Covid-19 labour market issues have resulted in increased expenditures and longer completion timeframes for Land Information New Zealand’s (LINZ’s) efforts to modernise its 20-year-old Land Information System, ‘Landonline’. Consequently, the NZ$128.2 million, five-year project is now estimated to cost NZ$175.7 million over 12 years, with a completion date of 2026.
Buyers and sellers rely on the services LINZ provides through its central record of survey and title information, with the Crown ensuring that the given title is valid.
In 2018, funding was approved to modernise the critical system maintaining these records, Landonline, a 20-year-old system that is costly and sluggish to adapt to new demands.
Since the Crown guarantees title and compensates for any inaccuracies, it was recognised that risks were increasing, and the repercussions of outages or compromise of land information would be substantial.
No viable alternative system would exist if Landonline services were to be substantially degraded.
Following a five-year phase evaluating possible options, including purchasing off the shelf, the preferred option was to deliver via in-house development while also creating the capability to continually modernise and enhance the service.
LINZ concluded that in-house construction would be a more cost-effective solution. This approach was assessed as providing the same advantages, security, and customer-focused outcomes without the risks associated with working with a third-party supplier. Furthermore, recreating the old system would be less complicated than transferring to a new platform, could be constructed mainly in New Zealand by local suppliers and developers, and could be tailored to New Zealand requirements. It would also equip LINZ with the capabilities and capacity to make improvements and offer improved functionality more rapidly.
The preferred delivery option was modernising Landonline over five years in four tranches at a capital cost of $128.2 million and associated operational expenses of NZ$51.7 million.
Since the program’s inception, there has been steady progress. So far, the development and early release of property search and automated property transaction notification services have produced 30 per cent of the total value projected from the program.
For example, the public land record search service, launched in February 2021, permits real-time online purchasing of land records from the LINZ website and has received 10,000 orders per month, compared to 3,000 orders per month through LINZ’s manual buying service. In addition, 45 of the 67 territorial authorities, including Auckland Council and the city councils of Wellington and Christchurch, utilise an automated property transaction notification service.
LINZ has been addressing the IT sector’s challenging employment market conditions since 2021. Covid-19-related effects on the labour market have resulted in sharp increases in contractor rates, resulting in considerable employee turnover and impacting productivity and delivery timelines.
In a highly competitive labour market, contractors have left for higher-paying jobs. The situation has been further exacerbated as, enticed by increased rates, permanent employees have also been moving to contract roles. LINZ has taken the proactive step of not reengaging ex-permanent staff as contractors to avoid setting a precedent and reinforcing the move. But this has not been without consequences. Quarterly staff turnover peaked in January 2022 before dropping back to 22 per cent by mid-2022, which resulted in a staff turnover rate for the year up to July 2022 of 45 per cent, compared to the planned less than 6 per cent turnover.
The LINZ experience is not unique. Public Service Association secretary Kerry Davies said in late 2022 that the turnover rate for the entire NZ Public Service for the 2021/2022 year was 17.3 per cent.
Throughout 2022, the New Zealand market had a considerable scarcity of applicants across all industrial sectors, with the technology sector one of the hardest hit. As a result, organisations with recruiters actively targeted a passive candidate pool to acquire talent – with some success.
A baseline forecast completed by LINZ in April 2022 considered the employment market and program delivery experience. It revealed that the program will take longer and cost more.
LINZ estimates the capital project to cost NZ$175.7 million over 12 years (up from NZ$128.2 million in 2018), finishing in 2026 (instead of 2023). As a result, operating expenditures will rise from NZ$51.7 million to NZ$76.1 million.
The present Landonline platform’s life will be prolonged under the amended timeline, and will be decommissioned in January 2025 (having been originally slated for a January 2023 shutdown). During this time, the vast majority of survey and title transactions will be conducted on the new platform, reducing the risk of a substantial failure of the present platform.
This prediction is based on industry circumstances in early 2022, which were expected to improve. However, there have been limited improvements within the NZ labour market, with skills shortages continuing and the Consumer Price Index reported over 7 per cent for the past three quarters.
With several government departments either executing or initiating modernisation or transformation programs, the LINZ experience will likely be repeated. Therefore, similar reports could be expected.