DEPUTY ACT Chief Minister Andrew Barr has asked rhetorically, “Is it really necessary for the government to maintain a register of real estate agents?” Well yes, and I’ll tell you why it is, Mr Barr. It is because ACT real estate agents handle an enormous amount of the public’s money in the form of deposits on houses pending settlement.
About $12 billion a year goes through these accounts each year nationally, about $300 million in the ACT. And then there is rent money and deposits on commercial sales – more than half a billion all up.
So, I want some tabs kept on these people. I want to be confident that I am not going to get a cheerio postcard from the Ronald Biggs Penthouse Suite at the Refuge for Recalcitrant Real Estate Agents, care of Copacobana Beach, Brazil.
I want some probity checks. Is this person a fit and proper person to handle their chunk of the $300 million of other people’s money going through real-estate agents’ accounts every year? Also, when I sell a house, I want to have some confidence that the agent knows what she or he is talking about when I put the biggest sale of my life on the line.
The confidence I don’t want is a confidence trick.
Now, in the same breath last week, Barr mentioned that the ACT should deregulate charities and the non-profit sector. Different story.
As it happens, Barr has no doubt been prompted by the Feds, who are in the process of taking over the regulation of charities and non-profit organisations and in taking over the regulation of various property-related trades and professions.
All good stuff. Cutting red tape and duplication, no doubt. But, there is more to it, and it is a big but.
With charities, the Feds are putting some spine and control into an area which has been quite shipshod. But with real estate, the Feds are attempting to impose a national standard which is lower than most of the state jurisdictions it is taking over.
A national standard is all very well, but not when it is a LOWER standard than most of the state standards it is replacing.
Now, I have to declare some interests here, which, as it happens, also suggests that I have some idea that I know what I am talking about.
I have been national chair of Barnardos, a $40 million-a-year charity for children, for the past five years and on the board for four years before that. I teach conveyancing law at the ANU, and I have done some work for the Real Estate Institute of Australia.
On the charity front, big charities cannot wait for the federal regime. They are tired of spending their donors’ money on the multiple compliance requirements of the six states and two territories.
Yes, Mr Barr, bow out of charities when the Feds come in, and take a bow.
The new federal regime is going to mop up all of these tiny charities set up in the memory of [insert name of loved one who died of exotic disease or died too young of a common disease — preferably a wife, husband, mother, father, son or daughter of a sporting star or TV celeb].
In this piecemeal envirnment, donations are blown away with poor economies of scale, bad administration and the general sloppiness which comes with good hearts and poor accounting.
The Feds want to ensure people’s donations are properly accounted for. Good policy. Let’s hope all the Premiers and Chief Ministers follow Barr’s line on not-for-profits.
But the same concern for public money seems to have escaped the Feds on real-estate regulation.
I smell an eco-rat.
The economic rationalists believe that less regulation is always better than more regulation. We saw the results when they deregulated the finance industry in the 1990s. In the US, the unholy alliance between the Democrats who wanted deregulation and less scrutiny of the penniless when they applied for loans, and the Republicans, who seized the opportunity to free their free marketeer mates from oversight.
Ponzis and cowboys thrived. Average-income people lost their savings. The government tried to reregulate, with mixed success.
In general, the eco-rats overstate the benefits and downplay the detriments of deregulation.
With real estate, the idea is to do away with the requirement for continuing professional development which require agents to keep up with changes in law and practice. And there will be no licensing requirement for people dealing with commercial real estate – even though 70 per cent of it is below $1 million and the buyers and sellers are usually novice bunnies in the game.
Under the proposed federal regime, agents will have to pass only the present lowest state-level standard in each of education, probity and continuing education.
So even a state with the lowest educational standards and higher probity and continuing education standards will have its standards lowered and so on. Indeed the standards in every state and territory will be lowered overall under the new federal proposal.
It is not a race to the bottom, but a race to something lower than the bottom.
The smell of the eco-rat got especially pungent when I looked at a table of the projected economic benefits from the proposed changes to each state and territory.
All states and territories had some gain, expressed in dollar terms.
But Tasmania stood out like a two-headed thylacine. The deregulatory gain for Tasmania was calculated at precisely $100 and put into the COAG tables.
Now I ask you, if an economist says the gain will be about $1m or about $100,000 or whatever, the figures might beguile you, but to suggest that the state of Tasmania will be better off by precisely $100 suggests the sort of idiotic modeling where management gurus and grown-up executives with multiple university degrees are required to build a model of the Eifel Tower out of drinking straws.
Dismiss it as the rubbish it is.
And Minister Barr, do not relinquish ACT control over real estate agents until you are thoroughly certain that the federal control over an industry struggling to maintain public confidence is stronger than the existing regime.
If not, people of the ACT, when your deposit or rent money goes west, form an orderly queue outside Mr Barr’s office for a refund.
DOT DOT DOT
Read this and despair:
“At the same time, we will have the capacity to introduce a remuneration unit to work with the Fair Work Commission for the longer issues around, both looking at and responding to, the needs of this sector nationwide.”
That is a “live” quote this week from Peter Garrett, the Minister for School Education, Early Childhood and Youth.
Why despair?
Because I was going to be a smartarse journalist and find some crisp, clean quote from one of his songs from his days in Midnight Oil to contrast it with.
Alas, I could not find one. They were all equally as opaque.
CRISPIN HULL
This article first appeared in The Canberra Times on 23 March 2013.