I lead for the Opposition on the Electronic Conveyancing (Adoption of National Law) Amendment Bill 2022, which seeks to amend the Electronic Conveyancing National Law as set out in the appendix of the Electronic Conveyancing (Adoption of National Law) Act 2012. The amendments will further the development of a national scheme for the electronic lodgement and processing of conveyancing transactions and enable interoperability so new lodging network operators can more easily enter the market.
The amendments to the Electronic Conveyancing National Law establish a definition of "interoperability", which refers to the interworking of electronic lodgement networks, known as ELNs, which are run by electronic lodgement network operators, known as ELNOs. The definition of interoperability makes clear that the network of ELNs operated by ELNOs must enable a subscriber using an ELN, referred to as the "first subscriber", to complete a transaction with another subscriber using a different ELN without having to subscribe to the other ELN. Interoperability also requires the preparation of a registry instrument or other document in an electronic form using data from different ELNs. Schedule 1 [3] to the bill inserts a definition of "financial institution" in section 12 of the Electronic Conveyancing National Law. "Financial institution" means either "an authorised deposit‑taking institution as defined in the Banking Act 1959 of the Commonwealth, section 5 (1)" or "a bank constituted by a law of this jurisdiction or of another State or the Commonwealth".
Schedule 1 [6] to the bill inserts new section 18A into the Electronic National Conveyancing Law, which covers the responsibilities of an ELNO to establish and maintain interoperability. Subsection (1) provides that a person approved as an ELNO "must, in accordance with the operating requirements, establish and maintain interoperability between the ELN operated by the person and each ELN operated by another ELNO". Subsection (2) empowers the registrar to waive compliance with the interoperability requirement if the registrar believes that granting the waiver is reasonably necessary in the circumstances. Subsection (3) states:
(3)A waiver under subsection (2) may—
(a)be total or partial, and
(b)apply to particular persons approved as an ELNO … or particular classes of those persons, and
(c)apply generally or be limited in its application by reference to specified exceptions or factors, and
(d)apply indefinitely or for a specified period, and
(e)be unconditional or subject to conditions or restrictions.
I move to new section 22 (2) (c), which updates the operating requirements for the ELNOs to insert that an ELNO will be required to enter into agreements with other ELNOs in respect to interoperability. The operating requirements establish technical and operational requirements for an ELN, such as data standards and other requirements related to interoperability. Other changes to the operating requirements include the integration of an ELN with other electronic systems; the separation of services provided by the ELN operated by the ELNO from other services provided by that ELNO; and the fees and charges payable to an ELNO and the circumstances in which fees and charges are not payable. The updated operating requirements also extend to the resolution of disputes between an ELNO and subscribers to the ELN operated by that ELNO, or the clients of those subscribers. This section also includes an operating requirement for the participation of an ELNO in a scheme for an industry code relating to associated financial transactions.
Section 40 (2) of the bill makes clear that, while the operating requirements make provisions relating to data standards for financial transactions and participation of an ELNO in a scheme for an industry code relating to those transactions, the registrar is not responsible for the regulation or conduct of associated financial transactions. Division 4, section 43 of the bill provides that the registrar may disclose information to the Australian Registrars' National Electronic Conveyancing Council, known as ARNECC, another registrar or a person or body who or which has functions or the responsibility for the administration or oversight of this law, or the land titles legislation, in relation to:
(a)an ELNO's compliance with the operating requirements or the interoperability requirement,
(b)a subscriber's compliance with the participation rules,
(c)a compliance examination conducted under Part 3, Division 5,
(d)any other matter relating to the performance of the Registrar's functions under this Law.
The registrar will also be exempt from any law in New South Wales relating to privacy and confidentiality. The bill will further advance not just the State's but the nation's shift to an eConveyancing model, which began in 2008 when the Council of Australian Governments, known as COAG, committed to creating a single national system to facilitate conveyancing transactions to occur electronically. The former Minister for Finance and Services, the Hon. Greg Pearce, introduced the Electronic Conveyancing (Adoption of National Law) Bill 2012 that established the Electronic Conveyancing National Law as the law in New South Wales. In 2014 the changes were further built on when the now Premier introduced the Real Property Further Amendment (Electronic Conveyancing) Bill 2014 to align paper and electronic conveyancing processes.
