Global experiences with public private partnerships for land registry services: A critical review

The purpose of this paper is to provide an overview of experiences globally with LRS PPPs and privatization proposals. Readers may recall that in the first part of the paper published in November issue the emphasis was on understanding privatization and Public Private Partnerships. In the second part published in the last issue, the author shared some of the global experiences from Canada, United Kingdom and Malaysia. In this concluding part the author shares the experiences from the Philippines, New Zealand and Australia

Dr. Keith Clifford Bell RFD, FIEAust, FISV, F.ASCE, LS, CPEng, NER The World Bank Office Bangkok, Thailand

 

Philippines

The Philippines is a Torrens system jurisdiction, adopted from the version used in Massachusetts, USA, during the American colonial period. The responsibility for land registry in the Philippines is Land Registration Authority (LRA), under the Department of Justice. The LRA’s operations are highly decentralized with 16 Regional Registries of Deeds (RD), together with the 162 RDs, as well as the central office in Quezon City, Manila.

The county’s land titling system was entirely manual and transactions could take years to process, unless informal fees were paid. At least half of legally occupied land is not registered. There is a high proportion of fake and fraudulent titles in the system. Most RDs were in poor dilapidated condition and lacked security. All records were held in largely disorganized storage roos lacking security. There was weak capacity and no IT infrastructure. To do a land transaction it was always necessary to visit the local RD covering the municipality, province or district where the parcel was located.

In 2003, the Philippines launched the Land Titling Computerization Project (LTCP) to restore confidence in the country’s registry and titling systems and raise its level of service to the public. To proceed with computerization, and in the difficult fiscal situation of the country, which was a developing country, the only way forward was to see private sector financing. The government decided to pursue a PPP with private sector joint venture consortium partner, the Land Registration Systems, Inc. (LARES). LARES is the project company formed by the STRADEC consortium that was awarded the contract for the LTCP under a Build-Own-Operate Transfer (BOOT) arrangement, as provided by Republic Act No. 1778 and its Implementing Rules and Regulations. As such, LTCP is being implemented at no cost to the government. It is wholly funded by the private investors without any government guarantee.

It is noteworthy that none of the consortium members had experience with land registration or automation. The initial lease was for ten years without guarantee of renewal. Early into the project, the private partner struggled, lacking competence and there were also issues on the government side. The project stalled for around two years and worked through an arbitration process. When it restarted around 2005-06, there were changes to the consortium partnership and the proposed backing by the International Finance Corporation did not proceed. Importantly a technical partner was brought on board – IL&FS Technologies India, part of IL&FS Group, one of the largest infrastructure and finance conglomerates in India. It is also notable that the BOOT agreement morphed into a BOO structure and the original ten-year concession period, seem to have been forgotten.

Governance has been a constant concern throughout project implementation. A further key issue has been charging government agencies at both national and local level for data. Notably, many of these government agencies contribute data free of charge to the LRA, and prior to the project received free access to land records.

Nonetheless significant progress has been made. As at August 2017 total of 159 RDs have been fully computerized. A further innovation is called “Anywhereto- Anywhere (A2A),” under which the public can apply for certified true copies of land titles, located in all other parts of the country, by going to any of LRA’s Registry of Deeds offices nationwide.⁷⁸

In sum, the BOO PPP could be judged as successful in the Philippines, where it has almost achieved full national computerization. Private finance was the only viable option for the government. However, implementation has not been smooth and it is largely assessed that government has lost ownership of land titling data through the BOO modality.

Under the original BOOT modality, full operations, including all data would have returned to government. There was no real opposition to the PPP. The general public was largely unaware and there was no significant professional opposition. There have been no staff cuts, so staff opposition was negligible. It is unknown as to whether the private consortium has yet recouped its outlays at this time, and once it has, as to whether any royalties will be returned to government.⁷⁹

New Zealand

Much can be learned from the experiences in New Zealand – lessons that Australia seems to have ignored. Land Information New Zealand (LINZ) was formed in 1996 following the restructure of the then Department of Survey and Land Information (DOSLI). DOSLI was restructured into Land Information New Zealand (LINZ) and Terralink NZ Ltd on 1 July 1, 1996. LINZ was vested with core government land related regulatory and purchase functions. Terralink NZ Ltd (then a State-Owned Enterprise and now fully divested from government and is a private company) was vested with the commercial activities. (NB. At the same time the responsibility for hydrographic services was transferred from the Royal New Zealand Navy to LINZ.)

