Decision ris proposal for national licensing of the property occupations

About this Decision Regulation Impact Statement

The purpose of this Decision Regulation Impact Statement (RIS) is to recommend a preferred option for policy to underpin the establishment of a national licensing scheme for the property occupations. This follows stakeholder comment on the Consultation RIS.

This Decision RIS identifies the nature of the problem to be solved and explains the rationale for selecting the model proposed and the elements that comprise the model. It also assesses the costs and benefits of the proposed model.

This Decision RIS follows the guidelines of the Council of Australian Governments (COAG) in the Best practice regulation guide. It has been approved for release by the Office of Best Practice Regulation.

PricewaterhouseCoopers was engaged by the COAG National Licensing Steering Committee to assist with the preparation of both the Consultation and the Decision RIS.

Quantified impacts for national licensing National licensing for property occupations across Australia has the potential to deliver significant ongoing net benefits (see Table S.1). Most benefits of national licensing go to business, workers and consumers. There are one-off costs, including costs to licensees and businesses to become aware of the proposed changes, and costs to government for the establishment of the National Occupational Licensing Authority (NOLA) and the public national licensing register and its supporting database. How these costs will be covered is a matter for individual jurisdictions to determine and may, in some cases, be passed on to licensees via increased fees. This Decision RIS indicates that the benefits of the reform outweigh these costs. In comparing the total benefits and costs across all stakeholders, it would take less than a year for the benefits of the reform to start exceeding the costs nationally, and the benefits of the reform would continue to be realised after the initial ten years presented in this analysis. Based on an indicative modelling exercise, a range of indicators show that these reforms are worthwhile, as can be seen in Table S.1. Table S.1: Net impacts of reforms to national licensing for the property occupations by jurisdiction NSW Vic Qld WA SA Tas ACT NT Total Ongoing net impact ($m per annum) 42.49 5.97 14.29 21.52 8.07 0.58 1.61 2.13 96.66 Community (licensees, business, households) 43.10 6.34 14.79 21.65 8.26 0.60 1.79 2.16 98.70 Government ^a (0.61) (0.38) (0.50) (0.13) (0.19) (0.03) (0.17) (0.03) (2.04) One-off transition costs ($m) (5.05) (2.93) (4.56) (2.63) (1.26) (0.72) (0.64) (0.66) (18.46) Community (licensees, business, households) (4.02) (1.57) (3.27) (1.47) (0.50) (0.04) (0.13) (0.14) (11.14) Government ^a (1.04) (1.35) (1.29) (1.16) (0.75) (0.68) (0.51) (0.53) (7.33) Total 10-year NPV ($m) 271.63 35.98 88.89 137.51 51.25 3.05 9.91 13.22 611.45 – excluding NOLA 275.08 39.08 91.53 139.19 52.46 3.74 10.23 13.65 624.95 Cost–benefit ratio of the total 10-year NPV 30.85 3.81 8.82 38.71 21.19 4.17 5.32 16.35 15.03 Payback period (years) 0.12 0.49 0.32 0.12 0.16 1.25 0.40 0.31 0.19 Rate of return (annualised percentage) 841% 204% 313% 817% 641% 80% 252% 321% 524% NPV = net present value ^aThe analysis does not account for changes in GST, payroll or other taxes. However, if it is reasonable to expect the community benefits to be consumed as expenditure, then there will be a flow through of GST revenue. Automatic mutual recognition An alternative to national licensing was also canvassed in the Consultation RIS. Forty-two per cent of submissions expressed support for automatic mutual recognition. However, most of these indicated that they would have supported national licensing if some elements of the proposed model were changed. In response to stakeholder responses, elements of the model proposed in the Consultation RIS have been changed. For example, non-residential property work will be included in national licensing. While automatic mutual recognition may deliver some of the benefits of national licensing over the short term, there are additional benefits of national licensing which are likely to be realised over the longer term. Notwithstanding the costbenefit analysis, there would also appear to be overall long-term qualitative benefits with national licensing. Consequently, automatic mutual recognition is not recommended for the property occupations.