Plan to cut red tape on housing

THE Federal Government plans to increase the pressure on the states to cut back the regulatory red tape for new homeowners, with plans under way to develop electronic settlement systems.

Finance Minister Lindsay Tanner has told BusinessDay, in a new weekly blog, that online settlement was being examined by each of the state governments.

The issue will be part of the Council of Australian Governments agenda when the state leaders and the Prime Minister meet in Sydney on Thursday.

Mr Tanner said the Federal Government was keen to make it easier to settle housing purchases, with the current system burdensome and adding unnecessarily to the overall costs.

"Some state governments have been working on this problem for some time, but there's still a way to go," Mr Tanner writes on BusinessDay today.

"And the big risk is that we'll end up with different systems in different states. If you're NAB or Westpac, having to run six or eight different electronic conveyancing systems would be a nightmare. And the ordinary home buyer would foot the bill."

The plan would allow online settlement but the mechanics of lodging documents are still being examined. "It's not as simple as it seems though. Victoria has invested a lot in developing software, which it naturally wants the other states to adopt. There's no guarantee they'll agree as work still needs to be done to determine whether it is suitable to roll out nationally," he says.

Mr Tanner joins the deputy opposition leader, Julie Bishop, from today as exclusive online columnists for Fairfax's BusinessDay.

The blogs will be available from midday and the two political opponents will alternate their commentary each Monday and Tuesday.

After today, Mr Tanner will write next Monday and Ms Bishop next Tuesday, before rotating each week.

In her first blog, Ms Bishop said she felt Australians were becoming too focused on the role of government and had ignored the influence they had as consumers.

The commentary from both sides of politics will be available on http://www.businessday.com.au.

Scott Murdoch

June 30, 2008

The Age

ECV gets a spray in Parliament

Land Victoria - Electronic conveyancing

Mr D. DAVIS (Southern Metropolitan) — Today I want to draw to the house’s attention the ongoing concern that the opposition and many in the community have about the government’s electronic conveyancing system.

This electronic conveyancing system is a project the government has been attempting to bring into operation since about 2000. Despite having spent $40 million on this white elephant, the government has had only a single transaction put through the conveyancing system.

Some months ago we heard in this chamber from the Minister for Environment and Climate Change that there were to be increased charges for paper transactions — in effect to drive people towards the electronic transactions of the electronic conveyancing system. The only thing is that the government did not get its consultation right; it did not get its details right. This lemon of a system is not wanted around Australia. The banks and lawyers want a national system that will fit in with what the banks do nationally. They do not want six state systems and two territory systems; they want one proper national system. And that system is not the Victorian system — a system that is based on old technology and that has had $40 million pumped into it but has delivered just one single transaction over the last six years.

I have to say, ‘What a lemon’. This minister, Minister Jennings, and his predecessors, former Deputy Premier Mr Thwaites, a former Minister for Environment and Conservation, Ms Garbutt, and others, have not delivered for Victorians. Victorians should be angry about the waste of public money. The money should have been spent on services —

— The PRESIDENT — Order! The member’s time has expired.

LEGISLATIVE COUNCIL - HANSARD

Wednesday, 25 June 2008

Torrens South Australia Real Property Act 1858 No. 15

Agents fume over realestate.com.au glitch

An embarrassing technical glitch in realestate.com.au's email servers meant real-estate agents did not receive queries from prospective home buyers for up to two months.

The glitch was discovered on Thursday last week after agents received a slew of email queries from realestate.com.au that were up to eight weeks old.

Real Estate Australia (REA) CEO Simon Baker said the glitch delayed 16.6 per cent of all email leads.

Agents, who pay about $650 a month to have realestate.com.au connect them with home buyers, are furious and baffled as to how such a seemingly basic error at a high-tech internet company could go unnoticed for so long.

The delays meant many leads were lost and agents complained of damage to their reputations caused by the significant delays in following up queries.

"The print analogy would be like me giving money to the print media for a full-page ad and the ad not appearing. What's the compensation?" said Craig Pontey, director of Ray White Double Bay.

Mr Baker, who admits that this is the most serious issue to affect the company in its 11 years of operation, explained that it was created when the company upgraded its email servers, a process that began eight weeks ago.

"During that process there was a bug which meant that some emails, not all by any stretch of the imagination, were being stored but not delivered to agents and thus, when we identified the issue, we immediately sent them on to the agents," he said.

Robert Simeon, director of Richardson & Wrench Mosman, said he and other agents began receiving bulk loads of email queries from realestate.com.au late on Thursday afternoon.

REA first notified agents of the glitch via email late the next day, but Mr Simeon said this was too late as his staff had already contacted the buyers, unaware that the queries were months old.

"The gross incompetency by REA in this entire matter then resonates throughout all the agents because we're the ones left to contact these people about their online inquiry, which was made months previously and remains unanswered until now," he said.

"This is like forgetting to put the postage stamp on the envelope ... it's fundamentally that simple."

Mr Baker said realestate.com.au had since contacted buyers whose queries were delayed and told them of the glitch so as to protect the reputations of the agents, but Mr Pontey questioned whether this was true.

Both Mr Simeon and Mr Pontey were certain that REA discovered the glitch only after being alerted to it by agents late last week.

REA, which is yet to provide agents with any compensation, said it identified the issue on its own while performing more mail server upgrades last week.

"I don't know how many sales it may have cost me - it might have cost me no sales at all but it certainly cost me reputation in my business getting back to these people quickly," Mr Pontey said.

"They [buyers] just think that the agents don't care and in this market buyers are gold; they need to be treated with respect."

Asher Moses | The Age | 25 June 2008

The Age owned by Fairfax owns domain.com.au #2 in online real estate

US banking system is doomed

David Hirst
June 25, 2008
• The Age
  

US banking won't survive in its current shape and its death will be painful.

DEATH is God's quiet way of saying slow down. Something more powerful than God, the US banking system, has been tapped on the shoulder and the Flaming Star flames no more. This will affect us all, but before we race to withdraw our deposits, or call super funds, or before we panic as great and powerful financial institutions far away fall, consider that most of the terrors in store are not matters that will bring National Australia Bank, ANZ, Commonwealth Bank or Westpac, or most of our pillars of finance, down.