In establishing LINZ, the government considered a PPP for land registration and an offer from Unisys was received and rejected. The specific reasons for rejection are not available.⁸⁰

New Zealand gave further consideration to a LINZ PPP a few years later, and in 2013, as part of its decision-making process, LINZ hired ConsultingWhere Limited and ACIL Allen to review the suitability of the Ontario LRS PPP for New Zealand. The review would seem to provide a balanced assessment of the Ontario-Teranet PPP operation:

“It can be argued that the public private partnership and subsequent contractual arrangement have been a success. It enabled the development of a fully functioning electronic land registration system by the late nineties. The land registration process is now virtually all electronic, all records have been converted and there is an effective electronic land registration system readily accessible to the property business and the citizen. Financially, a long-term sustainable model has been established which yields profits for Teranet and revenue and royalties for the Government of Ontario. The latter has been able to benefit from the increased value of the business even after it sold all of its stake in it. Meanwhile, the public interest is able to maintain regulatory control whilst retaining ownership of the data.

On the down side, the conversion of records to POLARIS took longer and cost far more than originally estimated. The arrangement is monopolistic to the detriment of other commercial interests and competition especially in respect of the value-added services. Ontario is now locked into a very long-term agreement with Teranet which could lead to complacency and a lack of incentive to evolve the ELRS in line with technological and other changes and increasing user expectations.”⁸¹

However, the consultant concluded with a risk analysis with very strong warnings:

“The dangers inherent in the type of arrangements operating in Ontario if there are not strong controls and effective governance in place, particularly where agreements run for decades, are that: · The service provider will exploit their monopoly position to the detriment of any potential competitors for value added services; · Public ownership of the data does not guarantee access to the data if it is via a service provider that has little incentive to promote its use by others; · The rights of smaller players in the data deriving originally from them may get lost in the rush to establish an ELRS; · There will be little incentive for technological advance on the basis of, ‘if it ain’t broke don’t fix it’ or more aptly, ‘if it ain’t broke don’t spend money on it’; · There will little incentive to upgrade the data and no migration path in place for this to take place; · There is a lack of transparency in financial reporting.”⁸²

As can be seen, LINZ did not pursue PPP for land registration services, following its careful consideration of the independent review – the risks far outweighed likely benefits. This would seem to be in stark contrast to both NSW and SA which did not take reviews of the nature commissioned by New Zealand and did little in terms of risk analysis, at least with such information made publicly available.

LINZ is currently working on Advanced Survey and Title Services (ASaTS), a project for updating and expanding the range of services offered by the Landonline system for property transactions. This is the next generation of New Zealand’s Landonline system, first introduced in 2000.

“LINZ plans to use an ‘as a service’ model for Advanced Survey and Titles Services (ASaTS). This means that instead of paying a vendor to build a system that we then own, we’ll select a vendor that can deliver a suitable system that we pay to use – a bit like renting. We are now working through procurement processes to find a vendor to deliver this.”⁸³

LINZ has not reported the expected costs as the government has deemed it to be “commercially sensitive”.

The project schedule for ASaTS (below), is a multi-year effort based on rigorous research and business planning:

▪ 2013 Indicative Business Case – approved by Cabinet November 2013 and identified a preferred investment option.

▪ 2014 Request for Information (RFI) March – May 2014- sought market information to implement the preferred option for providing survey and titles services in the future.

▪ 2014-2015 Detailed Business Case on the preferred option, approved by Cabinet November 2015.

▪ 2016 Cabinet approval for ‘as a service’ approach to deliver ASaTS. LINZ begins procurement process to select a vendor.

▪ LINZ anticipates having ASaTS in place by 2021.⁸⁴

In sum, New Zealand seems by all accounts seems to have undertaken due diligence, including obtaining independent expert advice, throughout its evolution from DOSLI to LINZ and has now adopted a strategic, lowrisk approach for its primary business system provided by the private sector.

