyancing and mortgage processing are hapless. And the efforts of the Land Registries, Revenue Offices, Financial Institutions and Law Societies to bring about the necessary changes on a national basis seems to have been reduced to a morass or quagmire.

First to bring about change "we" don't need big bang changes. What "we" need to do is start to solve the communication quandries between the parties to the settlements chain. With a concerted commitment and co-operation by the Financial Institutions this could be solved quite easily.