The great fall that will soon be upon us, and has already seen US financial powerhouses such as Bear Stearns fade away, is part of the evolution of the species, a manifestation of a great purge desperately needed.

The endgame, which is still a way off, will see a card game of credit brought down. We will all be poorer in that instant, but richer in what might be a long, long time.

The US banking system as it exists now will not survive and its death throes will be painful. Details of its demise are in evidence everywhere you look. The fall of Bear Stearns, the collapse of Lehman Brothers and rumours circling the future of market super-heavyweight Goldman Sachs and Merrill Lynch attest to the end of the broker-dealer form of banking that cannot survive without securitisation, a system essentially built on kickbacks, big bonuses and the movement of money dressed up as industry.

Increasingly, people are wondering what these companies do (or did), other than pass around paper and pocket vast sums. Could they have been engaged in a massive heist dressed up in complicated terminology signifying nothing?

How can companies such as Bear Stearns, worth more than $US70 a single share, be found to be insolvent and worthless?

The shotgun marriage between Bank of America and Countrywide may be the next cause of a fresh banking crisis as it is the most obvious source of immediate, mutually assured destruction.

S&P's decision late on Friday to downgrade both banks may destroy the plan to allow Bank of America to swallow Countrywide and its almost unfathomable debt. If that doesn't concentrate the minds of the global financial community, there is plenty else to look forward to.

The death throes are evident wherever one looks within the entrails of the US financial system and it is not hard to find experts ready and raring to call the last act. George Soros, interviewed in The Wall Street Journal at the weekend, put it plainly enough. The US, he explained, has ridden out credit crisis after crisis by creating fresh bubbles, all on debt, or credit. The last bubble, the lunacy from a wider moonbeam, was what we now call subprime. In a better world, subprime would have been an excellent idea. The provision of trillions of dollars to people with no credit record, no jobs and no prospects of ever paying off their fantastically inflated home prices was a socialist dream. But it was also unbelievably improper to attempt to recharge a system built on bubbles and credit.

US banking, as it has evolved, is now passing from a deep Darwinist phase, the survival of the fittest, or the cannibalisation of the weakest, to something more explosive.

Christopher Whalen, of Institutional Risk Analytics, sees the US banking system as rather like a poisoned aquarium, where some of the fish are dying and others, like Goldman Sachs, are feasting. But the system is poisoned. "They (companies like Goldman) are very adept at staying afloat by pushing their colleagues back into the water," he says.

Perhaps, inevitably, he compares them with dinosaurs: "When the volcano erupts, all the dinosaurs will die." But he adds: "They are very nimble. The buy-side investor is withdrawing from the Bear Stearns, Lehman and Goldman Sachs crowd and fleeing to the apparent safety of the universal banks. A fool's gambit, but what else shall they do?" Regardless of daily swings in the financials, Whalen, whose associates are in that poisoned aquarium, believes the inhabitants are doomed.

The US, like all of us, conditioned itself to believe in economic cycles and the inevitable bounce. But each correction has seen the creation of a new and less stable bubble. On this fact, several authorities are now coming to the same conclusion.

One is Michael Hudson, a financial authority and adviser to numerous governments, including the US.

"The idea," he says, "that we're even in a business cycle is whistling in the dark. If we're in a cycle, then that implies there's an automatic recovery in store.

"This happy free-market idea was developed at the National Bureau of Economic Research by opponents of government regulatory policy. But the economy doesn't move by a sine curve. There is a slow build-up, and a sudden plunge, so the shape is ratchet-shaped. This is why 19th century writers didn't speak of economic cycles, but rather of periodic financial crises."

At the heart of the crisis is housing. Reports published late last week indicate a 50% fall in mortgage values in the worst area of the US. And as Hudson points out: "Today's plunging real estate and stockmarket prices are not a self-correcting ebb and flow in which downturns set in motion automatic stabilisers that produce recovery.

"When a bubble bursts, time makes things worse. The financial sector has been living in the short run for quite a while now, and I suspect that a lot of money managers are planning to get out, or be fired, now that the game is over. And it really is over.

"The Treasury's attempt to reflate the real estate market has not worked, and it can't work … The banks are trying to win back their losses by arbitrage operations, borrowing from the Fed at a low interest rate and lending at a higher one, and gambling on options.

"But options and derivatives are a zero-sum game: one party's gain is another's loss. So the banks collectively are simply painting themselves into a deeper corner.

"They hope they can tell the Fed and Treasury to keep bailing them out or else they'll fail and cost the FDIC (Federal Deposit Insurance Corporation) even more money to make good on insuring the 'bad savings' that have been steered into these bad debts and bad gambles."

But even the Fed has its limits, having spent more than half its almost trillion-dollar balance sheet buying junk securities to leave sound Treasury securities on the banking system's balance sheets.

Like many others, Hudson believes many small regional banks will go under and be merged into larger money-centre banks — just as many brokerage firms in recent decades have been merged into larger conglomerates. "False reporting also will help financial institutions avoid the appearance of insolvency," he says.

Increasingly, independent analysts like Whalen and Hudson are blaming deregulation, especially the repeal of the 1930s Glass-Steagall Act that was passed to prevent a recurrence of the practices and results we are seeing today, and repealed by Bill Clinton, leading, as Hudson observed, to insufficient, or non-existent, oversight.

The hard hand of the regulator must be evident and constant. In these difficult days, we look to a new leader to emerge, for that is democracy's birthright and its meaning.

For anyone wishing to understand these issues more thoroughly, Planet Wall Street recommends they consult the Institutional Risk Analytics site. It costs nothing and explains these issues in detail and with authority.

David Hirst is a journalist, documentary maker, financial consultant and investor. His column, Planet Wall Street, is syndicated by News Bites, a Melbourne-based sharemarket and business news publisher.

Drowning in Faxes

The Spanx Solution to bank mortgage settlements

How many people use floppy disks these days? The 3.5" disk has been replaced by the USB stick, the CD as well as ubiquitous email. As technology advances so do clients, businesses and industry.

A client called upon me to help with a "complex" refinance for a partially completed development. I suspected we were all in trouble when he pulled out the 3.5" floppy disk. Not since email took off a few years ago has there been much exchange of information using the floppy disk. Even the CD has been relegated to coffee coaster status.