New South Wales

In April 2017, the NSW government announced the awarding of a 35-year lease of the state’s land registry, under Land and Property Information (LPI), to a consortium comprising Australia’s Hastings Funds Management and pension fund First State Super. Under the deal, described as a “purchase”, the consortium has agreed to pay A$2.6 billion to run New South Wales state’s land registry. The consortium is made up of 80 percent Australian institutional investors, including First State Super, investment funds from Hastings Funds Management and a 20 percent stake held by the Royal Bank of Scotland Group. The consortium has received the relevant regulatory approvals to proceed. The PPP operated Land Registry will be answerable to the state’s Registrar General. The government has the power to resume control of the Land Registry if required. This author is not aware of the specific conditions required to resume control by government including any payments, notification periods, dispute arbitration and so forth.

The primary driver for the PPP, which the NSW described as a “sale” is to fund infrastructure across New South Wales, as population growth and a housing boom, particularly in Sydney, “stretched public services” such as transport. However, the former Premier has also advised that a significant proportion of the proceeds would finance a major new sports stadium. NSW has also continued to report much of its justification being based on much-lauded “successes” of the Ontario LRS PPP.

A former NSW Registrar-General, Kevin Nettle, who has also worked in international development assistance for land registries, advised⁸⁵:

“I had hoped to see what the stated justification was for the change but the case is lacking any support. Many of the registries in the case studies were so undeveloped that something drastic had to be done and PPPs were a good solution. However, NSW was not in that situation, either from a technological or a customer service viewpoint. It was the first registry to computerise and I was invited to the Canadian Registrar’s Conference in 1987 to present on our achievements and went to Ontario to see what they were attempting with Teranet at that time. We were way ahead of them. In NSW, all the hard work of data conversion was done long ago and services are online. National Australia Bank became our first online customer in the 1980s.

Some of the justification relates to creating a more customer focussed organisation. But again, back in my time the NSW registry won the Australian Quality Award for Service Quality competing against the private sector. That service quality must still exist as all the professional bodies, Law Society, Institution of Surveyors etc. opposed the sale of the registry.

So, the government has foregone an annual dividend of 150 million and rising in return for a one-off payment of 2.6 billion much of which will go to fund a football stadium. Maybe this is short term political thinking or just political ideology. If there is any justification it can only be in the redevelopment of the computer systems. Many of these are now some 20 years old and no doubt are old from a computer viewpoint and could be redeveloped. Whether that needed to be done by the private sector is a moot point as the registry had always been able to manage it previously helped by the fact that it was an executive agency. Landgate, which bought the NSW system in 2000, is currently redeveloping through Advara. Maybe they are now hoping to sell that back to NSW.”

Critical concerns were raised by professions including lawyers and surveyors, which are well summarized by a former President of the Law Society of NSW:

▪ The land registry is a natural monopoly and critical infrastructure upon which the security of business and commerce are based.

▪ Lack of an independent assessment of the deal, and whether the expected upfront payment is suitable compensation for forgoing the annual revenue.

▪ Likely requirement for home buyers to pay title insurance, as occurs in the US. Title insurance on the purchase of a A$1.4m property is currently about A$990. Based on 213,000 land transfers lodged in NSW in 2016, it amounts to around A$210 million in insurance premiums or tens-of-billions of dollars over the 35-year term of the lease.

▪ Failure to consider why similar PPP proposals were rejected in other jurisdictions around the world.⁸⁶

Significantly the lack of an independent objective assessment could be considered to be a breach of duty of care and due diligence. In late 2014, the NSW Productivity Commission’s report on the provision of public infrastructure, explicitly warned that the government’s financial incentives for privatization of public assets (“asset recycling”):

“…could act to encourage privatization in circumstances that are not fully justified and encourage the selection of new projects that do not have demonstrable net benefits”.

The NSW PPP raises many concerns:

▪ NSW’s primary justification for the PPP, was short-term funding needs to invest in infrastructure. NSW’s LR was modern, advanced in use of digital technologies, provide good service delivery, was secure, met the required obligations to state and federal police for Law Enforcement Agency Network (LEAN) agreement, had the confidence and trust of the banking sector, professions, private business and the general public.

