Decision ris proposal for national licensing of the property occupations

National licensing – preferred option

National licensing is the preferred option put forward in the Decision RIS. It represents the highest net benefit to the community, taking all impacts into account, when compared to the other options considered.

Overview of the three options

National licensing option

National licensing would achieve significant benefits through improved labour mobility and reduced red tape for businesses and licensees. While this benefit would be greatest for larger companies working in multiple jurisdictions, it would also be felt by small businesses, which would more readily be able to attract staff from other states and territories and to understand the scope of the licences prospective employees may hold. While the majority of real estate establishments (approximately 81.9 per cent) are located in New South Wales, Victoria and Queensland, there has been significant growth in demand for both residential and non-residential real estate in Western Australia.⁶

Under national licensing, licence requirements would be consistent in all jurisdictions and uniform licence categories would be issued. A national policy framework would apply overseen by NOLA, which would help ensure consistency. National legislation and policy development processes would underpin the system and provide a mechanism for ensuring that the system remained sustainable and that there was a forum in which to resolve jurisdictional differences. For example, national licensing involves jurisdictional agreement to a common set of licence categories and eligibility requirements so that there is one system and an agreed set of requirements operating throughout the country.

In the residential market, operators mostly comprise localised firms with a smaller number of national franchises that mainly operate in the non-residential and rural markets. While a benefit of national licensing would be greatest for national franchises working in multiple jurisdictions, it would also be felt by small businesses, which would more readily be able to attract staff from other states and territories and be able to understand the scope of the licences prospective employees may hold.

Box ES.I below lists the key features of national licensing for the property occupations.

Box ES.1 Key features of national licensing for the property occupations

A licensee would be able to work anywhere in Australia without having to reapply or pay for a licence when they move to another jurisdiction within Australia. A centralised licensing body, the National Occupational Licensing Authority (NOLA), would be responsible for developing (with Ministerial Council approval) national licence policy for each occupational area and would oversee its consistent application by jurisdictional regulators. National licence policy includes: the licence categories that should apply the regulated work that can be undertaken by the holder of a licence category who can apply for a licence, e.g. individual or body corporate skilled and non-skilled eligibility requirements, e.g. qualifications, personal and financial probity other licence characteristics, e.g. exemptions or exclusions. Jurisdictional regulators would administer the system as delegates of NOLA under the National Law. A jurisdiction would not be required to introduce licensing where it does not already do so. However, if licensing is introduced in the future, a national licence would be issued. Current state and territory licensees will be deemed across to the new system at its commencement on the basis of ‘no disadvantage’, in terms of the scope of work a licensee would be able to perform. Licence applicants will be able to choose between one year, three year and five year licence periods. Licence fees would continue to be set by jurisdictions and paid only to the licensee’s primary jurisdiction. A licensee’s primary jurisdiction would be determined by the principal place of residence for individual licence holders and for bodies corporate and partnership it will be determined by their principal place of business. Current requirements for annual mandatory continuing professional development would be removed in the jurisdictions where this applies. Skills maintenance would be prescribed on an as needs basis. There would be no requirement for retesting at licence renewal time. If the licence is not renewed within three months of its expiry a new licence application would be required and the current qualification requirements met (former national licensees can present a lapsed licence of the same category held within the three years prior to application). There would be standard qualification and eligibility requirements across all jurisdictions and there would be no additional experience requirements for obtaining a licence. A range of unnecessary licence conditions would be removed. Personal and financial probity requirements would be made consistent

Licensees choosing to work in an additional jurisdiction would still need to comply with any relevant jurisdiction-specific conduct and compliance requirements that apply to work they intend to perform.

Overview of the preferred model

Under national licensing, a set of nationally uniform licence categories for the property occupations has been developed. Table ES.2 below gives an overview of the preferred model and proposed licence categories, associated regulated work and the eligibility requirements. Chapter 3 contains the full description of the proposed licensing model for the property occupations, which includes the qualification and non-skills based eligibility requirements, personal and financial probity requirements and classes of persons exempt from licensing.