The client's problem was compounded when I discovered all the floppy disk contained was a couple of MS Word documents. Embedded in those two Word documents were extensive tabulated tables of line by line details of building works yet to be done and current and future valuation calculations. I gasped at the inanity of his even attempting such a task using Word with what is really a glorified typewriter. Why would you not use an Excel spreadsheet which is tailor made for the job? His attempts were crude and failed to take in the logic, that when you change just one item, a spreadsheet will update all sum totals automatically, magic like.

Just as the floppy disk and CD have been relegated to history, what is the fascination the legal and mortgage industry have with the fax. It's a love affair that just wont die.

The Age Good Weekend carried a feature story on a former Disneyland chipmunk whose underwear range has made the VPL and the question "Does my bum look big in this?" nigh obsolete thanks to Spanx supremo Sara Blakely. Two quotes in the article ran like this -

Quoting Spanx supremo Sara Blakely

"If Blakely has come up with the idea of matronly support hosiery in France, I suspect she'd still be selling les fax machines"

"My favourite part is that I am exposed to more now.
I wasn't running into Richard Branson or Oprah Winfrey selling fax machines."

The legal and mortgage industry desperately need a Sarah Blakely and make the fax obsolete. We need to put a little bit of the Spanx philosophy into how conveyancing is done and into the back office of the banks' retail lending departments.

The banks obviously must be drowning under faxes, compounded by the fact that we conveyancing practitioners quite often fax and re-fax the same documents twice and three times over. But what other choice do you have?

Just what would the numbers look like for a major lender?

The estimated combined number of purchase and sale property settlements across all States is 1,000,000 per annum. Assuming a major lender has 20% market share, per annum, a bank will handle 200,000 settlements. On a sale file, a practitioner will send a minimum of 3 faxes and probably an average of 6. On a purchase file it will be a minimum of 2 but an average of 4. An overall industry average is 5 faxes per file. A major lender will therefore receive 1 million faxes per annum. On any working day the bank across its network will have to process 3,846 incoming faxes. Wow. 3,846 faxes per day every day.

3,846 faxes per day is symptomatic the industry has a problem. Like the floppy disk, the fax has had its day. The problems and the inefficiencies of the industry cost my firm and probably every other law firm and conveyancing company a minimum of $50,000. That is the cost of employing one conveyancing staff member too many. Do the maths and this is a big cost issue for the whole industry. The industry needs to implement an industry wide - industry led solution. Such a solution would save big bucks. If the solution saves my firm $50,000 just think of the back office savings for a major bank.

If only we could eliminate the fax by replacing it with a scan, and replace the call centre with a web service? I think I need to get hold of Sara Blakely. I might just try sara@spanx.com and see if I get a reply!

June Newsletter | Brett Hayton | 247legal

Another benefit to new architectures

Rick's Notebook

It's been said that bankers will take twice as long to adopt a new technology as just about any other industry. The cases used to illustrate that are generally the automated teller machine (about 10 years, though much of that was consumer resistance) and automated underwriting in the mortgage space (another 10 years). Sure, there are other industries that are also risk-averse that also move slowly into unproven technologies, but the old R&D/IT investment numbers that MBA chief economist Doug Duncan used to toss around stick in my mind. The mortgage business, he said, invests about one-tenth what most other industries do in technology research and development.

But why should they invest more? People that manage risk for a living don't like to take unnecessary risks. As long as there is an old DOS-based system cranking away reliably on the company's accounts, new technology could look like an unnecessary risk. But that may be changing.

The benefits of SOA-based architectures have generally been sold to the mortgage space bundled with MISMO data standards with the promise that they can reliably connect business partners in a fragmented industry without the high costs of system-to-system integration. But lenders are finding that there is another benefit to having loosely coupled systems that can easily be plugged together: making pilot programs easy.

Now, with the insertion of a single business rule, lenders can test out a new fraud detection system by simply telling their processing technology to send every loan that is, say, over $300,000 and not owner-occupied in a certain ZIP code to a new company for analysis. If there is no ROI, they can turn it back off again and go back to their old vendor. Easy. The same holds true for just about every other service the lender might need to close a loan.

Of course, it will take some expertise to build rules that provide good tests, but the point is lenders can do it now and it won't cost them big bucks to try out something new. How's that for mitigating risk?


Rick's Notebook

'Uniform planning laws will benefit all': Sartor

UNIFORM planning and development laws could yield "huge advantages" for the national economy, says NSW Planning Minister Frank Sartor.

Mr Sartor will put planning on the agenda of the Council of Australian Governments next month when he asks ministers from other states to agree to commission research on the benefits of a national regime. "Investors would have a lot more certainty wherever they go in the country," Mr Sartor told The Weekend Australian yesterday.

His plan comes as a new report by financial services company KPMG reveals recent planning reforms in NSW, Victoria, South Australia and Queensland have moved in similar directions -- removing local councils' control over key infrastructure, reducing red tape and forcing councils to fast-track low-risk developments, such as standard home extensions.

Mr Sartor said the increase in environmental consciousness in the 1970s had led to tighter regulation around building and development, but it was now recognised across the states and territories that it was time for the pendulum to swing back.

"I don't think we're going to end up with identical laws, but there ought to be some common rules and principles," he said.

Mr Sartor, who managed to push a raft of key reforms through NSW parliament this week after a long battle with councils, said shifting the reform push to COAG would take the heat out of the battle between state and local governments over planning.

Under the reforms legislated in NSW this week, minor work, such as extensions and single-storey homes, will require a permit rather than going through a full-scale development application process.

There will be new rules limiting the costs councils can pass on to developers in the form of levies.

Private certifiers will have a bigger role in development approvals and most major infrastructure projects will be determined by independent panels of experts, rather than by Mr Sartor or councils.

The KPMG report, which was commissioned by Mr Sartor, finds most of the states have acted on planning processes that are "ill-equipped to respond to the pace and magnitude of development applications brought on by increasing economic activity and regulatory creep".

It says the average time for councils to approve a new home has blown out to 78 days in NSW and 120 days in South Australia. Building codes have streamlined approvals for low-risk projects, with most states aiming to increase the proportion of straightforward, "complying" developments to 50 per cent of the total.

