I'm late for a settlement

Conveyancing drift

The Australian 29 may 09

THE late newspaperman Paddy McGuinness frequently advised reporters to "follow the money" in order to arrive at the root of any particular problem.

If that dictum is applied to the problems of building a national electronic conveyancing system, it is hard to avoid the trail of money laid down by the Government of Victoria.

If a national electronic conveyancing system is established, the Victorian Government will need to admit that much of the money it has spent on its state-based electronic conveyancing system has been wasted.

A national system -- by definition -- would operate in every state. And that would consequently render the Victorian system superfluous. Politically, that would be a catastrophe for the state Labor Government.

The state Opposition estimates that the Government has shelled out about $50 million on its e-conveyancing system.

Yet that potential embarrassment would disappear if the national system were somehow stymied.

Every year that a national system is delayed is another year in which buyers and sellers of houses are being deprived of cost savings that have been estimated to be worth $250 million.

Those benefits, however, are spread among a diffuse group of people in other states who might not be aware of what they have lost.

E-conveyancing edges closer to total collapse

Chris Merritt | May 29, 2009 The Australian

THE push to roll out a national electronic conveyancing system is close to collapse because the nation's governments have not allocated $20 million to establish a company to run the new system.

Kevin Rudd was warned this week that without repayable seed funding for the new company, the national e-conveyancing project is at risk of "complete failure".

The Prime Minister received this warning in a letter from Les Taylor, who chairs the steering committee that has been planning the new system.

Even though the Council of Australian Governments has agreed that the states should establish a single national e-conveyancing system, Mr Taylor wrote that the savings from the project were at risk of being lost for at least a generation.

Those savings have been estimated by industry groups to be worth $250 million annually.

"I have to tell you that the real prospect that you and your COAG colleagues are facing is the complete failure of this important micro-economic reform project," Mr Taylor wrote.

A former general counsel of the Commonwealth Bank, Mr Taylor said lawyers, bankers and conveyancers were likely to abandon the project unless $20 million was provided to establish the company that will run the system.

The project could be saved "by a modest injection of seed funding by the Commonwealth", Mr Taylor wrote.

Mr Rudd's office told The Australian the federal Government had already provided significant funding through COAG in exchange for the states and territories agreeing to set up the new system.

A spokeswoman for Mr Rudd said the Government was committed to providing $550 million to the states and territories as part of COAG's "seamless economy national partnership agreement".

"In exchange, the states and territories agreed to reform and harmonise regulation across 27 regulatory hotspots, including the creation of a national electronic conveyancing system by the end of 2011," the spokeswoman said. "This includes an upfront facilitation payment in 2008-09 of $100 million, to be shared between the states on a per capita basis."

Mr Taylor's letter to the Prime Minister is the result of concern among the private sector groups involved in conveyancing that none of the money flowing to the states under the COAG agreement has been earmarked for the e-conveyancing project. Because the e-conveyancing company is not due to be established until September next year, it will be too late to have access to the Government's $100 million facilitation payment that will be made this financial year.

And while the COAG agreement provides a strong financial incentive for the states to make progress on 10 priority areas listed in the agreement, those priority areas do not include e-conveyancing.

If the states fail to meet their commitment to establish the project, they could still receive their full reward payments from the commonwealth so long as they make progress in the other areas covered by the agreement. Concerns have also emerged that the problems associated with the national system could be associated with Victoria's growing commitment to a separate state-based e-conveyancing system.

Victorian Opposition frontbencher David Davis said he believed the state Government had now spent about $50 million on its state-based system, which is known as ECV.

"It's a tragedy that a genuine national system has been spiked by the activities of the Victorian Government in preference for their $50 million white elephant," Mr Davis said.

COAG's endorsement of a single national system raised doubts about the future of ECV because the national system would operate in each state.

While ECV has been open for business for about 18 months, it has been boycotted by solicitors because of concerns by their professional indemnity insurer that it could expose lawyers to increased potential liability.

The major banks have refused to use ECV because they do not wish to encourage the development of state-based systems that would diminish the efficiency gains from e-conveyancing. 

All the private sector players in conveyancing are concerned that COAG's decision to delay the establishment of the national system means years of preparatory work by the steering committee is in danger of being lost. 

By delaying the start date for the project from March next year until the end of 2011, COAG has already wiped out cost savings for home buyers that, based on industry estimates, are worth about $437 million. 

Mr Taylor's letter to Mr Rudd says private sector groups involved in conveyancing had made it clear to the steering committee at its last meeting that without a clear funding commitment, they did not believe their organisations would continue to support the project. 

These groups include the Law Council of Australia, the Australian Institute of Conveyancers and the Australian Bankers Association. 

The steering committee, which also includes representatives of state and federal governments, has been working towards establishing a national e-conveyancing system since 2005. 

While its work has been hampered by disagreements between the state governments, Mr Taylor told Mr Rudd that many key requirements were well advanced. 