▪ The real return to the state through the PPP versus what would have been realized over 35 years was not provided for public scrutiny. Media has reported “insider” views that the sale was a bargain and the real upfront payment should have been A$3-4 billion. LPI, which enjoys a 70 per cent profit margin, generated $190 million in revenue in 2015-16. Fees for regulated products will rise by CPI each year. Leaked governmentsales pitch documents stressed the billions of dollars profit that would be made by the private investor.⁸⁷

▪ The government chose to ignore widespread public opposition to the PPP and proceed. This suggests that the government had no intention to change its mindset and was never open to considering alternatives or the wishes of the electorate. Both the former and current Premiers presented the Ontario success in their respective pitches the NSW PPP.

In sum, NSW had an efficient, wellcapacitated land services agency, LPI, with modern technology prior to entering the PPP. The government saw an opportunity, for realizing significant immediate funds from the private partner to fund infrastructure and it was fixed on this path. The NSW PPP is held to be a great success by both the Victorian and SA governments. Both SA, and now also Victoria, utilize the NSW PPP establishment as justification for proceeding down similar paths for their respective jurisdictions.

What enabled the NSW LRS PPP to proceed? The government which doesn’t control the Upper House of Parliament, secured the vote of Reverend Fred Nile, Christian Democrat, to get the requisite legislative bill passed.⁸⁸

South Australia

The SA government announced its intention to “commercialize” a range of transactional land services and functions in the 2016-17 State Budget On August 10, 2017, the SA Premier announced that Land Services SA has been appointed as the exclusive service provider for South Australia’s transactional land services, which cover land registration and valuation for a period of 40 years. The Government will receive A$1.605 billion in an upfront payment. The Government also will receive an ongoing annual royalty stream. The Land Services SA consortium comprises Macquarie Infrastructure and Real Assets and the Public Sector Pension Investment Board of Canada. The deal is comparable with that signed in NSW in April 2017. Notably, the NSW PPP does not cover valuation services.

Although the commercial details of the contract are confidential, what is known includes:

▪ The contract includes a commitment by Land Services SA to establish an Innovation Hub in Adelaide, provide A$35 million in ICT investment in South Australia and to work with local digital start-ups.

▪ Land Services SA will accelerate innovation and investment in transactional land services and functions as it will be investing in major ICT systems and bringing new product offerings to market.

▪ Under the commercial contract, the government retains key legal, policy and regulatory functions and responsibilities while the private sector takes over processing of transactions for the next 40 years.

▪ Government will continue to set prescribed fees and charges for land services

▪ Land Services SA will have exclusive rights to commercialize related data, subject to Government approvals.

Land Services SA will adopt the existing Lands Titles Office information technology systems. Some existing staff will be expected to be hired by Land Services SA, which implies an early loss of expertise, and long-term risk of any early recovery of the land functions if the contract had to be terminated.

In addition to the upfront payment and annual royalties for the period of the PPP, the government perceives the key benefits included:

▪ Reduction of future operating costs to government and drive innovation in customer service.

▪ Promotion of investment in systems and reduce risks to government in future ICT upgrades.

The SA government has been very specific of the statutory responsibilities that will reside with, and be oversighted by the government which include:

▪ Continuing to guarantee indefeasibility of property title, supported by the statutory assurance fund;

▪ No change to Torrens Title or other legal status of land;

▪ The Government retaining key legal, policy and regulatory functions and responsibilities with the statutory positions of the Registrar- General, Valuer-General and the Surveyor-General continuing;

▪ The Government will continue to set regulated fees and charges with no changes other than the standard annual increases applied;

▪ The Government retaining ownership of titling and valuation data and associated intellectual property;

▪ Stringent service delivery standards, data security and privacy protections –with penalties, up to termination of the contract, for breaches.