The reports says consistency in planning reform will reduce costs for builders and home owners, improve housing affordability, clear infrastructure bottlenecks, and "unleash economic competitiveness around the country".

The Australian | Imre Salusinszky, NSW political reporter | June 21, 2008

Forest land returned, block at a time

A DEVELOPER responsible for the sale of 10per cent of new suburban house blocks in Melbourne will donate an equal area of land to Victorian forests.

Villawood Properties, which sells about 1100 housing allotments a year, has purchased 280ha of private land within the Kamarooka National Park, north of Bendigo. And for every housing block bought after April 1 this year, Villawood will donate an equivalent area to the Victorian Government.

"People who buy a cleared block in Melbourne can feel good that it is offset by the return of land to our state forests," said Villawood joint executive director Rory Costelloe. "This is about doing more than is required, and taking the responsibility to help make going green a reality."

A two-hour drive north of Melbourne, the 280ha area is a mix of box and ironbark forest and mallee scrub. The land has an abundance of wildlife including koalas, kangaroos, possums and wombats, and has been deemed by the state Government to be of significant ecological importance.

Mr Costelloe said the 280ha to be returned to state forest would represent about three years of sales, or 3000 house blocks.

He did not disclose the purchase price of the land, but said it had been bought at "farm" rates.

Villawood is involved in a major Melbourne housing development at Point Cook with the giant Industry Superannuation Property Trust.

The company first came to prominence some years ago when it upstaged other developers by launching its own green guide for home buyers. The forest handback is part of a program the developer calls Villawood Positive Change.

The program has been developed to encourage buyers and builders to construct more environmentally sustainable homes, Mr Costelloe said. Information on the Villawood website demonstrated how it was possible to reduce harmful carbon emissions by cutting electricity and gas use, as well as saving water.

Mr Costelloe said the average home owner could reduce carbon emissions by 7.4tonnes per year and save 86,000litres of water by measures as simple as putting seals on doors and diverting grey water to gardens and lawns.

He said the savings at the 1100blocks to be sold by Villawood this year were potentially 8600tonnes of CO2 and 100million litres of water. At the 11,000 new homes across Melbourne, the savings would be 86,000 tonnes of CO2 and one billion litres of water.

As part of its promotion, Villawood has offered two monthly $2000 cash prizes to residents of its estates who demonstrate the greatest savings on carbon emissions or water use.

The Australian | Maurice Dunlevy | June 21, 2008

State pumps $40 million into white elephant

IN ANOTHER embarrassing technology bungle, the Brumby Government has spent $40 million and six years developing an online property settlement system that has processed only one transaction in seven months.

Major banks and lawyers have boycotted the new electronic conveyancing system, effectively rendering it useless.

The Government was warned as early as 2004 that banks would only take part in a national electronic system. Lawyers cannot get professional indemnity insurance to participate because it is considered too risky.

Despite the 2004 warning, the Victorian Government pushed ahead and last November slapped a sharp price rise — up to 32% — on users of the old paper system, hoping home buyers would turn to the new electronic version.

For five months, the Government's system lay idle until last month when two Melbourne conveyancing firms, with Bendigo and Adelaide banks, completed an online property settlement.

The transaction was trumpeted as the "world's first electronic settlement". But no other transactions have followed and The Sunday Age believes the Government is searching for another settlement to put through its system.

Meanwhile, the Government will this year collect an extra $6 million from the price hike of $15.50 on the 400,000 conveyancing transactions across the state.

The State Opposition, lawyers and builders said the extra charge was an unjust imposition when the Government's preferred system was essentially unusable because of the boycott.

The electronic conveyancing bungle is the latest in a string of nightmare Government technology projects, which include myki, the public transport ticketing fiasco.

Conveyancing is the legal process of transferring real estate from one person to another.

Property buyers are charged for the transferring of sale documents and registration of mortgages. Despite a lack of customers, the Government's new system was recently a finalist in national awards for technology excellence in government.

The electronic system was designed to eliminate from conveyancing the necessity to meet to exchange documents and the drawing of cheques. The Government also hoped it would reduce the costs of buying a house, saving $235 to $395 on the typical four-party settlement and up to $70 million in red tape reductions across the state each year.

Liberal MP David Davis described the implementation of electronic conveyancing as a shambles. "With $40 million spent and a single transaction to show for it, the Brumby Government has pushed ahead against the advice of the banks and the lawyers, determined to implement last decade's technology," he said. "Victorian families are being slugged to prop up the Government's white elephant."

One legal commentator described the system as "the perfect example of how not to build an e-conveyancing network".

Michael Brett Young, the Law Institute of Victoria's chief executive, said that even if the risks for solicitors were fixed, the state system was doomed to fail without the acceptance of the major banks.

In national negotiations, Victoria is insisting that each state take on a version of its system.

But the only state to support this position is Queensland.

All other states and the Commonwealth want a seamless, centralised national system. The National Electronic Conveyancing Office has been set up to establish this, but Victoria has frustrated progress, insisting on keeping its own system.

It appears that state bureaucrats, having spent $40 million — much of it on fees for the private contractor Ajilon and for legal advice — do not want to walk away from their system.

Victorian Government technology blunders:, the public transport ticketing system: hundreds of millions over- budget and years overdue.

■ myki

■ New criminal justice software system: years overdue and at least $30 million over budget.

■ $60 million school software system: facing delays and cost blowouts.

■ $20 million computerised directory for public servants: over-budget.

■ HealthSMART project for state health system: almost $35 million over-budget.

• Melissa Fyfe
• June 21, 2008
• Fairfax WA Today
• The Age
  

Senate Inquiry into house affordability

THE first home buyers' grant has forced house prices up in recent years, working against its aim of making new homes more affordable, a Senate inquiry has found.

Urging an overhaul of the scheme, the Senate Committee on Housing Affordability found that the system of $7000 grants for all first home buyers had "benefited existing home owners rather than those seeking to enter the market". The committee, comprising Coalition and Labor senators, also found that negative gearing and state fees such as stamp duty were compounding the affordability crisis.

The findings coincided with a new report warning that capital city house prices would soar again next year, as the nation's fastest population growth in two decades outweighs the effects of higher interest rates.

