Legal Innovation Summit Speech

11 November 2024

Introduction

I am pleased to be at this Legal Innovation Summit.

Today I want to speak about how technology, productivity, the legal sector and the broader economic implications. 

My starting proposition will be that Australia has a productivity problem – and one of many contributors to that is the time and process requirements of our legal system.

Next I want to talk about the way that digital technology offers exciting prospects to improve productivity.

Thirdly, then, I want to make some suggestions about government’s role in helping facilitate the diffusion of technology to capture these productivity benefits. 

Australia has a productivity problem

Let me start then with Australia’s productivity problem. 

Over the long run, our productivity has grown at an average of 1.5 per cent per year.  But that has been slowing.  In the five years to 2019, it dropped to 1.1 per cent a year. 

Under the Albanese Government things have got much worse. Productivity grew by 11.4% over the last Coalition Government; in one year of the Albanese government, almost half of that had been lost. 

So it is important to be looking for contributors to our productivity problem – and possible sources for productivity improvements. This of course incudes Australia’s legal and justice system. 

The Productivity Commission, in a major review of Australia’s justice system, had this to say:

A well functioning justice system…gives people the confidence to enter into business relationships, to enter into contracts, and to invest.  This, in turn, contributes to Australia’s economic performance.[1]

It called for ‘access to least cost avenues for dispute resolution and facilitating the quick resolution of disputes at the earliest opportunity.’[2]

Digital technology offers exciting prospects to improve productivity 

Let me turn then to the question of how the wider take up of digital technology in the legal system – in the way that people prove their identity, enter into contracts, make legally binding commitments and so on – can deliver economy wide productivity benefits. 

There is a good example to be seen in India, a country which I had the opportunity to visit twice last year.  India has established a national digital identity system known as Aadhaar, after the modern Hindi word for foundation, and obtained material economic productivity benefits as a result. 

Over 1.3 billion Indians hold a digital identity, which has made it much quicker and easier to open bank accounts, to transfer money from one person to another and to receive government benefits. Today, if you are a bank customer in India, you can satisfy a bank's know-your-customer requirement in seconds with your Aadhaar. In Australia, by contrast, this is a long, cumbersome and painful process often requiring certified copies of identity documents.

The productivity promise of digital identity was examined by the McKinsey Global Institute in its 2019 paper Digital Identification: a key to inclusive growth. McKinsey found that extending full digital ID coverage could unlock economic value equivalent to three to 13 per cent of GDP in 2030. It could reduce institutional customer onboarding costs and payroll fraud, saving up to US$1.6 trillion globally, and it could save approximately 100 billion hours through streamlined e-government services.[3]

Many of these benefits come through the saving of time and effort in the multiple interactions which are required today when you need to prove your identity, whether that's to a government agency, a business or another human being. Think of how much time is required to take and send photocopies of identity documents such as passports and driver’s licences; or to find a Justice of the Peace or somebody else who is qualified to give you a certified copy of such documents; or to go physically to a bank branch or a lawyer's office or any one of the many other places where today you are frequently required to present yourself to demonstrate your identity.

The Productivity Commission’s report, although now some ten years old, has some interesting suggestions about the way that better use of technology could improve the productivity of our legal system – and, in turn, of the society which the system serves.

As the PC observed: 

Technology is widely viewed as having the capacity to generate time and cost savings for the courts and their users.[4]

It highlighted such measures as allowing court documents to be filed and court fees paid electronically; providing online access to court documents; conducting hearings through videoconferencing; and using case management systems to manage case flows more efficiently.[5]

Of course the pandemic became a huge natural experiment in using videoconferencing and other technology, in the legal sector and more broadly, and what seemed radical in 2014 has now been shown to be quite practical and workable. 

An updated list today would include artificial intelligence and machine learning, to assist in such tasks as discovery and in the drafting of pleadings and other complex court documents. 

What Government should do

It is clear then that digital technology offers exciting opportunities to improve productivity in our legal system.  But translating opportunity into reality is not always easy.  What public policy settings will help to stimulate such improvements?  I want to suggest some principles.

The laws we make

The first principle is for government to look for digital productivity improvements in the laws we make.  Can we make it easier for citizens and businesses to meet requirements to report or provide information to government by providing it digitally?  Can we give incentives to transact more efficiently by digital means?  For example, the Coalition rolled out e-invoicing across a range government agencies to make it simpler and quicker for businesses to get paid.

