Conveying the buck

THE delay to the planned national e-conveyancing system will prevent big cost savings being passed on to homebuyers nationally but, in Victoria, there will be some more pleasant side effects for the state government.

The delay to the national system looks like extending the financial windfall that is currently being enjoyed by the government.

That windfall is the result of increased charges for traditional paper-based conveyancing that were imposed by the Government to drive traffic to its state-based e-conveyancing system. That system, known as ECV, has a fee regime that is lower than the fees for paper-based conveyancing.

Nevertheless, it has been used for just one property settlement because it does not meet the fundamental requirements of its main customers -- banks and solicitors.

As a result, ECV is being boycotted by the banks -- which favour a national approach -- and by solicitors, who fear it will expose them to greater liability.

So while ECV is barely used, its existence is indirectly responsible for a revenue rip-off by the state Government.

If the states ever get around to establishing the organisation that will run the national system, the Council of Australian Governments has already decided one of its first responsibilities will be to have a good look at ECV.

The aim will be to decide whether any parts of the software underpinning the Victorian system can be used in the much larger national system.

For those who authorised the expenditure of $40 million on ECV, that process is unlikely to have a happy outcome.

Even if the new organisation decides to recycle 75 per cent of ECV's software, there will be no place for a state-based e-conveyancing system once the national system is rolled out.

Crucially, COAG has endorsed a single national system, not a federation of state systems.

If the new national system is indeed national, it is unlikely to be boycotted by the banks and if the nation's governments build a system that meets the minimum requirements of solicitors, they will have no reason to stay away.

That means the end of Victoria's revenue boom. Worse, it also means someone will need to explain to Victorian taxpayers why $40 million of their money was spent on a little-used system that is about to be scrapped.

Then again, all that unpleasantness will only happen in the most unlikely of circumstances.

It would first require all the state governments to break with tradition and take a national approach to e-conveyancing.

Now that the federal Government has decided to take a back seat on this issue, the one centre of power that is obliged to act for all of the nation is unlikely to cause much trouble.

Even if the states do nothing about e-conveyancing, the federal Government has signed on to a COAG deal that means the states could still be in line to pocket every dollar of a $550 million reward payment for reforming the national economy.

So if nothing changes there is a strong chance that harmony will continue to prevail in Victoria and conveyancing will continue to be a relatively expensive paper-based pursuit.

There is, however, an alternative.

To date, the record of the states on e-conveyancing is appalling. They have shown little interest in moving quickly to pass on cost savings to businesses and consumers.

They continue to treat this issue as a low priority, despite the fact that Kevin Rudd says e-conveyancing can cut the cost of buying a home by hundreds of dollars.

So how long will it be before the banks wash their hands of this mess and team up with solicitors and licensed conveyancers to establish a private sector e-conveyancing network? This would not, of necessity, extend to the state land titles offices. ...

It would still, however, cut the cost of property transactions and lead to savings that could be shared between banks, conveyancers and homebuyers.

It would also have the added benefit of insulating the private sector from the massive waste of time and money that is the hallmark of the states' handling of e-conveyancing.



PREJUDICE: Chris Merritt | March 20, 2009

Article from: The Australian