Economic forecaster BIS Shrapnel predicted median house prices in Melbourne would rise by 16% in the three years to June, 2011. "Australia is experiencing record net overseas migration flows, which is underpinning what is already strong underlying demand for housing," the forecaster said.

The failure of construction to keep pace with population changes was a key focus of the Senate committee findings released last night.

In its report, the committee recommended an overhaul of the first home buyers' scheme so that grants would be increased for those buying new homes, and cut for those buying existing ones. In effect, this would involve a return to an earlier version of the scheme launched by the Howard government, under which new home buyers got $14,000 and buyers of existing homes $7000.

The bias towards new homes, aimed at stimulating construction, would come on top of existing incentives in Victoria where the State Government offers a $5000 bonus for new purchases and an additional $3000 for those buying in regional areas.

Liberal Senator Marise Payne, who chaired the inquiry, denied that the proposal to review the grant was an admission of structural flaws in the system, as it merely mirrored the previous policy of paying double to those buying new homes.

She said reverting to a system that favoured new home purchasers could help address "some of the supply issues" affecting housing affordability.

The report found that, on the demand side, the housing affordability crisis had been fuelled by higher incomes, smaller households, population growth, a long period of low interest rates, more access to credit, and a taxation system encouraging multiple property purchases. On the supply side, the report blamed state and territory governments for complex planning processes, developer infrastructure charges and a shortage of skilled labour.

Stamp duty was also blamed for higher prices, with the report saying states had "failed to adjust stamp duty thresholds to keep pace with house prices".

Senator Payne said that the current system of stamp duty often encouraged people to buy larger houses than they needed to. The committee recommended exemptions on the tax for all first home buyers and retirees.

"They are quite simply an inefficient tax which impedes people moving to more appropriate housing. Furthermore, as they have not been indexed, they are a growing proportion of incomes," Senator Payne said.

The report said building houses on the outskirts of cities was not the answer to unaffordability. "This simply shifts the costs from housing to the cost - in dollars and time - of transport," it said. "The aim must be to build affordable housing in areas where infrastructure can provide for and attract new residents," the senators said.

Their report proposed reviewing the tax discount for capitals gains on investor housing, exceptions from land tax for the home owner, and negative gearing. They also urged new measures to encourage construction of more public housing and rental properties in areas of greatest need.

Chris Lamont, of the Housing Industry Association, said the proposed changes to the first home buyers' grant were welcome, as the scheme was pushing prices up in its current form. "The first home owners grant was a demand measure and wasn't equalised or offset by any supply response," he said.

He said any review of stamp duty had to take into account funding arrangements between states and the Commonwealth, which he argued was making states reliant on land taxes. He said stamp duty was often confusing and unfair in its current form.

Mr Lamont said abolishing negative gearing would be "the worst thing you could do" for the rental market. "If you were to abolish negative gearing, stand by for 25% increases in rent year on year," he said.

Federal Housing Minister Tanya Plibersek said last night she had no immediate plans to change the first home buyers' grant, a move that would need the approval of states and territories.

Tha Age | Leo Shanahan | 17 June 08

The Cloud and the Paperless Office: It Just took 33 Years

It's tough to think of a more trite concept than "the paperless office". According to Wikipedia, the term may have been coined in 1975 in a Businessweek article entitled "The Office of the Future".

The failure of the paperless office has been due to one obvious factor -- too much work to get the benefits. In 1975 perhaps it was mimeographing and microficheing. Until very recently, it was scanning, PDF'ing, inputting, tagging, storing, archiving. Too much pain when business works OK today.

But we can tell you that 33 years later, something is finally and truly changing now with our 350,000 EchoSigners, and the reason is a term and concept that may also be trite already, but is just as powerful - "the cloud" and the concept of doing all your computing on the internet.

The traction we are seeing with now thousands of customers and salesteams is based on what's changed on the "front end" of the paperless office - the apps we use to create contracts and track customers. Whether it's using Salesforce.com, Zoho, Gmail, or just plain Windows XP and Internet Explorer ... everyone is working "in the cloud" now, whether they think about it or not. And they don't want to leave.

And by far the clunkiest and most painful part of the document and contract process is execution. It's not that fax and FedEx are bad. I's just that you once you've moved to the PC and the web to create; track (e.g., Salesforce); interact (e.g., WebEx) and manage your customers and business on the web and on your PC -- it's too painful to leave.

The paperless office in 1975 was about analog [create] -> analog [sign] -> digital [store]. But today it's digital -> analog -> digital. Switch the middle to digital with EchoSign. And the entire customer and contracting process can be done in clicks, from the web, anywhere, anytime.

The message - switch to digital signing to complete the loop

Source EchoSign

ECV good news for Vic Govt Panel Lawyers

THE Victorian Government's spending on legal services jumped by 17.6 per cent last financial year to hit a record $46.7 million.

And most of that went to 27 law firms on the Government's legal services panel that shared $38.9 million in legal fees.

The biggest single factor behind the growth in legal spending was a surge in government infrastructure projects.

In just two years, government legal spending on project and finance work has jumped by 124 per cent and now accounts for $10.9 million of the state's total legal bill.

The Department of Sustainability and Development, which has been building the state's electronic conveyancing system, has one of the fastest-growing legal bills.

Annual spending by the department on legal services described as "property" has grown from $111,254 in 2002-03 to $2.1 million in 2006-07. The surge in government legal spending is outlined in the latest report on government legal services that was made public this week.

It shows that in the past five years the Government has spent $169.9 million buying legal services under the panel arrangements. The report, which covers 2006-07, shows that while overall legal spending has grown strongly it has also triggered millions of dollars in pro bono work for those in need.