In 2019 New South Wales shifted to a 100 per cent electronic conveyancing system, and continued to evolve this system with the Real Property Amendment (Certificates of Title) Bill 2021, which shifted all interactions with the Torrens Title Register to be done electronically. At the time my colleague the member for Canterbury raised two major concerns on the behalf of the Opposition. Firstly, the shift to 100 per cent eConveyancing would create a monopoly for the sole ELNO, PEXA. Secondly, any changes had to have combating cyber security risks at their core. I note that in 2020 the member for Canterbury made clear Labor's support for establishing interoperability standards to promote competition, and I state in the House now that our view on this has not changed. However, we must ensure that we balance promoting competition with risk mitigations for fraud and cyber security breaches.
In consulting with stakeholders, support for the bill has been mixed. As the Minister has stated, both the Law Council of Australia and the Australian Banking Association have expressed support for the need for competition between ELNOs. However, in its letter of support, the Law Council notes that the concerns it raised in a November 2021 submission to the Australian Registrars' National Electronic Conveyancing Council remain unaddressed. I ask that the Minister elaborate on how the Government plans to address these concerns and why they were not addressed in this bill. The Australian Banking Association [ABA] has expressed support for interoperability and competition in the market as a driver of innovation, increased efficiencies, increased customer service and reduced prices. The ABA stated that, in developing and implementing interoperability, it is essential that safety and security in eConveyancing is maintained. The Minister claims industry support of interoperability and the bill in its present form. However, it is my understanding that the Minister via the land registry reached out to the Australian Institute of Conveyancers [AIC] National and the AIC NSW, asking for a letter of support. They declined. Instead they wrote:
… our collective opinion is that the Bill is premature, requires industry consultation and substantial amendments before being enacted in law.
The AIC National and the AIC NSW believe the long and complex development of eConveyancing has always been based on the principle of understanding between the government, regulatory authorities and industry participants that eConveyancing and interoperability will not result in a loss of security in the present eConveyancing system, diminished integrity of the land register or diminished public confidence in the system. Rather, eConveyancing and interoperability should result in the provision of appropriate regulation of approved ELNOs, and speedy dispute resolution procedures for practitioners and their clients. Further, eConveyancing and interoperability should not result in an eConveyancing system of lesser efficiencies or increased risk compared with the present one. As such the AIC National and the AIC NSW's considered view is that the bill in its present form does not meet these requirements and, consequently, is not fit for purpose.
I have consulted broadly. Another ELNO on the market is Sympli, which was licensed in New South Wales in 2019. It has expressed its strong support for this bill and the need to accelerate interoperability to allow other players into the market. PEXA, which is the monopoly provider at the moment, has expressed its support for competition in this space but has also expressed reservations about the current time line for adopting the proposed interoperability model. I was advised by PEXA that the rushed time line could potentially see a market outage, which would be devastating for not only homeowners but also our economy. To address the issues, PEXA would like to see an independent readiness and feasibility review to ensure the transition to interoperability is done in the safest and most secure manner.
In his second reading speech, the Minister made clear his commitment to competition, but this simply does not stack up against his record as a Minister. This is the Minister who championed Park'nPay, a government‑funded monopoly benefiting a single private entity. He is so committed to further this monopoly that he put forward a proposal to legislate the use of Park'nPay for all councils until his Nationals colleagues rolled him on it in Cabinet.
Labor believes in interoperability and the important role it plays in bringing competition to the market. It is vital that we ensure that the interoperability model adopted is one that not only delivers a better outcome for consumers but also does not compromise safety. That is why I have met with the Minister's office to discuss this bill, but it is worth noting that, despite the Minister's rhetoric around consultation, the Opposition was not provided with a briefing until just days before the bill was introduced. I have sought to engage constructively with the Minister on this bill to deliver the best possible outcome for consumers but, despite undertakings from the Minister's office to produce a cost-benefit analysis, none has been provided.
We must ensure that in promoting competition in this space, we do not unnecessarily increase risk factors. Before we proceed with this model, consumers should know how much they can expect to save versus the extra risks being introduced into the system. It is vital that we get this right and do not unnecessarily put at risk the biggest investment of people's lives. To do this we have to listen to and take on board the feedback of all stakeholders. Rushing to adopt an interoperability model that fails to adequately regulate the sector and address increased fraud and cyber risks will led to short-term gain but long-term pain.
Labor does not oppose interoperability but believes regulatory controls must be put in place urgently to ensure the market delivers the best possible outcome for all participants. The bill does not provide a regulatory framework; Labor has been told that that will be dealt with down the line. Too often the Government and in particular the Minister brings legislation to the Parliament that is not holistic but instead piecemeal. As a principle, that is not good legislative practice. The Opposition reserves its right to move amendments in the other place. I trust the Government will take on board the Opposition's concerns.