Key opposition to the PPP included⁸⁹:

▪ The Law Society of South Australia and the Property Council raised the key risks compromising data security, eroding services, as well as increasing consumer costs;

▪ The Public Service Association (PSA) and Australian Institute of Conveyancers have also raised concern about the likely need for title insurance, risk of compromising privacy, failure to publicly disclose protections and risk mitigations due to “commercial in confidence”;

▪ The government’s move to PPP was more about a short-term cash injection

The PSA established a very informative website “The Secret Selloff” which provides a very comprehensive coverage of media reports of government “asset recycling” proposals, including LPI, which is informative and inciteful.⁹⁰

What has not received adequate exposure is the real return to government over the 40-year period taking into account the upfront payment, annual royalties adjusted for changes in prices due to inflation or other external effects and so forth. Assessing the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time. Adjusting the nominal return to compensate for factors such as inflation allows you to determine how much of your nominal return is actually real return. Was there a net social benefit analysis?

In sum, SA had an efficient, wellcapacitated land services agency with modern technology. The government saw an opportunity, for realizing significant immediate funds from the private partner and also ongoing technology innovation to support the state. Opposition to the PPP was largely ignored by the government. The funds realized from the upfront payment became available for other government financing priorities. This is most definitely a case of the devil being in the detail.

Western Australia

Landgate, formerly the Department of Land Information (DLI) (and earlier the Department of Land Administration, DOLA) is the statutory authority responsible for land registration services, property and land information in Western Australia. In Landgate’s creation as a statutory authority, it adopted a hybrid model with both public and private characteristics. The compromise provided the financial flexibility, but the government’s greater oversight made the model more palatable to officials. The state continued to regulate prices for core services such as registration and valuation, and the new authority would still provide discounted services for other government offices – paid for by a state budget allocation. But the new agency could also develop and sell commercial products and services, and it would be responsible for funding its own operations and investments by using fee based revenue and commercial profits – enabling it to build any new IT systems it could afford

Significantly, the legislation establishing Landgate required it to generate a “fair commercial return”, with a portion of the agency’s profits, agreed upon each year with the minister, to be returned to the state government. The legislation enabled Landgate to engage in a wide range of business activities, such as providing consulting services, developing and marketing software or other intellectual property, forming companies, partnerships, or joint ventures and also commercializing land information.

When Landgate commenced in 2007, Western Australia faced the biggest land boom in the state’s history with the volume of transactions increased by 35%. With manual processes and limited staff, the registration of even a simple transaction took up to six weeks at the height of the boom.

In order to deliver land, mapping and geospatial services and provide context to the State’s property interests, Landgate coordinates access to location information held across WA government departments through the Western Australian Land Information System (WALIS). Landgate operates an open data platform called the Shared Location Information Platform (SLIP).

The immediate-past CEO of Landgate, Mike Bradford reported to the 2016 GovInnovate conference:

“…..the agency saw the writing on the wall in 2010, as the advance of electronic property trading gathered pace, and other states began to sell their own registries to the private sector in anticipation of the market shake-up.

Since then, NSW has announced its intention to sell off part of Land and Property Information, and SA is formally scoping its options for its own Lands Titles Office. Victoria’s then- Liberal government threatened to do the same in 2014 before it lost office.

‘We are seeing privatization of land registries starting to occur largely because the governments in each of those jurisdictions don’t believe that the government-owned operator has the capability or capacity to deal with the industry transformation we see coming’…

But instead of sitting and waiting to be dismantled, Landgate launched into a five-year, IT-based revolution.”

Since 2010, Landgate has undergone radical transformation as an alternative to moving to a PPP.⁹¹ The outcomes have seen a drastically smaller, vastly automated organization, as well as establishing Advara. A privatized Landgate subsidiary that was awarded the A$140 million IT contract for Landgate in December 2016, without bids being sought from competing providers. Landgate said it received an exemption from the requirements of the State Government’s competition policy from the Public Sector Commission (PSC) before handing out the contract.

The IT system for online title management, which is owned by Landgate, and for which Advara has the contract, was developed by partner Adecco. In addition to its IT contract to Landgate, Advara will continue to partner in bids on PPPs for other land titles registries. Advara was a technical adviser to the consortium that successfully bid on the A$2.6 billion PPP for NSW’s land registry services.