Chris Merritt | The Australian | 12 May 08

Murray Thompson MP on ECV - World Wide Waste

Mr THOMPSON (Sandringham) — In commenting on the budget I would like to cover a range of issues that affect multiple government departments. The Labor Party has had the opportunity to deliver a government information superhighway, but unfortunately and regrettably for the residents of Sandringham and the people of Victoria we have been left with a boulevard of broken dreams. Under the previous Liberal government Victoria was a world leader in multimedia and information technology industries. Bill Gates noted in his book Business @ the Speed of Thought that Victoria was the world leader in multimedia, electronic service delivery and IT. This view was also supported by a group of seven industrialised states known as the G7, and elsewhere. While from one side of the globe man can put a spaceship on Mars, in the Sandringham electorate Victoria Police cannot tell the people of Sandringham how many traffic fines are issued from one camera on one day. Then there are multiple other examples that affect other departments. In the Department of Planning and Community Development there is the Electronic Conveyancing Victoria project; in the area of transport, the failed myki ticketing system; in the area of health, the delays to HealthSMART; in the area of education, the delays to the ultranet project; in the area of housing, the extraordinarily and tragically bungled housing integrated information program; and in the area across the whole of government, the failure of Project Rosetta to deliver its improvements on time and on budget.

In relation to the Electronic Conveyancing Victoria project, under the ministerial watch of the Attorney-General and Ministers Madden and Jennings in the other place we have seen a project that commenced in the year 2000; other jurisdictions were working on their own conveyancing projects. In 2004 the major banks told all jurisdictions they wanted a single national system, but the Victorian government did not listen. In 2005 a national steering committee of representatives of all jurisdictions and industry was set up to develop a single national system. The National Electronic Conveyancing Office implemented the work program of the national steering committee. All jurisdictions except Victoria stopped their projects and supported the national system. Victoria continued with Electronic Conveyancing Victoria. Over the last three years the national steering committee has put considerable effort into accommodating Victoria and working with it. The National Electronic Conveyancing System involves a legal framework, legislative changes, governance issues, risk management, business practices, systems operation, funding arrangements and industry, government and community confidence. ECV simply provides a computer system which may or may not be suitable as a national system. Victoria continued to develop the Electronic Conveyancing Victoria project without regard for requirements outside Victoria. ECV went live in November 2007 at a development cost of $40 million. At the same time the government increased titles office registration fees to cover the system’s operational costs. The major banks will not use it because it is not national; Victorian lawyers will not use it because of uncertainty over its risk management arrangements; and Victorians are paying for a system their industry does not want and will not use. There has been only one transaction in more than six months, and no others are in the pipeline. Electronic Conveyancing Victoria is continuing to cost Victorians $6 million each year, most of which is being paid to contractors. Victoria continues to refuse all offers to have ECV incorporated into the national scheme.

All major banks and law societies, including the Law Institute of Victoria, support the national system. With no prospect of ECV being used nationally, Victoria is frustrating the efforts of industry and all other governments to establish a national system that will benefit consumers of conveyancing services throughout Australia, including Victoria. Victoria has wasted $40 million, is continuing to waste $6 million each year, and is holding up the genuine efforts of all government and industry stakeholders to realise genuine economic benefits for Australia. I call upon the Auditor-General of Victoria to examine this absolute waste of taxpayers money affecting taxpayers not only of Sandringham but also across Victoria.

Again, there is this litany of government failure. The Department of Justice cannot give an outline of one traffic fine at one intersection on a single day in terms of the quantum of fines incurred at an intersection on a single day. The government cannot deliver a conveyancing project. It cannot deliver a public transport ticketing system. It cannot deliver a health hospital management service. It cannot deliver the ultranet. It cannot deliver a housing management system, and across government its Project Rosetta is a failure. When people from around the world tap into the Victorian government website and type in ‘www Victoria’, what will it stand for? It will stand for worldwide waste. The Victorian government has failed the electors of Sandringham, and it has failed the people of Victoria.

Source Hansard

Vectis eyes former competitor

Financial, legal and property transaction specialist Espreon has received a $62 million buyout proposal from the San Francisco-based Vectis Group.

The offer of 65 cents a share is about double the recent trading range for Espreon, which has hired Robert Fraser from TC Corporate, along with legal firm Baker & Mckenzie, to advise on its options.

Vectis is an entrepreneurial investment firm that describes itself as a “global technology enterprise builder”. It is backed by a syndicate that includes Whitney & Co., Banco Santander, and buyout firms Omninet Capital and K1 Ventures.

Vectis is a former competitor to Espreon but sold some of its business to SAI Global several years ago. Now, it seems, they want to re-enter the sector, with a particular interest in Espreon’s property transaction business.

They have already built up a 19.72 per cent stake in its target. It is believed they are receiving advice from Grant Samuel.

Espreon describes the proposed scheme of arrangement as “preliminary, incomplete and highly conditional on due diligence, exclusivity and events, undertakings and contingencies involving the Company and certain third parties.”

However, it considered that the proposal merits further detailed evaluation and it has commenced discussions with Vectis.

Giles Parkinson
Business Spectator
10 June 08

A google search reveals Vectis is associated with former directors and owners of Anstat / IceRidge Conveyancing Software

Staff Shortages

Its not just Law Firms and Conveyancing Companies recruiting for experienced conveyancing staff. The large banks are recruiting in their back office Lending department, working in the Mortgages, Settlements, Document preparation.

It would appear the demands of working in these areas are not the attractions for young persons happy to make a career in these traditional back end support roles.

Fax Signatures

by schneier

Aren't fax signatures the weirdest thing? It's trivial to cut and paste -- with real scissors and glue -- anyone's signature onto a document so that it'll look real when faxed. There is so little security in fax signatures that it's mind-boggling that anyone accepts them.

Yet people do, all the time. I've signed book contracts, credit card authorizations, nondisclosure agreements and all sorts of financial documents -- all by fax. I even have a scanned file of my signature on my computer, so I can virtually cut and paste it into documents and fax them directly from my computer without ever having to print them out. What in the world is going on here?

And, more importantly, why are fax signatures still being used after years of experience? Why aren't there many stories of signatures forged through the use of fax machines?

The answer comes from looking at fax signatures not as an isolated security measure, but in the context of the larger system. Fax signatures work because signed faxes exist within a broader communications context.

In a 2003 paper, "Economics, Psychology, and Sociology of Security," Professor Andrew Odlyzko looks at fax signatures and concludes:

Although fax signatures have become widespread, their usage is restricted. They are not used for final contracts of substantial value, such as home purchases. That means that the insecurity of fax communications is not easy to exploit for large gain. Additional protection against abuse of fax insecurity is provided by the context in which faxes are used. There are records of phone calls that carry the faxes, paper trails inside enterprises and so on. Furthermore, unexpected large financial transfers trigger scrutiny. As a result, successful frauds are not easy to carry out by purely technical means.

