In the second of a two-part posting, Rod Thomas, an academic visitor to Edinburgh Law School, considers how moves to privatise the process of land registration have unfolded in Australia and Canada.
Privatisation is proving to be a heady mix for many Australian and Canadian governments. There is unquestionably significant commercial value in “big data” and none so much as in data related to land use and ownership. Access to and control of such information creates significant commercial opportunities. This may include the development of apps useful for real estate agents, mortgage brokers, valuers, surveyors, local government, central government, developers, architects and even historians.
How has this unfolded? Measures to automate and privatise Ontario’s land registration system commenced in 1980. In 2010, Teranet was given a 50-year extension of the rights to run the registry. This was on the basis that the Ontario government received a $1 billion (CAD) “upfront” payment, together with an assurance of royalties. These royalties were expected to be approximately $50 million (CAD) in 2017-18, and to grow in future years. The royalties are to be paid over a 50-year renewal period. Another example can be observed in Manitoba. In 2014, this Province sold its property registry to Teranet due to the Province’s immediate need for a cash injection of some $75 million (CAD) to deal with impending economic issues. In 2000 Saskatchewan then consolidated all of its land registry system, its surveying systems, and geomatics services into a new Crown owned corporation, now renamed the Information Services Corporation of Saskatchewan. Shares in ISCS were then offered to the public resulting in a gross return of $147.0 million (CAD).
We next move to Australia. In 2017 the New South Wales State government announced it had leased the operation of its registry to Hastings Funds Management and First State Super, accepting their bid for $2.6 billion (AUD). South Australia then entered into a commercial arrangement whereby Macquarie Infrastructure and the Public Sector Pension Investment Board purchased the right to manage the land registry for $1.6 billion (AUD). In 2018, First State Super acquired the Victorian land titles and registry office for $2.86 billion (AUS) for a 40-year term, but with the Victorian government retaining control over prices for the land registry service. Other Australian States and territories may shortly follow this privatisation route.
In most situations these privatisations have occurred quickly with little public discussion, usually but not inevitably, following automation of the operation of the register. The prevailing view of parliamentarians appears to be that title registration is mainly a data processing exercise which can be handled more successfully by private enterprise driven by profit incentives, better placed to manipulate and develop that data in a way that will be beneficial for the public at large. Against this background, issues such as potential market capture, creation of monopolies, and loss of effective control tend to be minimalised.
This is not to say opposition has not been voiced by law societies and other interest groups. Raised issues concern ownership of data, overcoming future incompetent performance, profit incentives conflicting with acceptance of claims made “on the register”, and the credibility of any ongoing audit and supervision. If the State guarantee of title remains, this is in effect the State underwriting the performance of a private monopoly, which is driven by profit incentives.
Whilst performance standards may be put in place, one may argue that that the consequences of failure are simply too great. Furthermore, return of the registry’s operation to public control will prove problematic given the operator will by then have undoubtedly developed and manipulated the data, and will also by then have a monopoly on knowledge associated with operating the register.
Further material on this issue can be sourced as follows. Rod Thomas, Lynden Griggs and Rouhshi Low “Big data and privatisation of registers – recent developments and thoughts from a Torrens perspective” 2018 (7) European Property Law Journal 1; Lynden Griggs and Rouhshi Low “Privatisation, the Consensus Algorithms of Blockchains, and Land Titling in Australia – where are we now, and where are we going?” in D Grinlinton and R Thomas Land Registration and Title Security in the Digital Age: New Horizons for Torrens (infra), and Benito Arruñada “Privatizing Public Registries: A Comparative Analysis of Organizational Options” (MS), delivered at CINDER Cartagena (May 2018).
Possible lessons for Scotland
Privatisation has appeared very attractive for smaller jurisdictions where parliamentarians are looking for ways to enhance cash flow. The creation of a quasi-private enterprise to control the registry appears a safe haven for investment of State-controlled investment funds. Where privatisation has occurred, it has happened quickly with little consultation and with much relevant information being withheld as commercially sensitive. Little attention appears to have been paid to many of the issues raised above.
Associate Professor Rod Thomas
Auckland University of Technology
Academic visitor to Edinburgh Law School