ECV - the last post from the House?

Mrs KRONBERG (Eastern Metropolitan) 

 

I find that there are serious sinister elements to the e-conveyancing system. Buried in the e-conveyancing system is a grab for cash. It is almost a new kind of taxation on behalf of this government. As a way of herding people like sheep -- there are the ones that get on the truck and the others that run out into pasture -- to use the e-conveyancing system the government has placed an impost on people who refuse to use this electronic device. A price rise has been factored in for people who are buying homes.

On top of the state's stamp duty burden and all of the other costs that are passed on by developers to homebuyers, there is a ratcheting up of some 32 per cent on the price of conveyancing. This corralling is to ensure that users of the old paper-based system are forced to turn to the new electronic system.

How are we to understand this grab for cash in this climate? The dimensions are that the government is set to collect an extra $6 million from the price hike of $15.50 on the 400 000 conveyancing transactions across the state. I think these sorts of burdens are an obscenity. What if you wanted to avoid paying the $15.50 on those transactions? What choice do you have? 

 

Mr D. DAVIS (Southern Metropolitan) 

 

I am pleased to be able to make a contribution to the debate on the motion that has been brought to the chamber today by Mr Rich-Phillips, and I compliment him on his timely and balanced motion. It is a motion that does draw openly and directly on the work of the Auditor-General over the recent period. I want to put on the record my compliments to the Auditor-General for the very important series of reports that deal with these areas of ICT (information and communications technology) project implementation by this current Labour government. Nine years into this government and we have an enormous list of projects, and I do not need to detail them all. Mr Rich-Phillips and others have looked at particular details in those projects. But it is important to note that today we do not see the Minister for Information and Communication Technology in the chamber; we see the Acting Minister for Information and Communication Technology, who is trying to get a grip on this portfolio, trying to get a grip on this out-of-touch area of government activity that has cost the community an enormous amount of money.

The motion of Mr Rich-Phillips is timely, balanced and sensible, and points to a major area of government failure over the last nine years. Again I put on record the importance of the Auditor-General's work in forensically ensuring that these matters come to public and parliamentary notice.

My comments today, beyond what I have just said, will be restricted to the electronic conveyancing issues, which I have raised in the Parliament on a number of occasions previously. The Acting Minister for Information and Communication Technology will know that in his other role as Minister for Environment and Climate Change he has responsibility -- and I am sure some days he rues the fact that he has this responsibility -- for electronic conveyancing. To be fair to him, he inherited this white elephant, and I say advisedly it is a white elephant. It is worth putting on record that this project is now tens of millions of dollars -- in all probability more than $40 million -- in the red. It has been mismanaged comprehensively by the department, and there are real questions of probity as to how this process has been undertaken.

I have indicated in the Parliament before that there are serious questions about the involvement of Ajilon, which is indeed a major international contracting company that has, in my view, an unhealthy position in the way it is operating with the Department of Sustainability and Environment. I make the point that Mr Rick Dixon from that firm is sitting in a position where not only is he in a managerial role in the department but he is also involved with the Ajilon firm, which is a successful tenderer to that department as well.

It is hard to think of a more difficult position to be in in terms of avoiding the appearance of a conflict of interest, and it would be hard to avoid the appearance of a conflict of interest in such a situation where you are both in a managerial role and also a contractor for a major contract with that section of the department.

I note that the decisions that have been made by the Council of Australian Governments to move towards an electronic conveyancing system nationally are important. I believe this is the way to go nationally. There are enormous transaction costs that can be reduced by the implementation of a successful electronic conveyancing system that is compatible across jurisdictions. To implement such a system you need to have major buy-in from the stakeholders in the transactions involved inconveyancing -- in this case, hopefully, electronic conveyancing -- and they are the banks particularly, but also building societies and credit unions as well, and solicitors and conveyancers.

The truth of the matter is that this government has not been successful in winning the confidence of the banks in this country, it has not been successful in winning the confidence of the Law Institute of Victoria and solicitors, and there are major concerns about the liabilities that may arise from transactions that occur where there is no satisfactory insurance behind them. The advice to many solicitors is, 'Do not take part in the Victorian system because of the insecurity of your legal indemnities and your insurance support in particular'. That is a major concern. The government has not got these factors right. It is important in implementing these systems to ensure that you have the support of the major players. Ultimately the system will only be used in the way that we would all desire if it does have support across major industry groups.

What is the government's solution to that? It is to belt those who have to pay conveyancing costs across the head.

It says, 'We're going to lift the price of paper conveyancing, although we know that there is only one transaction in Victoria that has occurred as a full electronicconveyance transaction' -- one! -- 'at a cost of $40 million for the project'. What a white elephant, what a disaster, and what a disgrace. The minister now has two hats with which to manage this responsibility -- as Acting Minister for Information and Communication Technology on the one hand and as Minister for Environment and Climate Change on the other. He is now in a position where he can certainly intervene to stop this remarkable merry-go-round of activity where consultants order more work from a consultancy with which they are connected, they grow richer by the day, the money is pumped in by the community and there is no output. One transaction -- $40 million! What a disgrace. The minister should hang his head in shame. Let me just ask the minister how many things he could have used that $40 million for. Health, education or transport? Which of those would have been better to have spent the $40 million on?

Let me now move to the national system. That same group of consultants who have got their grip and their teeth into the department in Victoria -- some might say it in a more prosaic way than I have explained it, and God knows what transactions have transpired outside the department on this matter -- now want to get their teeth into the national system as well. It is a disgrace, and it should be stopped.

The Council of Australian Governments has said we are going to go to a national system, and that is supported. There should be a national e-conveyancing system, as the national newspaper and others have indicated very strongly, but it should be a clean system. It should not be a corrupt system; it should be a system that is seen to be clean, and it should be a system that the community in all states can have confidence in. I, for one, do not have confidence in the system in Victoria, and that is a very sad fact, given the expenditure of more than tens of millions of dollars of community money.



That same group of consultants now want to try to ramp the department up to go into bat at the national level. They now want to get their mitts on the money across the nation. Let me tell you -- and I think some of my federal colleagues have begun to make this point clearly too -- that it is unlikely that the national system will jump at such an offer. I do not think the state governments around the country and the national government are going to be willing to fund at a national level an expansion of a system where only one transaction has been delivered for $40 million.

I think it is worth quoting very briefly the editorial in the Weekend Australian of 12-13 July 2008, and then I will conclude. The heading is 'Nation building' and the subheading is 'Lessons from Victoria's wasted conveyancing efforts'. I will quote several paragraphs from this because I think it is important. It points to the transaction costs that can potentially be saved and the benefits for the national economy. It reads:

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 modern 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.

That is not just for one year; it is for next year, the year after that and the year after that. Economic efficiency is about lowering the transaction costs in the economy, and that can be successfully done with an electronic conveyancing system, but not a white elephant like we have got in Victoria. The editorial goes on to say:

The Victorian government appears to have wasted $40 million by building a system that does not comply with the basic requirements of the main players in conveyancing ...

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

The first mistake was the refusal to accept that conveyancing is primarily a commercial transaction, not a filing procedure for land title bureaucrats.

Those at Land Victoria have a lot to answer for on this. This is a long-term blunder in management of land procedures that should have been done correctly.

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 --

Electronic Conveyancing Victoria --

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 party is off to a flying start.

I agree. It is something that should be supported, but there are traps for young players. In Victoria this Brumby government has fallen deep into the pit.