[Headline provided for illustrative purposes only, i.e. not factual: Ed]
South Australia is the second state to offload its Land Registry to its “natural custodians,” namely investment and super funds.
We can only speculate that Warren Buffett would be upset at the prospect of missing out on these deals. Who wouldn’t be upset at missing out on the opportunity to run an essential government services monopoly? Warren Buffett is on record as taking a liking to businesses which have the ability to ratchet up the prices of their goods and services, particularly following management bungles.
Of course, both SA and NSW will put in place masses of new regulations to ensure pricing moderation.
What is the justification of our governments to hand out licences to print money? Money, of course. The NSW government scored $2.6 billion and South Australia $1.6 billion. The NSW government said it will help pay for a new sports stadium in Western Sydney. South Australia is getting a new innovations hub.
The NSW government announced its deal in April 2017. Following the South Australian deal, just announced, the NSW deal looks very meagre for NSW shareholder/residents. $2.6 billion equates to around $330 per NSW person. The SA deal is around $876 per South Australian. South Australians achieved a more than 2.5x better deal upfront. Ongoing royalty stream arrangements make comparisons between the two deals difficult at this stage.
Here is the official announcement from South Australia’s Tom Koutsantonis:
Land Services SA appointed as the exclusive service provider for land services
Land Services SA has been appointed as the exclusive service provider for South Australia’s transactional land services.
The Government will receive $1.605 billion in an upfront payment which includes certain optionality for the life of the contract. The commercial details of the contract are confidential.
The Government also will receive an ongoing royalty stream that can be invested in critical infrastructure and essential services benefitting all South Australians.
The contract includes a commitment by Land Services SA to establish an Innovation Hub in Adelaide, provide $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.
Land Services SA comprises globally recognised investors Macquarie Infrastructure and Real Assets and the Public Sector Pension Investment Board, which both enjoy distinguished track records of long term investing in the provision of essential services.
Land Services SA is a highly qualified provider with significant technology and change management experience. Land Services SA will adopt the existing Lands Titles Office information technology systems.
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.
The change will:
Reduce future operating costs to government and drive innovation in customer service.
Promote investment in systems and reduce risks to government in future ICT upgrades.
The new service provider is expected to make offers of employment to a significant number of staff currently perform transactional land services.
The majority of remaining staff will either assist with the transition to the new service provider or be placed in positions for functions retained by government following consultation which is underway. A small number may be placed in alternative positions in the SA Public Sector or managed in accordance with usual Government practice.
The appointment of Land Services SA is the result of an open, competitive, multi-stage selection process which included strong legal and probity oversight.
Land Services SA submitted a binding bid that compares favourably with other land registry transactions, including the recent commercialisation in NSW.
The Treasurer announced the Government’s intention to commercialise a range of transactional land services and functions in the 2016-17 State Budget.
At this time, the Government undertook that key protections for the public of South Australia would be put in place – these protections are either enshrined in South Australian legislation or the binding contracts with Land Services SA and include:
– The Government continuing to guarantee indefeasibility of property title, supported by the statutory assurance fund;
– There will be no change to Torrens Title or other legal status of land;
– The Government retaining key legal, policy and regulatory functions and responsibilities;
– The Registrar-General, Valuer-General and the Surveyor-General continuing as statutory officers;
– 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;
– Maintaining existing terrestrial and online access arrangements, including the Adelaide office of the LTO and over-the-counter services.
Land Services SA will progressively assume responsibility for land registry and property valuation services during the coming months, with exclusive rights to commercialise related data, subject to Government approvals.