Decision ris proposal for national licensing of the property occupations

1.Impacts on consumer outcomes

Under national licensing, it is proposed that a number of current requirements for licensing be removed on the basis that they represent an unnecessary regulatory burden for licence holders. Several of these requirements have the potential to affect consumer protection outcomes, namely:

• 
  changes in licence periods
  
• 
  the removal of experience requirements
  
• 
  the proposed removal of mandatory continuing professional development
  
• 
  proposed changes to qualification requirements in some jurisdictions.
  

Attachment F of this Decision RIS provides a detailed analysis of the risks associated with property work. In a property transaction, the consumer faces such risks as not finding a buyer or tenant, failure to maximise the value of the property and loss of deposit or rental income. The engagement of an agent can assist in managing some of those risks but can also generate further risks. Such risks include incompetence, unethical or dishonest behaviour, poor quality of service, misrepresentation and business failure.

The 2008 statutory review of the Property, Stock and Business Agents Act 2002 (NSW) indicated that the most common complaints about property agents in New South Wales for the 2003–07 period related to:

• 
  unsatisfactory performance of service
  
• 
  misleading and deceptive behaviour
  
• 
  failure to account for money held in trust
  
• 
  unlicensed trading
  
• 
  refunds
  
• 
  general compliance with legislation
  
• 
  general complaints about rights and responsibilities
  
• 
  repairs and maintenance.⁷⁵
  

Approximately 611 monetary claims are made by consumers against property agents nationally each year, averaging $4.8 million per year.⁷⁶

The key consideration for this analysis is whether any of the proposed changes in licensing arrangements would alter consumer protection outcomes. An assessment of the potential risks associated with property work, and the proposed changes in the licensing arrangements, considers risks linked to consumer protection and the proposals are met. Several changes are administrative in nature and do not alter the coverage of licensing across the industry (that is, they do not remove a person from licensing altogether).

Changes to licence periods would not alter licence requirements, though they would potentially lengthen the time between renewal, and therefore the time period for regulators to receive updated information. However, across the entire licence period, whatever the length, compliance and enforcement would continue to be required – renewal is just one element of the process.

Throughout the consultation period, and following the release of the Consultation RIS, the REI have consistently stated that entry level qualifications should be set at the highest qualification applying in any jurisdiction, on the grounds of advancing consumer protection and industry professionalism. The primary focus of feedback has been on requiring licensed real estate agents to hold a diploma rather than a Certificate IV, but the issue of an appropriate number of units of competency for an agent’s representative and auctioneer also received attention. The REIA, the majority of its state institutes, and REINSW have been the main proponents of this issue. The arguments expressed focus on the business risk associated with the operation of an agency. The additional business skills contained in a diploma are not directed at the work being regulated and a requirement to hold this qualification would unnecessarily increase compliance costs and the time taken to complete the qualification. Imposition of the diploma level would not be consistent with Australia’s excellent ranking in terms of low cost and time requirements to start a business.⁷⁷

The establishment of the national register will provide more consistent information for consumers across the country as well as enhanced quality of data.

2.Comparing the impacts of licensees working in single and multiple jurisdictions

Of the impacts that have been quantified in this analysis, there are two impacts that relate only to those licensees and businesses that work across more than one jurisdiction. These are:

• 
  benefits from improved labour mobility
  
• 
  benefits from the removal of multiple licences held across jurisdictions.
  

To demonstrate the impact of national licensing on those who work in a single jurisdiction versus those who operate across multiple jurisdictions, Table 4.27 shows the quantified impacts separated out for each of these groups. The separation of the results has been calculated based on:

• 
  the percentage of licensees in each state and territory domiciled in another jurisdiction
  
• 
  the estimated distribution of multiple licence holders across each of the jurisdictions.
  

For more detail on these two assumptions, see Attachment G.

Table 4.27: Comparison of the impacts of national licensing on licensees working in a single jurisdiction versus licensees working across more than one jurisdiction

$ million	NSW	Vic	Qld	WA	SA	Tas	ACT	NT	Total
Impacts on those who currently operate in only one jurisdiction
Ongoing net impact per annum	32.84	1.99	6.44	18.07	6.55	0.23	1.10	1.38	68.59
Transition cost	(4.86)	(2.77)	(4.43)	(2.54)	(1.17)	(0.38)	(0.52)	(0.50)	(17.18)
Impacts on those who operate in more than one jurisdiction
Ongoing net impact per annum	9.65	3.98	7.86	3.45	1.52	0.35	0.51	0.75	28.07
Transition cost	(0.19)	(0.15)	(0.13)	(0.09)	(0.09)	(0.34)	(0.12)	(0.16)	(1.29)
Total impacts
Ongoing net impact per annum	42.49	5.97	14.29	21.52	8.07	0.58	1.61	2.13	96.66
Transition cost	(5.05)	(2.93)	(4.56)	(2.63)	(1.26)	(0.72)	(0.64)	(0.66)	(18.46)