The federal Government cuts link to ailing e-scheme

Chris Merritt, Legal affairs editor | June 05, 2009
Article from: The Australian

THE federal Government severed one of its last links with the moves to establish a national electronic conveyancing system last week after being informed that the scheme was on the brink of collapse.

The decision to reduce the Government's involvement was taken last Friday by an inter-governmental committee that reports to Finance Minister Lindsay Tanner and Small Business Minister Craig Emerson.

That group, the business regulation and competition working group, decided to hand responsibility for the planned system to the governments of Victoria, NSW and Queensland.

The decision came a week after Kevin Rudd was warned that the project was at risk of "complete failure".

This warning was contained in a letter to the Prime Minister from Les Taylor, a former general counsel at the Commonwealth Bank, who heads the steering committee that has been planning the national e-conveyancing system since 2005.

Mr Taylor told Mr Rudd that unless $20million in repayable seed funding could be found to establish the company that would run the new system, lawyers, bankers and conveyancers were likely to abandon the project.

While the commonwealth has promised the states $550million if they undertake a series of micro-economic reforms, including e-conveyancing, no funds have been earmarked for the project.

Friday's decision to shift responsibility for the scheme to Victoria, NSW and Queensland was taken by government officials at a meeting that was not attended by ministers.

One of those familiar with the meeting said it was normal for responsibility for major national projects to be divided between the states.

However, Opposition legal affairs spokesman George Brandis urged the Government to take back the lead role on the project and end years of bickering between the states that have alienated the private-sector players in conveyancing. "It has been a shambles for more than a year now and the Attorney-General has shown a complete lack of leadership in trying to resolve the problem," Senator Brandis said.

"There is a very significant risk that because of the delay and lack of leadership from the commonwealth in particular, that this whole project might fall over.

"The optimal result of a seamless national system is going to be lost and we may well end up with a set of arrangements that are no better than the current arrangements."

He said the problems with e-conveyancing went much deeper than the lack of funding to establish the new system.

"The various participants cannot even agree on a model that they are prepared to work towards," Senator Brandis said.

"Until the state governments are able to reach agreement on that threshold question, there is no point in talking about funding for the system."

He said the lack of agreement between the states appeared to be associated with the fact that the Victorian Government had continued to develop a state-based e-conveyancing system while industry and other state governments wanted a national one.

Last October, it was revealed in The Australian that the Victorian Government was continuing to develop its system -- less than four months after Mr Rudd had announced that all states would be using a national e-conveyancing system by March 2010.

In a joint statement with Mr Tanner, Mr Rudd said last July industry groups had estimated that "a national electronic conveyancing system could reduce the costs of buying and selling property by $250million a year".

"Consumers will save money by spending less on expensive legal and conveyancing fees," the joint statement said.

They said the agreement to establish a national system "is only possible because all states and territories have agreed to co-operate".

The delayed start date of late 2011 will deprive house buyers and sellers of cost savings that on the estimates used by Mr Rudd and Mr Tanner are worth about $437million.

The later start date was put in place after all state governments failed last year to meet a series of deadlines for seven key decisions on establishing the new system that had all been listed in the July statement by Mr Rudd and Mr Tanner.

At the same time, the Victorian Government continued to develop its state-based system, which would be at risk had the states reached agreement on the matters listed in the July statement.

The deadlines that the states missed had been set after e-conveyancing was placed on the agenda of the Council of Australian Governments following a summit in February last year of the key industry groups.

That meeting was chaired by one of the most senior officials in the federal Attorney-General's department, Richard Glenn.

Mr Tanner and Mr Emerson were then given responsibility for a working group of officials that was to prepare options for the structure of the system.

But in March, it emerged that the federal and state governments had agreed to delay the new system and responsibility for the project had moved back to the states.

Senator Brandis said the hiatus over the national e-conveyancing system could be resolved if Mr McClelland ensured the project was given priority by the standing committee of attorneys-general.