Dris proposal for national licensing of the electrical occupations

Executive summary

Purpose of the Decision Regulation Impact Statement

This Decision RIS examines the impact of replacing the current diverse state and territory licensing of the electrical occupational area with a national licensing system. It also examines an automatic mutual recognition option. It considers the impact that both options would have on industry, consumers and government, and is informed by stakeholder feedback on the options proposed in the Consultation RIS. The Decision RIS also acknowledges that the status quo would be the default option.

The Decision RIS builds on previous policy examinations and consultation findings that were supportive of a national licensing system and which were subsequently endorsed by COAG through the signing of the Intergovernmental Agreement for a National Licensing System for Specified Occupations (Intergovernmental Agreement), passage of the Occupational Licensing National Law Act 2010 (National Law), establishment of NOLA and appointment of the board. National licensing is considered as the preferred option in the Decision RIS.

This executive summary provides a snapshot of the key features, rationale and costs and benefits for the following options:

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  national licensing (preferred option)
  
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  automatic mutual recognition
  

The full overview of national licensing can be found in Chapter 3. Chapter 3 also contains the stakeholder views and the rationale for each element of the proposed model. Chapter 4 contains the impact analysis of national licensing and in some cases automatic mutual recognition, with quantification of impacts where possible. Implementation of the preferred national licensing option is discussed in Chapter 7. A summary of how the proposed arrangements compare to current jurisdictional licences is provided at Attachment A.

The problem

Electrical occupations are currently licensed under state and territory legislation and administered by jurisdictional regulators. All jurisdictions have some form of licensing, though the approach to licensing varies widely across jurisdictions. Electricians wishing to work across multiple jurisdictions are required to obtain the relevant licence or licences in each of those jurisdictions through a process of mutual recognition. The state and territory based approach to licensing of the electrical occupations means that there are up to eight different approaches to setting licensing requirements around the country. An overview of the sector and current regulatory requirements is provided at Attachment A.The various approaches have led to licences being issued in different jurisdictions for the same occupational area, often with different parameters, eligibility requirements and scopes of regulated work. Different licence classifications, training requirements, licence periods and licence structures commonly apply. These inconsistencies impose costs on those businesses that operate in more than one jurisdiction.

Mutual Recognition

The different approaches impose an increased regulatory burden on licensed workers despite the existence of mutual recognition arrangements since 1992. Under mutual recognition arrangements, a licensed person moving from one jurisdiction to another is entitled to a licence authorising the equivalent scope of work to that authorised by the issuing or home jurisdiction. However they must first apply for recognition of their existing licence and pay a fee. Once an application is lodged, they are able to work to the scope of their existing licence(s), pending the decision of the ‘second’ jurisdiction regulator. Provided that the decision is to recognise that licence, they will be issued with the nearest equivalent licence, which may or may not have conditions imposed to achieve that equivalency. It is also sometimes necessary for the second jurisdiction to issue multiple licences to equal the scope of the first. If the licensed worker works across borders, they must renew multiple licences and pay the relevant fees. Mutual recognition does not apply to business licences unless they are held by a natural person (e.g. not a body corporate or similar). These arrangements have a negative impact on labour mobility.

Recent reforms to mutual recognition for the licensed electrical occupations, while beneficial in some respects, have not:

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  removed the need for licence holders to apply for a new licence when they wish to work in a different state or territory.
  
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  eliminated the cost to holders of multiple licences. These costs include licence fees and licence renewal, as well as costs associated with keeping up to date with various skills-based and non-skills-based licence requirements. In addition, there are productivity costs to businesses due to processing time and administration.
  
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  harmonised the eligibility requirements for licences across jurisdictions. For example, similar licences may vary considerably in terms of skill, managerial or experience requirements, qualifications, nominees, state-based competency testing, or the requirement to work under supervision before a full licence can be granted.
  
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  harmonised licensing frameworks. Many existing licences are not readily comparable or transferable across jurisdictions and a number of endorsements or restrictions may be required to achieve equivalence across jurisdictions.
  
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  stemmed the ability for jurisdictions to unilaterally change licence categories, scopes of work, qualification or eligibility requirements.
  

Furthermore, not all licences have an equivalent licence in other jurisdictions, and some occupations (or areas of work within occupations) are not licensed in all jurisdictions. In these cases, individuals may be required to be licensed where they were previously not required to be, or they may need to apply for a new licence because there is no equivalent to the licence that they currently hold. Furthermore, ministerial declarations of equivalency must be updated annually in order to remain current; therefore, maintaining those declarations incurs an administrative cost.

In addition to the burden of red tape on licensees from the very different approaches, governments must retain oversight of their own regulatory regime while maintaining an understanding of how other regimes work in order to recognise interstate licences. These multiple approaches could be perceived to be economically inefficient for a nation of just over 23 million people¹.

The Productivity Commission supported the development of nationally uniform licensing requirements and national registration systems for occupations that were highly mobile across jurisdictions, where licence requirements between jurisdictions were significantly different, and where the benefits would justify the costs.

The current approach, therefore, leads to:

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  costs to electrical workers and businesses in the form of financial and time costs associated with maintaining a multiple-jurisdiction approach to licensing and meeting a range of regulatory requirements
  
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  reduced efficiency impacts on households and the economy more broadly where the current regulatory approach creates impediments to mobility of labour and imposes unnecessary regulatory burdens.