He's right. Thinking back, there really aren't ways in which a criminal could use a forged document sent by fax to defraud me. I suppose an unscrupulous consulting client could forge my signature on an non-disclosure agreement and then sue me, but that hardly seems worth the effort. And if my broker received a fax document from me authorizing a money transfer to a Nigerian bank account, he would certainly call me before completing it.

Credit card signatures aren't verified in person, either -- and I can already buy things over the phone with a credit card -- so there are no new risks there, and Visa knows how to monitor transactions for fraud. Lots of companies accept purchase orders via fax, even for large amounts of stuff, but there's a physical audit trail, and the goods are shipped to a physical address -- probably one the seller has shipped to before. Signatures are kind of a business lubricant: mostly, they help move things along smoothly.

Except when they don't.

On October 30, 2004, Tristian Wilson was released from a Memphis jail on the authority of a forged fax message. It wasn't even a particularly good forgery. It wasn't on the standard letterhead of the West Memphis Police Department. The name of the policeman who signed the fax was misspelled. And the time stamp on the top of the fax clearly showed that it was sent from a local McDonald's.

The success of this hack has nothing to do with the fact that it was sent over by fax. It worked because the jail had lousy verification procedures. They didn't notice any discrepancies in the fax. They didn't notice the phone number from which the fax was sent. They didn't call and verify that it was official. The jail was accustomed to getting release orders via fax, and just acted on this one without thinking. Would it have been any different had the forged release form been sent by mail or courier?

Yes, fax signatures always exist in context, but sometimes they are the linchpin within that context. If you can mimic enough of the context, or if those on the receiving end become complacent, you can get away with mischief.

Arguably, this is part of the security process. Signatures themselves are poorly defined. Sometimes a document is valid even if not signed: A person with both hands in a cast can still buy a house. Sometimes a document is invalid even if signed: The signer might be drunk, or have a gun pointed at his head. Or he might be a minor. Sometimes a valid signature isn't enough; in the United States there is an entire infrastructure of "notary publics" who officially witness signed documents. When I started filing my tax returns electronically, I had to sign a document stating that I wouldn't be signing my income tax documents. And banks don't even bother verifying signatures on checks less than $30,000; it's cheaper to deal with fraud after the fact than prevent it.

Over the course of centuries, business and legal systems have slowly sorted out what types of additional controls are required around signatures, and in which circumstances.

Those same systems will be able to sort out fax signatures, too, but it'll be slow. And that's where there will be potential problems. Already fax is a declining technology. In a few years it'll be largely obsolete, replaced by PDFs sent over e-mail and other forms of electronic documentation. In the past, we've had time to figure out how to deal with new technologies. Now, by the time we institutionalize these measures, the technologies are likely to be obsolete.

What that means is people are likely to treat fax signatures -- or whatever replaces them -- exactly the same way as paper signatures. And sometimes that assumption will get them into trouble.

But it won't cause social havoc. Wilson's story is remarkable mostly because it's so exceptional. And even he was rearrested at his home less than a week later. Fax signatures may be new, but fake signatures have always been a possibility. Our legal and business systems need to deal with the underlying problem -- false authentication -- rather than focus on the technology of the moment. Systems need to defend themselves against the possibility of fake signatures, regardless of how they arrive.

This essay previously appeared on Wired.com.

EDITED TO ADD (6/3): 2005 story, "Federal Jury Convicts N.Y. Attorney of Faking Judge's Order."

Visit the original post below for the tremendous number of responses / comments by readers

Schneier on Security

Questions for Minister Jennings

PARLIAMENT OF VICTORIA

PARLIAMENTARY DEBATES

(HANSARD)

LEGISLATIVE COUNCIL

FIFTY-SIXTH PARLIAMENT

FIRST SESSION

Tuesday, 26 February 2008

Land Victoria: electronic conveyancing

Mr D. DAVIS (Southern Metropolitan) — My question is to the Minister for Environment and Climate Change. My question relates to the state government’s continuing failure to secure major stakeholder support for its bungled electronic conveyancing system, which is forcing consumers to rely on paper-based conveyancing. Given that all paper-based conveyancing transactions now cost families an additional slug — in some cases, up to 30 per cent more for conveyancing — is it not true that the government stands to make windfall gains of the order of $6 million a year despite having botched the introduction of electronic conveyancing?

Mr JENNINGS (Minister for Environment and Climate Change) — The premise of the Leader of the Opposition’s question has a number of false aspects to it. The introduction of electronic conveyancing is a project I inherited. It was a long way down the development and implementation stage by the time I arrived as minister.

Mr D. Davis — You are walking away from it now.

Mr JENNINGS — Not at all. In fact I have been very active in that space. In the last few months I have spent a lot of time and effort talking to jurisdictions across this nation to galvanise the cross-jurisdictional delivery of this program. All Victorians and all Australians will benefit from an electronic system that streamlines conveyancing regimes and can be used by the financial institutions to enable the appropriate transaction of important information that, up until now, has been bedevilled by virtually Dickensian-type administrative practices.

Mr D. Davis — But reliable.

Mr JENNINGS — If Mr Davis had been talking to people in the sector, he would be aware that financial institutions want to move to electronic conveyancing. In fact all jurisdictions recognise the value of moving to an electronic conveyancing system. They want to make sure the platform is available for the widest variety of transactional programming within those financial institutions and that this can be shared across jurisdictions. The Victorian government has invested significantly in the development of this software and system — and in fact we are the only jurisdiction in the nation that has done so.

Mr D. Davis interjected.

Mr JENNINGS — Indeed, millions, Mr Davis. It is our unswerving commitment to deliver a national system that has seen a buy-in by financial institutions and other jurisdictions. One by one, the other states have shown an increasing preparedness to engage. We are very close to receiving endorsements of the application of this system in a number of jurisdictions. A number of jurisdictions across the nation have been using our software in trialling their accounting practices, and their land transfer and conveyancing procedures across the nation. I am confident that once a critical mass of state jurisdictions has been brought into this process and financial institutions are available to trial the software and the various applications — despite some teething problems in terms of getting a national buy-in to the rollout of this important program — at the end of the day the Victorian people will be well pleased that we will be at the heart of a national electronic conveyancing system which will have maximum compliance with other jurisdictions and financial institutions. In terms of the ongoing financial arrangements that underpin the establishment of this platform, the state of Victoria has been prepared and has been very willing to share its platform, which was developed at great expense to the people of Victoria with minimal return to the state, because we believe there will be national benefits from the rollout of the program.

