Nation Buildng

Lessons from Victoria's wasted conveyancing efforts

THE decision of the Council of Australian Governments to build an electronic conveyancing system that spans the nation is by no means glamorous, But history will see it differently.

This is the modem equivalent of the nation-building projects of previous generations, It might not have the cachet of a Snowy Mountains scheme, but just like that great project of the 1950s, electronic conveyancing will benefit all succeeding generations.

Industry groups estimate that if this single initiative is implemented properly it will cut the cost of buying and selling homes by $250 million a year, But that all depends on whether the COAG working group that now has control of the new project is able to avoid the sort of mistakes that have crippled Victoria's state-based e-conveyancing system.

The Victorian Government appears to have wasted $40 millionby building a system that does not comply with the basic requirements of the main players in conveyancing - the big banks and the solicitors. The Victorian system, known as ECV, has been used for just one property settlement since its launch last year.

This is the direct result of two mistakes that should be avoided by those who build the national system.

1. The first mistake was the refusal to accept that conveyancing is primarily a commercial transaction, not a filing procedure for land-title bureaucrats,
2. The second mistake was to cede control of the system to private consultants, The Victorian experience shows that those skilled in computer technology are of most value when their role is confined to implementing public policy decisions - not making them, Responsibility for the national system must remain in the hands of those who are responsible to voters, not shareholders

To avoid the fate of the ECV, the national system should be designed around the business needs of the private sector, By endorsing the principle of a single national system, COAG's working group is off to a flying start. This was the core demand of the banks - a demand that was ignored by Victoria,

When the national system comes into operation in March 2010, it will reduce the transaction costs of buying and selling property, and clear the way for more competition in the conveyancing market. Once the system is in place, the banks will need to be monitored to ensure they pass on much of the, savings, State governments should also start planning to pass on the savings in the form of reduced stamp duty on property transactions,

The states have already failed consumers by pocketing the GST revenue and refusing to slash state taxes.

There will be no excuse for such intransigence once e-conveyancing reduces the costs of their land title registries. The national conveyancing system will present the states with another challenge, Once the technology is in place, the only thing that will impede the development of a true national market for conveyancing is the fact that land law differs substantially between the states.

Competition will still be possible, but harmonising the land laws would speed that process and lead to even more savings for those who buy and sell property.

Despite the promise of a bright future, Victoria looks set to pay a high price for its false start. Years of effort and $40 million have been wasted, Its state-based system has no future, The best the state Government can hope for is that ECV will be cannibalised by those responsible for building the national system.

The Australian | Opinion | 12 July 08