Table ES.2: Overview of the preferred model

Category	Regulated work	Qualification level	Probity
Real estate agent	Real estate agency work means selling, purchasing, exchanging, leasing, managing or otherwise dealing with real property on behalf of another person, for fee, gain or other reward. However, the following work is not real estate agency work : Strata-managing agency work; or selling, purchasing, exchanging, leasing, managing or otherwise dealing with real property that: is not rural land; and is used or intended to be used, wholly for purposes other than residential property; and has an estimated contract price of at least a prescribed amount or has an area greater than a prescribed area. Estimated contract price, for selling, purchasing, exchanging, leasing, managing or otherwise dealing with real property, means the true estimate, made on reasonable grounds by the person carrying out the work, of the price payable for the real property transaction. Rural land means land used or apparently intended to be used, for gain or profit, for grazing livestock or cultivating crops.	Certificate IV Or A business agent’s licence plus a statement of attainment comprising the eight identified units of competency	Personal: Criminal history relating to dishonesty; misleading and deceptive conduct; offences against the person; drug trafficking; and Whether, within the previous 5 years, a conviction for an offence under section 9, 10 or 11 ^7of the National Law or a provision of a corresponding prior Act that corresponds to section 9, 10 or 11 of the National Law occurred; and Matters relating to business conduct. This means any action taken against a person under the Corporations Act 2001 in relation to the following: failure to exercise powers with care and diligence failure to exercise powers in good faith and for a proper purpose misuse of position to gain advantage or cause detriment to a company misuse of information obtained by virtue of the person’s position to gain advantage or to cause detriment to a company breach of the procedures under that Act when given a financial benefit to a related party of a company failure to comply with financial reporting requirements under that Act breach of the duty not to trade while insolvent. Financial: The NOLA must have regard to the following history of an applicant or a licensee: whether the person is bankrupt or insolvent, compounds with creditors, enter into a compromise or scheme of arrangement with creditors or otherwise applies to take the benefit of any law for the relief of bankrupt or insolvent debtors whether the person has within the last five years been a relevant person for another person who, during that five-year period, was bankrupt, insolvent, compounded with creditors or entered into a compromise or scheme of arrangement with creditors or otherwise applied to take the benefit of any law for the relief of bankrupt or insolvent debtors whether the person fails to pay a penalty, fine or other amount ordered by a court or tribunal to be paid or required to be paid under the National Law or a prescribed law. For a body corporate or a member of a partnership: whether a relevant person for the body corporate or a partnership is bankrupt, insolvent, compounds with creditors or otherwise applies to take benefit of any law for the relief of bankruptcy or insolvent debtors.
Business agent	Business agency work means the sale, purchase or lease of a business on behalf of another person, for fee, gain or other reward.	Certificate IV Or A real estate agent’s licence plus a statement of attainment comprising the two identified units of competency	Personal: Criminal history relating to dishonesty; misleading and deceptive conduct; offences against the person; drug trafficking; and Whether, within the previous 5 years, a conviction for an offence under section 9, 10 or 11^8 of the National Law or a provision of a corresponding prior Act that corresponds to section 9, 10 or 11 of the National Law occurred and Matters relating to business conduct. This means any action taken against a person under the Corporations Act 2001 in relation to the following: failure to exercise powers with care and diligence failure to exercise powers in good faith and for a proper purpose misuse of position to gain advantage or cause detriment to a company misuse of information obtained by virtue of the person’s position to gain advantage or to cause detriment to a company breach of the procedures under that Act when given a financial benefit to a related party of a company failure to comply with financial reporting requirements under that Act breach of the duty not to trade while insolvent. Financial: The NOLA must have regard to the following history of an applicant or a licensee: whether the person is bankrupt or insolvent, compounds