Advara is 78 per cent-owned by the Western Australian government, through Landgate, and 22 per cent by Swiss outsourcing giant Adecco, which paid A$2 million for its stake in the company in August, 2016. In July 2017, it was announced that the Landgate CEO, Mike Bradford, had stepped down and had been being appointed Advara’s CEO. Bradford was seconded to act as Advara chief executive in February 2017, having sought permission from the PSC for the transfer shortly after the IT contract was awarded.⁹² One can easily speculate on governance issues concerning Advara, but that is beyond the scope of this paper.

There are many lessons to be learned from the Landgate experience, which to date has avoided going down the LRS PPP:

“The statutory-authority model adopted in Western Australia had both advantages and drawbacks. Despite operating increasingly like a private company, Landgate still had to adhere to publicsector policies on human resources and financial management—for instance, not investing some of its cash reserves because doing so would add to the state’s already high net debt. Being a statutory authority meant Landgate faced financial pressures for efficiency but could think beyond the bottom line. Despite certain limitations, the broad commercial powers accorded to Landgate in its enabling legislation gave it far more flexibility and space to innovate than government department.”⁹³

In sum, Landgate was faced with many challenges including efficiency, technology upgrade investment, financial return to government and so forth. The government adopted the modality of a statutory authority to operate the LRS and source its IT from by a private sector partner Advara. Having said that, it is arguably ironic that Advara, majority-owned by the WA government is actively lobbying and pursuing business in other jurisdictions for land registry PPP and privatization.

Subsequently, since the original version of this paper was produced, Western Australia proceeded to enter into a fortyyear lease for Landgate for A$1.4 billion with Land Services WA, a consortium comprised of Macquarie Infrastructure and Real Assets, and superannuation funds Sunsuper and HESTA.⁹⁴

Other cases

There are extensive other PPP case studies that could have covered in this report, but time and space precluded their inclusion. However, these further examples are all developing countries, and whilst all are interesting with pros and cons, they are of less relevance to the Australian context. These further cases include:

▪ Nigeria – states of Ondo and Kaduna.

▪ Cabo Verde, a former Portuguese colony, is an archipelago approximately 570 kilometers west of Senegal, West Africa.

▪ Honduras

▪ Jamaica – another PPP with Teranet as the private partner

▪ India – Maharashtra State.

Part C: Lessons and conclusions

Safeguards

There are always risks associated with any decision to partner with the private sector in delivering land registration services. What may work in Jurisdiction A, may not work in Jurisdiction B due to one or more local factors that may not have been fully considered.

There would seem to be a consensus across most of the case studies that among critical safeguards that any government should have in place, there are always two key functions that must be under government control:

▪ setting fees

▪ ownership of data.

Other safeguards may include the retention of key statutory officer functions within government including Surveyor- General, Registrar-General and Valuer- General – where such positions, or their respective equivalents exist.

However, such critical oversights must be monitored and the role of the jurisdictional Auditor-General would seem to be critical. Of course, governments must act on the advice received.

From the perspective of law and order, it is important that law enforcement agencies have access to land registry information to help them in issues of monitoring and investigation of matters such as money laundering.

The rights of citizens to privacy and confidentiality should be protected and private partners should be prohibited from either commercializing such data or passing it to others except for official government purposes.

State lands (often called Crown or public) lands should also not be compromised by PPP lease.

Finally, where jurisdictional governments guarantee title, that should not be comprised.

Clearly, these thoughts on safeguards to mitigate risks, are brief. Identifying safeguards is one thing, ensuring compliance is another, and may prove to be challenging, especially if it is necessary to terminate the contract and for government to resume the land registry services operation.

Updates

Since the original version of this paper was prepared, the Land Registry of the Australian State of Victoria, was leased for an initial forty-year concession in August 2018 for A$2.86 billion to Australia’s First State Super.⁹⁵ Notably, Australia’s First State Super also secured the concession for the Australian State of new South Wales land registry services in August 2017 for A$2.6 billion. .Despite public outcry, and the significant opacity on making publicly available the real financial return or otherwise, using the usual economic and financial analyses based on net present value determinations, the government stuck to its policy decision to proceed. It is significant that this is the normal path for governments wishing to move down this path. Subsequently, the Australian State of Western Australia also entered into a forty-year concession for its land registry (Landgate) in September 2019 for A$1.4 billion.⁹⁶ There is no such thing as “readiness” for land registry PPP or full privatization, rather it is almost always a policy decision to yield a quick windfall to produce better government budgetary figures and in some cases to fund election promises. Nonetheless, it is the prerogative of governments to make such decisions.