"Unfortunately the point has now been reached where unless a firm commitment to provide the funds necessary to establish the corporation and to attract capable and skilled directors and executives is forthcoming, then I have to tell you that it is my considered opinion that the industry participants in the project will be highly unlikely to be able to continue their support of the project," Mr Taylor wrote. 

"The fact is that if the banks and legal practitioners, in particular, walk away, the project will fail and the considerable value and progress created by the committee's work to date will be lost. 

"If this is allowed to happen, then the prospect of electronic conveyancing delivering financial benefits to Australians, particularly greater housing affordability for young people will be lost for at least a generation," Mr Taylor wrote. 

The Australian Bankers Association said the uncertainty over the capital base for the national system was a great concern. 

"You cannot expect private sector organisations like banks to stand idly by and do very little while the states have gone back to their people to discuss funding," said ABA director of retail regulatory policy Ian Gilbert. 

"Each bank will have to make its own decision but it's totally unrealistic to expect that people will be kept on hold, on ice, while the jurisdictions sort out questions of funding. 

"This is not the way that the private sector would go about it. It would all be up front, organised and settled," Mr Gilbert said. 

Law Council of Australian president John Corcoran said the legal profession was extremely disappointed by COAG's decision to delay the start date for e-conveyancing. 

"It really took us back to square one," Mr Corcoran said. 

Westpac backflip on India jobs shift

WESTPAC has dispatched a strike team to India as part of an offshoring reconnaissance mission a week after the bank's chief, Gail Kelly, drew widespread praise for suspending the practice of sending jobs overseas.

The Australian understands the bank's top technology executives have travelled around India over the past two weeks to meet with about eight outsourcing companies.

Two outsourcers will be selected to perform a range of work and are set to benefit as Westpac spends hundreds of millions of dollars over the next couple of years to update core banking systems and integrate complex technology functions as part of the $12 billion acquisition of St George bank.

Several sources confirmed the Westpac contingent met with technology firms Accenture, IBM, EDS, Wipro Technologies, Tata Consultancy Services and Infosys, as well as one or two others.

A fortnight ago Ms Kelly announced she had put the brakes on Westpac's offshoring of Australian-based jobs, a decision prompted by the recession and expectations that unemployment could rise next year to 8.5 per cent.

"I've decided to suspend further offshoring until conditions improve," she said.

Westpac declined to comment on the visit to India or the bank's future offshoring plans.

Ms Kelly's commitment to keep jobs in Australia followed a three-year undertaking by Commonwealth Bank chief executive Ralph Norris not to send jobs offshore.

Westpac's stance also drew praise from Finance Sector Union national secretary Leon Carter who said the bank had sent 460 back-office jobs overseas, mainly to India, and was probably considering a similar fate for "1000 or more" other positions.

"This is an excellent outcome because maintaining jobs in Australia is of paramount importance," Mr Carter said at the time.

It is believed Westpac plans to set up a two-vendor panel which can be called on when necessary to perform a range of work.

The prospective outsourcing vendors were not provided a specific brief by Westpac but were asked to pitch for where they could offer technology services to the bank.

It is not clear whether there are plans to set up a "captive" outsourcing centre similar to ANZ's Bangalore facility which houses more than 3000 staff.

The winners will benefit from the merger of St George and Westpac, which is slated to cost $700 million when completed, with half of the spend expected to cover the integration of the banks' technology systems.

It is believed the outsourcers panel could be drawn on to complete the lion's share of this work as well as lucrative work to update Westpac and St George's core banking systems.

St George has already outsourced the support and maintenance of key legacy systems to Indian firm Infosys.

There has been a surge in local technology work over the past year, spurred by several legacy system overhauls and consolidation across the financial services industry.

An industry source said banks had been forced to look for resources overseas because of the limited technology talent pool in Australia.

• Font Size:DecreaseIncrease
• Print Page:Print

Mahesh Sharma | May 18, 2009 | The Australian

30 minutes to lodge a caveat

Electronic Conveyancing (EC), the first online caveat has been processed in Victoria by EC Subscriber and National President of the Australian Institute of Conveyancers (AIC), Pauline Barrow.

Pauline said EC was a “convenient and efficient online service (which) has resulted in the preparation, lodgement and registration of a caveat within 30 minutes.”

Source EC News 13 May 2009

LIXI - major focus on NECS

LIXI continues to contribute to the development of the National Electronic Conveyancing System (NECS). The work currently under way will ensure that the data transactions are designed well in advance of the roll out of NECS and conform to the requirements of LIXI members. NECS is proceeding rapidly with requirements development and has encouraged LIXI to be proactive with the requirements for the data standards. All members are encouraged to participate in the requirements gathering process. The NECS transaction standards are a major deliverable for LIXI over the next 18 months – on the scale of the original credit application language – and is a key focus for us this year.

May 09 LIXI newsletter - Erik Fenna CEO - introduction