Dris proposal for national licensing of the plumbing and gasfitting occupations

Factors in determining preferred national licensing option

All national licensing models 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 be able to understand the scope of the licences prospective employees may hold. A majority of plumbing and gasfitting businesses are small businesses (less than 2 per cent of employers have more than 20 staff) and businesses operating in border areas are more likely to be smaller companies.

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 a national occupational licensing authority, 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.

National licensing involves each of the jurisdictions agreeing to a common set of licence categories and eligibility requirements so that there is one system and agreed set of requirements operating throughout the country. The key features of national licensing are set out below.

Box ES.2: Key features of national licensing for the plumbing and gasfitting 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 central 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. 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 would 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 fees would continue to be set by jurisdictions and paid only to the licensee’s primary jurisdiction. A licensee’s primary jurisdiction for an individual would be the principal place of residence and for bodies corporate would be the principal place of business. Skills maintenance on an as-needs basis when directed by the Licensing Authority. There would be no requirement for any 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 experience requirements for obtaining a licence. There would be no skill or business qualification requirement for a contractor’s licence (contractors not holding a licence to undertake the technical work would need a nominee). A range of unnecessary licence conditions would be removed. Personal and financial probity requirements would be made consistent. The process for skilled migrants would be streamlined. 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.

Considerable discussion surrounded the selection of the most appropriate model for plumbing and gasfitting licensing under national licensing.

The two tier model was developed for the Steering Committee as a theoretical position, based on a deregulatory approach to national licensing which most accorded with the COAG Best Practice Regulation guidelines; it was not fully worked through, or discussed with the stakeholder advisory committees at the time it was considered by the Steering Committee.

The two tier model, which removes the tradesperson level and decreases the qualification requirements for full licensees, provides the greatest net benefit ($566.67 million total ten-year net present value) on a purely quantitative basis, due to the savings achievable from decreased regulation. However, there are significant risks presented by this option, which are difficult to accurately cost. This option is strongly opposed by both industry and regulators, on the grounds that it significantly reduces current qualification requirements for the plumbing and gasfitting occupations in all states and territories, and the reduced requirement would not provide the skills necessary to carry out critical functions associated with plumbing and gasfitting. This could lead to an increased risk associated with plumbing and gasfitting work, such as contamination of potable water (possibly leading to infection or death), asphyxiation, personal injury, property damage or energy inefficiency. An analysis of the difference in skills required for the two tier and three tier sub options, in terms of the number and type of units of training, shows that the two tier option provides greater exposure to these risks occurring. Section 3.2.8 and Attachment D provide further discussion on the difference in qualification requirements between the options. Both industry and regulators consider that a period of working under supervision is necessary before a person is able to achieve the breadth of skills necessary to become a full licensee. This model is considered to increase the risks for consumers and licensees when compared with the status quo and to increase the need for substantially increased monitoring and compliance action and is therefore not preferred, despite its financial benefits.

The three tier, sub-option 1 was developed with advice from the plumbing and gasfitting Interim Advisory Committee (IAC), which met to advise on policy options during 2010–11. The IAC comprised representatives from industry, unions, regulators, the training sector and a consumer group. A three tier model of contractor, full licensee and licensed tradesperson reflects the way in which many jurisdictions currently licence this occupation, although three jurisdictions do not have a separate contractor level. Instead, their full licence level is able to contract and perform the technical work as part of the licence scope. In Western Australia, this licence is called a contractor licence but does not licence business conduct. A significant majority of industry respondents supported a three tier model of licensing.

However, sub-option 1 provides an overall increase in qualification requirements at the full licence level. As such, it could not be supported under the Intergovernmental Agreement, which requires that arrangements should be ‘effective and proportional’ to the risks encountered. There has been no evidence that current arrangements have failed to mitigate existing risks or that the nature of risks has increased, therefore additional qualification requirements would increase the regulatory burden, compared with the status quo.

The three tier, sub-option 2 is considered the preferred option on balance, although it provides lower quantified net benefits ($318.41 million total ten-year net present value) when compared with the two tier model. The qualitative risks identified are considered to outweigh the quantitative benefits of the two tier model. This model closely resembles the three tier, sub-option 1 model developed by the IAC but the qualification requirements at the full licensee level approximate a harmonised version of the status quo for most jurisdictions and not an overall increase in units as proposed under the three tier, sub-option 1. It therefore provides an increased quantified net benefit when compared with sub-option 1 (which provides an estimated $226.02 million total ten-year net present value) while maintaining the core aspects of the model developed by the expert industry and regulator representatives who participated in the advisory committees. The three tier, sub-option 2 does not increase risk, unlike the two-tier option and it has the support of the majority of occupational stakeholders as it most appropriately delivers the skills required in the industry, and therefore best mitigates the risks identified, when compared with the two tier option.

The rationale for discrete elements of the proposed model, such as categories and scopes of regulated work, are discussed in depth in Chapter 3: National licensing – overview of key features.