It is especially profound, that Professor John Quiggan’s⁹⁷submission to the Victorian Upper House Enquiry advised:

“Broadly speaking the activities most suited to the private sector are those characterized by competitive markets, limited need for regulatory oversight, a wide range of products with constant innovation and significant opportunities for gains in operating efficiency. Conversely, the activities most suited to the public sector are natural monopolies operating in stable environments and requiring close regulation.”⁹⁸

Quiggan further advised that:

“.. a land titles registry service represents a ‘natural monopoly’ and is best operated by the public sector.”⁹⁹

Prudently, Australia’s watchdog, the Australian Competition and Consumer Commission (the ACCC) told the

“Committee that a private operator in the land titles register with ‘existing upstream or downstream interests in related markets’ requires government to enact appropriate and effective regulatory arrangements to ensure competition issues are addressed.’¹⁰⁰

Concluding remarks

There is a lot to learn from those LRS PPPs which are reported to be successfully operating, especially from Ontario and Manitoba and the respective justifications for going down the PPP path. On the other hand, there is a lot to be learned from jurisdictions that are reported to have rejected the LRS PPP or privatization approaches. Why have similar arguments prevailed in some jurisdictions but failed in others? Understanding the political economy is essential.

Jurisdictions including Nova Scotia, New Zealand and the UK have looked at the Teranet Ontario experience and rejected it. On the other hand, Manitoba and Jamaica contracted Teranet to be the private sector partner. It seems to be very much the case that NSW and SA governments have cherry-picked the Ontario-Teranet experiences to support their respective PPP decisions and the Victorian government is now following suit. What differs in each of the Australian cases from those of Ontario, Manitoba and even Jamaica, is that the Australian state government registries are well-capacitated, have good technology, are computerized, provide high-levels of service and are highly regarded, support law enforcement agencies and so forth. The justifications in each jurisdiction are to “recycle an asset” to provide immediate cash injection to the governments. In contrast, Ontario and Manitoba lacked good capacity, were not modern and struggled to meet local demands. These are clearly very different drivers and would for all purposes suggest the need for ASD including PPP.

If government has a LRS sale or private partnership arrangement firmly in its sights, there may be little that can be done to change the political will – and even harder if the government has a strong majority. Such governments, with sights set on a fast fat cash injection to jurisdictional coffers, are unlikely to be swayed by arguments such as:

▪ Guaranteeing integrity of the property boundary system

▪ Ensuring that registration services continue to be delivered by suitably qualified and experienced persons

▪ The need for registrations services to be able to evolve because of innovation and advancements in technology

▪ Recognising and maximising the value of the registration services

▪ History of the jurisdictional titles office.

Arguably, for both proponents and opponents, it is better to focus on more substantive factors such as:

▪ Real return of any deal using net present value methodology computed over the lease period

▪ Governance, transparency and accountability

▪ Roles of statutory officers

▪ Law enforcement access to information specially to investigate money laundering

▪ Risks and mitigations of LRS being delivered from off-shore locations and being subject to the obligations of foreign laws

▪ Government agency access to information including public (crown) lands records

▪ PPP contractual remedies

▪ Fees

▪ Impacts on Financial Institutions requirements.

It seems that in most jurisdictions key government watchdogs and information privacy commissioners have raised strong concerns and are likely to be ignored if the government has a strong majority. There is a role for Auditor-Generals in reviewing risks, accountabilities, due process and business cases.

Continued pursuit of fiscal reform to reduce deficits and balance budgets by “recycling assets” is a finite strategy. Once all the government’s viable assets, i.e. those that may be attractive to private investors – are either under PPP or privatized, what’s next?

Finally, it is useful to especially look at decisions taken by the governments such as New Zealand which carefully looked at roles for the private sector and have made decisions that work for their respective jurisdictions. New Zealand undertook extensive due diligence into its decision to enter into a PPP for its ITrelated requirements for land registration services. Significantly the due diligence was objective, technically sound and financially prudent, rather than political. The New Zealand approach is definitely one that should be studied by any government considering going down the PPP path for land registry services.

