Land Information New Zealand spent $17 million researching the Advanced Survey and Title Service (ASaTS) before rejecting it, Parliament's Primary Production Committee says.

In its 2017/18 Annual Review of Land Information New Zealand, the committee says LINZ investigated procuring an ASaTS solution from a Canadian provider to replace the Landonline system.

During 2017/18 the focus changed from procuring the Canadian solution to building a replacement system.

"We observed that LINZ had incurred $17 million in researching the ASaTS service before rejecting it," the report says.

"LINZ believes that the funds it spent on research were prudent to ensure the success of the project. Additionally, LINZ said that some of the research it paid for will be reusable through the next phase of the Landonline rebuilt project."

The committee says the project's research allowed LINZ "to thoroughly engage and plan with customers and other stakeholders, and to understand its own and customers' requirements and pain points". It says LINZ was then able to make an informed decision on the preferred delivery pathway, "having thoroughly appraised an 'as-a-service' model versus the development of a LINZ-owned and operated platform".

The Landonline rebuild

Following the decision to build a replacement system rather than follow the "as-a-service" model, LINZ says it has organised the project in four tranches over five years.

"Before it embarks on each new tranche, it will report to Ministers for approval and for the draw-down of the funds it needs for the next tranche. It hopes that this staged approach will ensure the smooth running of the project and prevent delays, cost blowouts, or problems switching to the new system."

LINZ told the committee that it has strengthened its governance to ensure the rebuilding of Landonline proceeds smoothly.

How was the $17 million accounted for?

The committee says LINZ accounted for the $17 million as operating expenditure "because these costs were associated with the research and discovery stage of the project" and no approval had been given to go ahead.

"The Office of the Auditor-General raised some concern that this amount was charged to the memorandum account, but LINZ maintains it sought advice on the legality of using the memorandum account, and is satisfied its accounting treatment is correct. However, as it has now been approved, any future costs associated with the project will be accounted for as capital expenditure."