Dris proposal for national licensing of the plumbing and gasfitting occupations

1.5Automatic mutual recognition

Automatic mutual recognition was included as an option in the Consultation RIS. It had been previously discounted in the 2009 Decision RIS but was not costed at that time. The model addresses the issues of labour mobility and the regulatory burden associated with licensees operating across jurisdictions, and would incur lower transitional costs than a national licensing system. It was therefore deemed appropriate to reconsider it in comparison with national licensing.

Existing Mutual Recognition Arrangements

Under existing mutual recognition processes, a licence holder who wishes to work in another jurisdiction must make an application, demonstrate that they hold a valid licence and pay an additional fee for an additional, ‘equivalent’ licence to be issued in the second jurisdiction. In some circumstances, conditions, restrictions or endorsements would need to be applied to the licence in the second jurisdiction to achieve licence equivalence. Work to achieve ministerial declarations of equivalence for the four initial occupational areas being considered for national licensing was undertaken over the period 2006–08 and details can be found at www.licencerecognition.gov.au. The Mutual Recognition Act 1992 only relates to individual occupational licences and not to business entities that are not individuals.

Automatic mutual recognition – unharmonised approach

Under an automatic mutual recognition approach, the licence holder would automatically be allowed to perform the scope of licensed work authorised by their jurisdiction-based licence across all jurisdictions regulating that work, without applying for an additional licence or paying an additional fee. The regulated work and licence type would be whatever jurisdictions determine – it would not be harmonised or made consistent in any way. It would become the responsibility of the regulator and employers to understand the licensed work authorised by a licence issued by any jurisdiction as, unlike under existing mutual recognition arrangements, the licence would not be ‘translated’ into the regulatory terms of the jurisdiction of operation. In addition to the different types of standard licences, licensees with conditions or restrictions imposed for disciplinary reasons could move between jurisdictions and these variations may not be apparent from the licence card. It could therefore be expected that compliance monitoring would be substantially more difficult for regulators in this environment.

A licensee would need to ensure they did not carry out work for which they were not authorised. The differences in licence types and associated regulated work could raise the risk of licensees working outside their scope of work in second jurisdictions, potentially affecting consumer protection and health and safety.

This option is similar to the arrangements that apply to a driver’s licence, where a licence in one jurisdiction entitles the bearer to drive anywhere in Australia. However, it should be noted that the standard automotive driver’s licence arrangement works because the regulated work – driving – is essentially the same in all jurisdictions. The different historical approaches to plumbing and gasfitting licensing mean that the various types of regulated work are significantly more varied than driving.

The 2009 Decision RIS noted that, on examination, an unharmonised approach would not address issues of consistency or transparency, would increase the level of complexity for individuals and businesses (in understanding jurisdictional licensing and conduct differences) and has the potential to increase consumer confusion. It further noted that there are potentially perverse impacts on consumer protection outcomes by undermining the integrity of jurisdictional regulatory regimes and increasing the potential for jurisdiction shopping. It indicated that there was a significant risk that regulators would lose confidence in the arrangements over time.

Automatic mutual recognition – harmonised approach

To manage regulatory differences, jurisdictions could agree to harmonise some licensing requirements under this option, particularly those where equivalence is more easily determined, or based on updated ministerial declarations of equivalence or the work of national licensing.

A harmonised approach, in the absence of a national coordinating mechanism or body would, however, be extremely difficult to achieve, time-consuming and hard to maintain over time as there would be no process to resolve differing jurisdictional views. The cost of existing mutual recognition administration is low as there is no central governance, however the resultant minimal coordination and resourcing has led to a poor level of knowledge of the Mutual Recognition Act 1992 amongst both regulators and licensees. The Productivity Commission recognised this issue and, in 2009, recommended the establishment of a specialist unit (funded by jurisdictions) to provide oversight of mutual recognition. It should be noted that a Commonwealth-funded taskforce set up in 2006 to improve the operations of mutual recognition procedures worked with states and territories until 2008 to reach a series of ministerial agreements on licence equivalence for a select number of occupations. The majority of these have not been updated since they were originally agreed.

Under both options, harmonised and unharmonised, state and territory autonomy would be maintained and transition and implementation costs would be minimised. However, jurisdictions would retain the legislative power to vary licensing requirements to meet circumstances arising in particular states over time. This would have the potential to undermine any agreed equivalency, increase complexity and create uncertainty in jurisdictions which had not issued the licence. Legislative change would be needed to the Mutual Recognition Act to allow recognition of business entities, and to jurisdictional legislation. Licence cards from different jurisdictions could contain different levels of information, causing uncertainty for consumers unless this was made more consistent. A national register of disciplinary actions would improve transparency for consumers and regulators alike, but would need to be agreed and established. Such a register would not provide the full national register of information provided for under the proposed national licensing register. A process would need to be developed surrounding who would provide, maintain and service it, and agreement would be needed on how it would be funded.

If harmonisation was introduced as a staged process, with clearly equivalent licences included first and others left outside the system, temporarily or perpetually, further confusion could be created. For licences where no equivalence had been agreed, current mutual recognition requirements would need to continue.

Consultation

It is not possible to fully quantify the level of support for automatic mutual recognition. Although approximately 50 per cent of respondents indicated that they supported mutual recognition only, the most frequently given reasons were that they did not want to change their existing licence structure and scope of work and they feared that national licensing would increase regulation. A large number of submissions used support for automatic mutual recognition or other options as a bargaining approach, that is, while they supported the ‘concept of national licensing’, they would support these alternative options if a certain national licensing option was selected or the national licensing proposal did not include a particular feature they supported. Submissions from most peak organisations used this approach. A very large number of submissions (over 50%) originated in Victoria and supported automatic mutual recognition, their opposition to national licensing arising from the non-inclusion of certain licence categories or scopes of work currently licensed in that jurisdiction. There was little consideration in the submissions as to how automatic mutual recognition was likely to work. Reasons given for supporting automatic mutual recognition often indicated that it would be easier to implement than national licensing. National Licensing was the option supported in approximately 46 per cent of submissions, with the three tier option favoured. The majority of peak bodies providing submissions indicated a preference for national licensing, provided that the three tier model was adopted. The submission from the Institute of Plumbing Australia Inc. indicated it did not agree with automatic mutual recognition in its presented format ‘because to include the necessary … checks and balances you end up with a defacto national licensing scheme without the benefits of full national licensing …’.

Conclusion

It was considered that, under the automatic mutual recognition model, there was a greater likelihood of resistance to reforms and fewer opportunities to streamline and rationalise licensing frameworks, compared with a single national system. Difficulties are envisaged in maintaining consistency in legislative provisions without a common legislative basis. While the governance costs arising from automatic mutual recognition are less visible than those from national licensing, they are still present; and that they are less transparent does not mean they can be avoided in any effective system. It is noted that costs would still be incurred in relation to policy development and legislative changes.

Compared with national licensing, automatic mutual recognition also has the potential to provide for enhanced labour mobility, but with lower immediate transition costs. However, the complexities of operating such a system mean that implementation would be extremely complex and would require close cooperation and coordination at all levels of policy development, regulation setting and compliance. Automatic mutual recognition would give rise to a more complex, less transparent and more high-risk environment, with far less opportunity for reduced regulation and a reduced prospect for the longevity of the reform over time. Automatic mutual recognition is therefore not the preferred option.