Lands Titles Office
The Hon. J.A. DARLEY (14:49): I seek leave to make a brief explanation before asking the Treasurer a question about the sale of the Lands Titles Office and valuation services.
The Hon. J.A. DARLEY: On 16 May this year, the Treasurer released a statement outlining that a secret deal took place between the former Labor government concerning the privatisation of the Lands Titles Office. As part of this deal, $1.605 billion was paid to the state, but what was not disclosed at the time was the fact that $80 million was paid by the Land Services SA consortium to be granted an exclusive right to negotiate for the further privatisation of the Motor Vehicle Registry. As a result, the government will be required to undertake a scoping study.
If the state and Land Services SA do not enter a privatisation agreement by 12 October 2020 or if the states appoint another third party to manage the Motor Vehicle Registry, the state must repay the $80 million, including interest, or grant Land Services SA a seven-year extension to the existing 40-year term. The Treasurer indicated in his statement that the government would seek further advice regarding the state's options associated with this contract.
My question is: can the Treasurer provide an update about the options explored in relation to this contract?
The Hon. R.I. LUCAS (Treasurer) (14:51): I thank the honourable member for his very important question. Yes, I can provide a little update to the honourable member and to members in the Legislative Council. The government has sought advice in relation to its legal options. It would appear that the former government locked all the doors and closed all the windows in relation to future options both for it, if it was re-elected, or indeed if a future Liberal government was elected. So there is no legal way out of having to go down the path that I outlined to the house in May, and the member in his explanation has repeated the details of our understanding at that time, which remains our understanding at this stage.
My recollection is that we have until October 2020 to have essentially, if we were to choose to privatise the motor registry division, concluded the deal with the new consortium. That is the end date written into the contractual agreement. We, at the start, have to undertake the scoping study which, as the member indicated, is a requirement under the contract that the former government entered into. I have had discussions with Treasury in relation to the timing of that scoping study. It is fair to say it will need to be sooner rather than later in terms of the announcement or the commencement of the scoping study.
My advice is that it would generally take about three to four months for an appropriate scoping study to be conducted. They are not inexpensive options. We need to obviously appoint somebody with expertise in this particular area, but my advice is that, as long as we have concluded the scoping study by towards the end of this year, we will be complying with the contractual arrangements and requirements we might have, depending on what particular path we choose.
There are other aspects, of course, that the government will need to consider. There is the not inconsiderable cost if we choose not to privatise the motor registry division, as the former Labor government would want us to do. We would have to work out the cost of doing so, and that is an $80 million cost potentially, at a 10 per cent per annum interest rate repayment—not a bad little earner that the Labor government wrote into the contract—or an extension of the 40-year deal to the LSSA, the private sector consortium, and that would be obviously at no cost.
My initial advice is that it is very hard to estimate what the value of that is, and of course no-one will really know that until 30 or 40 years down the track. The whole world might have changed in relation to the value of these sorts of deals; whatever estimate someone might make today could be massively different to what the value of this information might be in 30 or 40 years' time. I invite the honourable member to go back 30 or 40 years and the experiences of the valuation division and the public sector and compare that with where we are now, and I invite him to look ahead 30 to 40 years as to what the state of play might be, how anyone could accurately predict what the value of a seven-year extension might be at that time.
All that work has to be done but, at this stage, we are locked into it. My advice is that there is no sensible way around it. In the not too distant future we will appoint someone to undertake the scoping study.
One remaining thing I will say is that the former government gave this private-sector consortium the option of privatising not only the motor registry division: I remind members that in my ministerial statement I did point out, 'or any other registry that the state owns', and invited members to reflect on those other registries. There are other registries such as Births, Deaths and Marriages, the Consumer and Business Services licensing registries; there is a range of other registries that the state has in its possession. Clearly the Labor government had intentions to potentially privatise all those other registries as well.
This consortium does have options in relation to those areas, should the government choose to go down that path. I make the point that it is ultimately a decision for this government in relation to whether or not we proceed down a particular path. In relation to the motor registry division there are significant potential financial penalties; in relation to the other registries there are no evident financial penalties if we choose not to go down that path.