Getting rid of red tape

A second principle is to look for opportunities to reduce red tape and cumbersome bureaucratic procedures, by leveraging the power of digital technology and the ubiquitous availability of smart phones. 

It is clear that there are big productivity prizes if we can make more simple and efficient the process of filing customs and biosecurity documentation associated with imports and exports.  This is one of many sectors of the economy where government has a critical role in setting the regulatory requirements and specifying the type of documentation required. 

As we think about our digital economy and digital government agenda, the Coalition believes there are many opportunities to use digital technology and standards to reduce red tape.  One area would be achieving greater standardisation in state level credentials such as drivers’ licences: can the Commonwealth work with states and territories to achieve a national standard?

Even more compelling are the opportunities within the Commonwealth.  Today you cannot use your MyGovID to lodge a passport application; you have to set up a separate account through DFAT’s website.  This needs to change. 

Enabling delivery by the private sector

A third and related principle is to leverage the power of the private sector.  Government is uniquely placed to establish economy wide standards and practices – but much of the power of doing this comes from the way such standards then allow the private sector to operate much more efficiently.  One good example is seen in the Indian experience with Aadhaar.  India’s third mobile phone network Reliance Mobile launched its Jio mobile service in September 2016. It used a completely digital customer onboarding process, taking advantage of Aadhaar and achieving 160 million new customers by December 2017.

The private sector makes up the majority of our economy and employs nearly ninety per cent of Australians.  Business is better than government at many things. The Coalition believes that often the best way to achieve public policy outcomes is for government to establish the framework and then let the private sector get on with operating under the framework to deliver outcomes.

One specific example of this principle is seen in the different approaches of the Coalition and Labor to the introduction of digital identity in Australia.  The Coalition did a lot of work on this when in government; we spent over $600 million; we established MyGovID and by the time we left government over six million Australians were using it. 

Since then the Albanese Labor Government has introduced and passed legislation dealing with digital identity.  We think they seriously mishandled this, particularly by deferring for several years the point at which an Australian citizen could authorise a private sector identity provider – such as ConnectID, established by a consortium of banks – to have access to that citizen’s data held by the Commonwealth for the purposes of identity verification. This covers such matters as your passport data, your tax data and so on. 

The Coalition believes that smart private sector sales and marketing people are much likely to do a good job of driving takeup of a digital identity service than Commonwealth bureaucrats.  But with the private sector locked out for several years, the risk is that takeup stagnates and hence we do not get the benefits of a widely used digital ID system. 

Recognising the role of the legal profession as an enabler

Let me mention a fourth principle to use in driving the take up of digital technology for a more efficient and productive legal system. That is the crucial role played by the legal profession.  Clients will naturally look to their lawyers for guidance. 

If lawyers support and encourage the use of technology, and in turn give clients a speedier, more efficient, less cumbersome process for negotiating transactions, entering into contracts and so on, then we are likely to see greater system wide use of such technology and in turn a more efficient and productive legal sector. 

When it comes to getting small businesses to adopt cloud based computing services, we know that accountants are key in influencing their clients to use cloud based accounting applications such as Xero or MYOB. This in turn drives economy wide productivity benefits.  Similarly, if lawyers use the latest digital technology and encourage their clients to adopt it when engaging with the legal system, that will have economy wide benefits. 

Certainly the legal profession has been key to the take up of electronic conveyancing services such as PEXA and Sympli.  The time savings and efficiency benefits have been significant.  Buying a house is for many Australians the largest and most stressful financial transaction they will ever engage in; if the steps in that process can be made quicker and less prone to error, that is a very good thing. 

Conclusion

Let me conclude then with the observation that the Coalition is committed to a stronger role for digital government.  This was a focus for us when last in power and will be a focus when we return to government. We think this offers many benefits, including serving citizens better, but also in capturing productivity improvements through the use of digital technology. 

The role of lawyers, the legal system, and digital technology to underpin fundamental processes such as establishing identity, negotiating and agreeing contracts, assigning property and resolving disputes, is critical in this agenda.

We look forward to delivering better outcomes for citizens across our digital government agenda – and the legal system and profession have an important role to play. 

[1] Access to Justice Arrangements, Productivity Commission Inquiry Report, 2014, Overview, p 6

[2] Access to Justice Arrangements, Productivity Commission Inquiry Report, 2014, Overview, p 7

[3] Give citation to the MGI paper

[4] Access to Justice Arrangements, Productivity Commission Inquiry Report, 2014, Overview, p 19

[5] Access to Justice Arrangements, Productivity Commission Inquiry Report, 2014, Overview, p 20