The Greens have secured amendments to overdue legislation.
Conveyance should never been placed in private hands and we welcome the government bringing it back into public hands.
Abigail secured amendments and spoke to the legalisation in parliament.
Ms ABIGAIL BOYD (16:18): I indicate that The Greens will be supporting the Electronic Conveyancing Enforcement Bill 2022. The bill comes hot on the heels of the Electronic Conveyancing (Adoption of National Law) Amendment Bill 2022, and the clue to the bill is in the name—it is the enforcement element. The bill gives the New South Wales Registrar General the powers necessary to put in place the provisions and intent of that earlier piece of legislation. Assuring the timely delivery of the interoperability between electronic lodgement network operators [ELNOs], as was the intent of the earlier bill, is now really important.
I stress "now" because the management of the transfer and registry certificates of title is pretty core government business. It is a necessary public service and in our view should never have been moved to the private sector. It should have remained in public hands, which was vigorously articulated at the time by the Law Council of Australia, the Law Society of New South Wales, the Real Estate Institute of New South Wales and the Institute of Surveyors. If it had never been privatised, we would not need to create enforcement powers to break up a private monopoly that never should have been allowed to exist in the first place. Once again, we are left cleaning up the mess created by years of misguided ideology. But we are where we are, and this legislation is very important.
I also sat on the Portfolio Committee No. 4 inquiry, and I understand that this is an incredibly technical process. It can be difficult to get your head around exactly what is going on here. But that first bill set up the expectation that we would be opening up this market to competition, and that the process of doing that was through interoperability. In order for the goals of that first bill to be realised, it is absolutely vital for the existing players to come to the table in a series of workstreams to implement what is required before we can get to the point where the Registrar General can say, "Yes, now we're okay to go live." We will never get to the point of having interoperability in place until we have done all of that incredibly technical work, including the work that will then be required from the financial institutions and everybody else.
Step one is ensuring that the existing players come to the table. Unfortunately, when you are making a huge amount of money and you have a lot to lose by allowing competition to enter into your market, fines and other things can just be a cost of doing business. It is really important that we introduce the enforcement part of the scheme at this point, because every day, every week, every month of delay is one step further from having competition in the market. The fact is that the smaller players cannot exist forever without being allowed to operate properly. One significant player in this market is a New South Wales based entity, and it employs a number of people. If this goes on for too long and everyone does not come to the table and do the work required to allow interoperability as soon as possible, it will have to start letting people go. That means New South Wales jobs will be lost, but there will also be the loss of real competition in the market. Again, it is not acceptable that we have a private player with a monopoly over something as vital as the transfer and registry of certificates of title.
The Greens wholly support this bill. We will move an amendment to make sure that it actually achieves its objectives, but we thank the Minister for bringing it. I understand we are going alone on the enforcement aspect, at least temporarily. An Australia-wide enforcement process will come eventually, but we have a special interest in this because it concerns New South Wales jobs and a New South Wales company. I believe that it is fair and reasonable for the Minister to take action to ensure competition in this space.
Cont.
The CHAIR (The Hon. Wes Fang): There being no objection, the Committee will deal with the bill as a whole. I have four amendments on sheet c2022-180 from The Greens.
Ms ABIGAIL BOYD (16:26): By leave: I move The Greens amendments Nos 1 to 4 on sheet c2022-180 in globo:
No. 1Enforcement orders
Page 6, clause 16(6), definition of maximum amount, paragraph (a)(i), line 15. Omit "$1,650,000". Insert instead "$10,000,000".
No. 2Enforcement orders
Page 6, clause 16(6), definition of maximum amount, paragraph (a)(ii), line 16. Omit "$44,000". Insert instead "$250,000".
No. 3Enforcement orders
Page 6, clause 16(6), definition of maximum amount, paragraph (b), line 19. Omit "$110,000". Insert instead "$250,000".
No. 4Enforcement orders
Page 6, clause 16(6), definition of maximum amount, paragraph (c), line 21. Omit "$1,650,000". Insert instead "$10,000,000".
The intent of these amendments is to ensure that being in breach of the law is not simply factored in as a cost of doing business. We understand that PEXA makes at least $300 million each year and opening the market up to competition will impact its bottom line. That is just how business works. The current penalties in the bill would only lead to a $17 million maximum penalty for an entity that was not complying with the interoperability steps. If you could delay a year and make sure that there is no competition as a result, that is really just a cost of doing business. The amendments would increase that cost—not unreasonably, but significantly.
The Office of the Registrar General [ORG] put out a white paper in July, shortly after the first Electronic Conveyancing National Law bill passed, testing the proposed enforcement regime. In it, the Registrar General considered the $10 million amount as the acceptable upper limit, as well as an increased daily amount. That is what the amendments reflect. In setting penalty amounts, the key consideration is that the penalty must be sufficient to operate as an effective deterrent for non-compliance. The penalty must be high enough to outweigh any commercial benefit that the regulated entity might obtain from engaging in noncompliant conduct.
It is simple maths. The risk that a regulated entity may treat a civil penalty as a cost of doing business was identified by the Australian Competition and Consumer Commission in 2018, when penalty amounts were substantially increased for breaches of the Australian Consumer Law. More recently, in January 2021, the Australian Energy Regulator increased penalty amounts for breaches of the national energy laws, reflecting the need to provide this greater incentive for businesses to comply with laws to protect consumers. The Australian Energy Regulator changed its previous tier 1 breach penalty from $100,000 plus $10,000 per day for continuing breaches to the new amount of "the greater of $10 million, three times the benefit obtained, or 10 per cent of the annual turnover of the company". The regulation is moving in this direction to ensure that these highly profitable companies are not just factoring in enforcement costs as the ordinary cost of doing business.
Our proposed amendment is commensurate with that, or slightly less, than that enforcement regime under the AER but also completely consistent with what was recommended by the ORG. The proposed amounts are maximum amounts and smaller amounts can still be opted for if the ORG decides that is more appropriate. None of these penalties would be automatically applied. The ORG can waive requirements to whoever, for however long, it deems appropriate. This would protect against the banks not being ready, for instance, against third-party entrants being unfairly penalised and disincentivised, and for other act‑of‑God circumstances. ELNOs will still retain the rights of appeal contained in the legislation. They can contest the allegation made by the ORG and if the ORG still insists, they can then challenge in the courts. The only time an ELNO is likely to pay anything is if they are found to be in egregious breach of their interoperability requirements. I commend the amendments to the House.