with creditors, enter into a compromise or scheme of arrangement with creditors or otherwise applies to take the benefit of any law for the relief of bankrupt or insolvent debtors whether the person has within the last five years been a relevant person for another person who, during that five-year period, was bankrupt, insolvent, compounded with creditors or entered into a compromise or scheme of arrangement with creditors or otherwise applied to take the benefit of any law for the relief of bankrupt or insolvent debtors whether the person fails to pay a penalty, fine or other amount ordered by a court or tribunal to be paid or required to be paid under the National Law or a prescribed law. For a body corporate or a member of a partnership: whether a relevant person for the body corporate or a partnership is bankrupt, insolvent, compounds with creditors or otherwise applies to take benefit of any law for the relief of bankruptcy or insolvent debtors.
Strata-managing agent	Strata-managing agency work means managing, for a fee, gain or other reward, any function of an owners’ corporation on behalf of an owners’ corporation under a strata or community title scheme.	Certificate IV	Personal: Criminal history relating to dishonesty; misleading and deceptive conduct; offences against the person; drug trafficking; and Whether, within the previous 5 years, a conviction for an offence under section 9, 10 or 11^9 of the National Law or a provision of a corresponding prior Act that corresponds to section 9, 10 or 11 of the National Law occurred and Matters relating to business conduct. This means any action taken against a person under the Corporations Act 2001 in relation to the following: failure to exercise powers with care and diligence failure to exercise powers in good faith and for a proper purpose misuse of position to gain advantage or cause detriment to a company misuse of information obtained by virtue of the person’s position to gain advantage or to cause detriment to a company breach of the procedures under that Act when given a financial benefit to a related party of a company failure to comply with financial reporting requirements under that Act breach of the duty not to trade while insolvent. Financial: The NOLA must have regard to the following history of an applicant or a licensee: whether the person is bankrupt or insolvent, compounds with creditors, enter into a compromise or scheme of arrangement with creditors or otherwise applies to take the benefit of any law for the relief of bankrupt or insolvent debtors whether the person has within the last five years been a relevant person for another person who, during that five-year period, was bankrupt, insolvent, compounded with creditors or entered into a compromise or scheme of arrangement with creditors or otherwise applied to take the benefit of any law for the relief of bankrupt or insolvent debtors whether the person fails to pay a penalty, fine or other amount ordered by a court or tribunal to be paid or required to be paid under the National Law or a prescribed law. For a body corporate or a member of a partnership: whether a relevant person for the body corporate or a partnership is bankrupt, insolvent, compounds with creditors or otherwise applies to take benefit of any law for the relief of bankruptcy or insolvent debtors.
Agent’s representative	Agent’s representative work means real estate agency work or business agency work carried out as an employee of, or otherwise for or by arrangement with , a person who holds a real estate agent’s licence or business agent’s licence; and Under the supervision of the person who holds the real estate agent’s licence or business agent’s licence.	Statement of attainment comprising four identified units of competency	Personal: Criminal history relating to dishonesty; misleading and deceptive conduct; offences against the person; drug trafficking. Whether, within the previous 5 years, a conviction for an offence under section 9, 10 or 11^10 of the National Law or a provision of a corresponding prior Act that corresponds to section 9, 10 or 11 of the National Law occurred. Financial: Failure to pay a fine under the National Law.
Real estate auctioneer	Real estate auctioneering work means the auctioning of real property on behalf of another person, for fee, gain or other reward.	Statement of attainment comprising three identified units of competency	Personal: Criminal history relating to dishonesty; misleading and deceptive conduct; offences against the person; drug trafficking. Whether, within the previous 5 years, a conviction for an offence under section 9, 10 or 11^11 of the National Law or a provision of a corresponding prior Act that corresponds to section 9, 10 or 11 of the National Law occurred. Financial: Failure to pay a fine under the National Law.