Malaysia would seem to be an example of government stepping in to provide a course correction to the PPP approach, and then resuming, with close monitoring. There may be roles for the private sector in land registry services and with due diligence they can be successfully established to deliver benefits.

Although this paper has confined itself to land registry services, it would be relatively simple to draw parallels to the New Zealand experience in considering going down a PPP path for geospatial information services such as a national geodetic network of Continuously Operating Reference Stations (CORS) and even for production and maintenance of fundamental geospatial data sets for the national spatial data infrastructure. For both, the government should always retain the strong regulatory oversight roles to ensure the authoritative requirements of NSDI are retained.

Although the decision to contract with a private sector partner may be taken for primarily political reasons, and there may be significant negative public sentiment, nonetheless, the public interest and the rights of citizens, should always be protected by adequate safeguards, which are monitored and transparent. The ability of the government to ensure the safeguards may not be easy.

Endnotes

⁷⁸ http://www.philstar.com/businessusual/ 2017/08/14/1728525/ easy-access-land-titles-a2acomputerized- process

⁷⁹ This overview was largely prepared by the author’s own notes and records from engagement in reviewing the original project back in 2003 up until 2015. The author also has a copy of the original BOOT contract obtained when advising IFC of its possible membership of the LARES consortium.

⁸⁰Email exchange dated May 20, 2017 with Neil Pullar, former DOSLI and Terralink staff, FAO specialist and now land administration consultant.

⁸¹ ConsultingWhere Limited & ACIL Allen, 2014, Annex B, Section 8, p.21.

⁸²Ibid, pp.23-24.

⁸³ LINZ website, status as at April 19, 2017. http://www.linz.govt.nz/about-linz/ our-organisation/our-whakapapa

⁸⁴ ibid

⁸⁵Private email from Kevin Nettle to the author, June 28, 2017.

⁸⁶Margaret Hole (2017). https://www.macrobusiness. com.au/2017/04/nsw-landregistry- everything-thatswrong- privatisation/

⁸⁷http://www.smh.com.au/nsw/ leaked-nsw-treasury-documentreveals- billions-to-be-made-byland- title-registry-operators- 20170201-gu2wed.html

⁸⁸http://www.smh.com.au/ business/consumer-affairs/ baird-governments-privatisationof- nsw-land-titles-registry-tolift- costs-for-home-buyers- 20161011-gs086i.html

⁸⁹https://www.macrobusiness.com. au/2017/06/sa-joins-recklessland- registry-privatisation/

⁹⁰ http://www.secretselloff. com.au/media/

⁹¹ https://www.itnews.com.au/ news/how-was-land-registryused- tech-to-save-itselffrom- privatisation-441668

⁹²Advara is 78 per cent-owned by Landgate and 22 per cent by Swiss outsourcing giant Adecco, which paid $2 million for its stake in the company in August.

⁹³Daniels, 2017.

⁹⁴ https://www.abc.net.au/ news/2019-09-10/wa-propertydatabase- landgate-sale-to-fundchild- abuse-redress/11498056

⁹⁵https://realassets.ipe.com/news/ first-state-super-wins-landregistry- rights-in-aud286bndeal/ realassets.ipe.com/news/ first-state-super-wins-landregistry- rights-in-aud286bndeal/ 10026342.fullarticle

⁹⁶https://www.abc.net.au/ news/2019-09-10/wa-propertydatabase- landgate-sale-to-fundchild- abuse-redress/11498056

⁹⁷Quiggan is a Vice-Chancellor’s Senior Research Fellow and Australian Laureate Fellow in the School of Economics at the University of Queensland.

⁹⁸ https://www.parliament.vic.gov.au/ images/stories/committees/SCEP/ Land_Titles/EPC_58-12_Text_ WEB.pdf Professor John Quiggan, Submission, no. 50, p. 4.

⁹⁹ ibid.

¹⁰⁰Australian Competition and Consumer Commission (ACCC), Submission, no. 60, pp. 1‑2.

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