Tax & Accounting Blog

A New Partnership Paradigm: Emerging Trends in Government and Technology in Land and Property Information Systems

Aumentum, Blog April 15, 2013

By Christopher Barlow
Dir, Strategic Accounts & Marketing
Thomson Reuters

In 2012, UN Habitat estimated that only 70% of land in developing countries is not recorded in a formal land registration system. This means that around the world, hundreds of millions of people do not have formally recognized land rights. This is a tremendous source of economic uncertainty for those residents, and also often results in political insecurity for communities and governments – disputes over land ownership and property rights have been a major source of war and conflict throughout history. Land is the principal source of wealth for most individuals as much of our personal wealth is tied to the property we own. This wealth though can only be secure when ownership is recognized.

Last Thursday, I presented a paper at the World Bank Conference on Land & Poverty, which argues that the technology is available to map, survey, and record this currently undocumented land. However, a better mix of technical know-how, financial capital, production scale, and most importantly, political will is required to make land registration both more affordable and more assessable for many around the world. This blog introduces some of the ideas behind how that can be achieved, and using the examples of Munitec, a Thomson Reuters business, and Ontario’s Electronic Land Registration System, illustrates several successes.

Recording land is a governmental responsibility, and in most cases, it is not a privately managed operation. However, some progressive governments, such as the Canadian province of Ontario, have developed operational mechanisms designed to better utilize technical, production, and financial resources through the formation of public-private partnerships (PPP). With the aim of improving citizen-services, Ontario created a PPP in the early 1990s to attract private equity capital to form Teranet, a new corporation set-up to manage the province’s land registry function. Today, Teranet manages 5.8 million land parcels in Ontario and is a fully private company. Furthermore, in 2011 the Ontario government received a CAD$1 billion payment for the concession of the registry service to Teranet for a 50 year period. This example clearly shows the potential of the PPP model.

However, there is a wide range of PPP opportunities and contract types: service contracts, management contracts, lease contracts, build-own-operate (BOO) contracts, and concession contracts. Teranet began as a lease contract and has evolved into a concession contract, but there are also tremendous possibilities for the build-own-operate contract method, specifically as in support of land recording and administration. One can easily liken the software as a service (SaaS) model to the BOO model. The essential difference, in most cases, is that that the government has not guaranteed the use of the SaaS cloud before a company builds out the digital infrastructure. Cloud computing, the deployment of computing resources including hardware and software over shared networks most commonly accessible via the Internet or an intranet, is propelling the movement toward SaaS services.

Thomson Reuters recently acquired Munitec, an Australian firm which provides local council governments a hosted SaaS property valuation system. The technology firm’s mission was to make valuation software more affordable and more assessable for the 79 council governments in the state of Victoria. By serving multiple councils under a hosted solution Munitec have been able to drive down the total costs – including hardware procurements, software, and IT specialists – as these costs are diffused across the councils. The economies of scale derived from this model also allow councils to harness greater valuation processing speed and power, as they had in essence bought into a larger IT infrastructure than what individual council government IT budgets could afford.

Munitec assumed the risk to build-out the systems and networks by developing, procuring, and deploying the hardware, data centers, and software applications – the digital valuation infrastructure. Munitec’s investment included data security services and software. Council governments averted large initial capital expenditures for the build out of the systems, and instead now figure Munitec’s services into their annual operating budgets. For local council governments the rewards from this SaaS model clearly outweigh the risks – today Munitec serves 58 of the 79 councils in the state.

This example, although from a developed nation, can provide a model for how PPPs utilizing SaaS services can register undocumented and unmapped land across the developing world. We’re on the verge of a new way of thinking about how to more affordably and more efficiently register this land, and politicians are recognizing this need – British Prime Minster David Cameron refers to land and property rights as ”the golden thread of development”.  This is potentially momentous, as it offers a secure path to greater economic and social security for millions of people around the world today.
The SaaS model is just one partnering example among a host of opportunities. Further innovation is needed, and we need more radical ways to harness technical, capital, and human resources. In doing so we can make the world more secure and more prosperous. That to me is progress.