Table ES.3 illustrates where national licensing will occur across Australia. It should be noted that, in accordance with clause 4.2(f) of the Intergovernmental Agreement for a National Licensing System for Specified Occupations (the Intergovernmental Agreement), a jurisdiction will not be required to adopt a national licence category where it does not regulate the area of work at the time national licensing commences. These instances are indicated by the blank cells in the table.

Table ES.3: Proposed national licensing categories across jurisdictions

	NSW	Vic	Qld	WA	SA	Tas	ACT	NT
Real estate agent	y	y	y	y	y	y	y	y
Business agent	y	y	y	y	y	y	y	y
Strata managing agent	y	*					y**	y
Agent’s representative	y	y	y	y	y	***	y	y
Real estate auctioneer	y	y	y	y	y	y	y	y

* The registration of owners’ corporation manager will remain a state-based licence in Victoria and will not be included in national licensing. However, for fullness of information for decision makers, the cost of implementing a strata manager’s (owners’ corporations) licence is included in the estimated costs for Victoria.

** The Australian Capital Territory is still to determine its position on whether a national licence will be issued for strata managers.

*** Tasmania has indicated that it may adopt the national licensing agent’s representative registration.

A comparative mapping of national licensing categories and arrangements against each of the current jurisdictional categories and arrangements is provided in Attachment A.

Costs and benefits of national licensing

The costs and benefits of national licensing shown in the tables below are assessed across the following four distinct categories:

Transition (or implementation) costs. These are the costs that will be incurred by government (mainly relating to the proportional cost to the property occupations in terms of establishing NOLA and the national register) and the cost to property licensees to spend time reviewing and understanding what the proposed changes mean for them.

Direct costs and benefits. These are the costs and benefits that can be identified as directly accruing to an individual, business or government as a result of the implementation of the options being assessed. This does not include any costs that are already incurred as part of licensing arrangements under the status quo.

Wider economic impacts. These are the impacts that flow from reduced costs to industry and the community more broadly as well as the implications for the economy due to greater ease with which labour can move and the potential gains in terms of economic growth, employment and consumer outcomes.

Impact on consumer outcomes. This impact refers to a potential change in the quality or quantity of services provided to consumers as a result of changes in regulation proposed in national licensing. This may include changes in consumer protection outcomes, or changes in the availability of services for consumers.

Not all of these impacts can be easily quantified, for example, the improvements and gains expected to flow from the establishment of a national register for property occupations. In relation to the impacts that have been quantified, it is important to acknowledge that some estimates are based on scenarios or assumptions – for example, the estimate of the benefit to the economy as a whole flowing from greater labour mobility.

In estimating the costs and benefits of national licensing, it is important that impacts are matched to the specific costs and benefits. For example, under all of the options for national licensing, NOLA would be the central coordinator of future policy consideration and have responsibility for the maintenance of a national licensing register. The benefits of these activities will flow from future reforms, the durability of reform and the prospects for future reform, and not just those set out in this Decision RIS.

It is, however, a challenge to quantify the value of potential and yet-to-be-defined future reforms along with the benefits to consumers or regulators associated with aggregated national licensing data. The costs of establishing NOLA are nonetheless relevant to the proposed changes to licensing and have been included for that reason. In some instances, where net present value estimates are made, these costs have been netted against the benefits of labour mobility and reduced compliance and administrative burden, in coming to an overall Net Present Value for the proposal. To the extent that states and territories have the scope to consolidate regulatory functions, they can decrease costs and potential regulatory charges.

The impetus for reform is a desire to enhance labour mobility and remove unnecessary regulatory burdens on property licensees. Both national licensing and automatic mutual recognition recognise that there will be benefits associated with:

an enhanced ability to promote labour flows to locations where property occupations are most needed

reduced administrative and financial costs in the form of duplicate fees for those that operate in multiple jurisdictions

the potential for improved productivity where some licence restrictions are removed.

Table ES.4 sets out the impacts associated with national licensing as well as an estimate of the potential flow-through benefits associated with increased labour mobility¹² and returns to business from national licensing.¹³ These impacts are presented in a number of different ways to allow readers to consider the difference between establishment and ongoing impacts along with the jurisdictional impacts. A payback period is also included to highlight the length of time that will be needed for the benefits to offset the transition costs. This payback period is quite short, while the benefits are expected to be ongoing. A ten-year net present value is presented; however, the reform’s effects could theoretically be considered over a longer time period, which would result in a larger net benefit (as the benefits are expected to continue beyond the ten-year time period provided for in this analysis).