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.