Supplementary question

Mr D. DAVIS (Southern Metropolitan) — I note that the minister in no way disputes my figure of a $6 million windfall or that there are additional costs for paper-based conveyancing. Will the minister outline to the house when he expects the government’s electronic conveyancing system will win the support of major banks and the Law Institute of Victoria, and will he now commit to removing last November’s cost increase for paper-based conveyancing until such time as there is movement on this endorsement?

Mr JENNINGS (Minister for Environment and Climate Change) — Specifically the answer to the last part of the question is no, because there needs to be some incentive within the regime that will enable the take-up of this process to be seen not only to be electronically and administratively efficient but also, ultimately, to lead to savings. The cost structures that underpin the scheme were not designed by accident; they were designed on purpose to try to drive initial compliance and buy-in across the sector, with the regime embedded in ultimately cheaper cost structures and a greater applicability of the electronic conveyancing system.

PARLIAMENT OF VICTORIA

PARLIAMENTARY DEBATES

(HANSARD)

LEGISLATIVE COUNCIL

FIFTY-SIXTH PARLIAMENT

FIRST SESSION

Thursday, 28 February 2008

Land Victoria: electronic conveyancing

Mr D. DAVIS (Southern Metropolitan) — My matter today concerns the government’s electronic conveyancing system, which shows all the signs of being a .

In no way do I oppose the move to electronic conveyancing, it is just that the government’s implementation of this system is proving to be a blunder — the system looks like it is a bit of a dog .

The idea is to slug families when they purchase properties. Around 400 000 conveyancing transactions occur each year in Victoria, and the government is just creaming off additional money, because it has raised the fees for conveyancing done using paper forms. The unfortunate consumers of these services are now forced to return to paper conveyancing because of a lack of quality, reliability and certainty with the electronic conveyancing system. The Law Institute of Victoria has made its position clear, as has the Master Builders Association of Victoria. The association wrote a letter, dated 3 September, which says:

However, the building industry and consumers should not be punished for choosing one application process over another.

The Law Institute of Victoria has made it clear that it has great concerns about the new system. Until these issues, that also concern the banks are sorted out, the Minister for Innovation should not be imposing punitive fees on families.

PARLIAMENT OF VICTORIA

PARLIAMENTARY DEBATES

(HANSARD)

LEGISLATIVE COUNCIL

FIFTY-SIXTH PARLIAMENT

FIRST SESSION

Thursday, 13 March 2008

Hansard p773

Questions on Notice

Land Victoria: electronic conveyancing Mr D. DAVIS (Southern Metropolitan) — My adjournment matter is for attention of the minister in the chamber, the Minister for Environment and Climate Change. It relates to an area of his responsibility namely, the electronic conveyancing program — about which I have previously asked him questions in this chamber. He knows it is an issue I am deeply interested in. Obviously electronic conveyancing offers great prospects for cheaper conveyancing, better information, better services for consumers and better services for the industry. The minister and I agree completely on the prospect of what can be achieved in the future. Some concerns are, however, developing about the way Victoria is going about it. Victoria has taken a stand-alone approach and has got itself into problems. The system has been botched. As we know from questions in the chamber, fees have been put on paper conveyancing transactions that outweigh the fees payable on electronic transactions.

The PRESIDENT — Order! And the action?

Mr D. DAVIS — I am giving some background in terms of the fees, but I always appreciate your guidance and encouragement, President. Concurrent with the activities in Victoria, a national system has been considered. This is the essence of my point. I know, for example, that former New South Wales Premier Bob Carr has played a very unusual role in brokering certain aspects at the national level. I know also that the Australian Bankers Association is very concerned about the approach Victoria has taken. Indeed I am told the association is furious that the minister has gone away from it and not consulted in a proper and sufficient way to ensure that the needs of the banking industry are taken into full account as the new electronic conveyancing system is developed. It is for this reason that I ask the minister to fully consult with the Australian Bankers Association as electronic conveyancing goes forward and to ensure that electronic conveyancing is developed on the basis of a cooperative model rather than being done in a sneaky and underhanded way, which is what many are accusing the Victorian government of doing, because it has gone outside the national system. I ask the minister to take electronic conveyancing forward and to do that within a national framework in an open and collaborative way, rather than behind closed doors. In particular I ask him to consult closely with the Australian Bankers Association.

The PRESIDENT — Order! Prior to calling the minister, I inform Mr Thornley that unfortunately I am ruling his matter out of order, given that time had run out before he had actually asked for an action

Mr Thornley — On a point of order, President, I did try to put the action up the top and then go into detail. I was reiterating the action when I ran out of time.

The PRESIDENT — Order! Is Mr Thornley telling me that he had asked for an action at the start?

Mr Thornley — Yes.

The PRESIDENT — Order! I will accept his word for that.

Responses Mr JENNINGS (Minister for Environment and Climate Change) —

In his question David Davis tried to provoke me in my response. I can assure him that at no stage have I turned my back on or ignored the views of the Australian Banking Association in relation to the rollout of the electronic conveyancing program. During the course of my responsibility for this program I can assure him, and I can assure the house, that there has never been a higher degree of collaboration and desire to give real life to a national scheme, and in fact that is my intention. While I could have disposed of the issue tonight, I am sure that over time Mr Davis will be interested in knowing how we proceed with this matter.

David Davis MP - his profile

Westpac to increase offshoring of jobs

Westpac Banking Corporation Ltd says it intends to increase "offshoring", but denied media reports today that it planned to shift up to 3000 back-office jobs to India.

"I haven't seen any piece of paper with that kind of number," Westpac chief executive Gail Kelly told analysts today.

But Mrs Kelly said the bank would be keen to outsource functions if there was another business that could perform a function more efficiently.

"Will there be an increase in offshoring? Absolutely," she said.

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