Western Australia looks set to follow the New South Wales, Victorian, and South Australian Governments’ lead in privatising its land registry in a bid to raise some quick cash. From The Urban Developer:
The West Australian government has appointed investment bank Investec to undertake a scoping study to ascertain the future of its land titles office, Landgate.
The scoping study will identify the options available to the Government to realise value from the operations of Landgate and its assets…
Investec acted as the advisor to the South Australian government for the 2017 Land Services transaction which outsourced its operations for land titling and valuations.
Investec will consider similar transactions to inform options for financial and commercial analysis. The final report is due to the Western Australian government by mid-2018…
In 2017 the NSW government realised $2.6 billion for the sale of its land titles office to Hastings Funds Management and First State Super.
In August the South Australian government announced it had achieved a $1.6 billion sale of its land titles services to the Land Services SA consortium made up of Macquarie Infrastructure and Real Assets and Canada’s Public Sector Pension Investment Board.
The Victorian government is also undertaking a scoping study into its land titles office through UBS.
I have previously described the sale of our land title registries as “everything that’s wrong with privatisation”, and claimed such deals “utterly defy both economics and common sense”.
State land titles business are an essential government service and a profitable natural monopoly. And their sale will very likely result in end-users being gouged by the new monopoly owners, whereas the state governments will lose a reliable income stream.
Indeed, a leaked NSW Treasury sales pitch to prospective buyers of NSW’s land titles registry all but spruiked the ability of the new owner to gouge consumers:
The EOI paper, co-authored by investment bank JP Morgan, reveals for the first time that LPI, with 3.9 million titles, made $190 million in revenue and $130 million in profit in 2015-16…
Under the heading “investment highlights” it says LPI is the “largest and most active land registry in Australia” and the “single source of truth” that provides “essential, monopoly services”.
Secondly, it says the operator will be exposed to the “long-term growth dynamics of the NSW real estate market”, which will be driven by a 50 per cent population boom and the construction of 43,500 dwellings each year over the next 40 years.
“This is forecast to result in the addition of approximately 1.8 million titles over the next 40 years,” the EOI booklet reads.
Thirdly, it says prices of regulated products will be tied to Consumer Price Index, offering the operator “pricing certainty”.
Fourthly, it says there is the “significant scope for business optimisation” that could involve dramatically cutting costs by “implementing automation” and “cost management initiatives”.
Former Victorian surveyor-general, Dr Keith Clifford Bell, also warned that privatising Victoria’s land titles registry could result in a 300% increase in fees:
Bell told Fairfax he had a “hell of a lot” of concerns about a private sector player taking over the registry.
He said private operators had hit consumers with fee increases of more than 300 per cent after similar deals overseas…
But he said Australian governments, hungry for short-term cash, continue to misrepresent the evidence that private lease deals were good for consumers…
He said there was a lot of evidence emerging that the taxpayers of NSW had been short-changed by their government when it leased out its land registry operation.
“The real return to the state through the [public-private partnership] versus what would have been realised over 35 years was not provided for public scrutiny,” Dr Clifford Bell said.
“Media has reported ‘insider’ views that the sale was a bargain and the real upfront payment should have been $3 billion to 4 billion [not the $2.6 billion received].
Australia’s state governments have clearly reached peak stupid with these privatisations. Voters deserve better.
